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Establishing a yearly vacation carryover policy

December 13, 2013 at 8:20 AM

If your organization provides employees with paid time-off, it's crucial to develop a clear vacation carryover policy. Some companies let staff members accumulate unlimited amounts of time-off, while others maintain "use it or lose it" policies. Many firms combine these two strategies by establishing annual carryover limits. It's vital to consider staffing levels, fairness, productivity, and employment laws when you craft a carryover policy.

Before you start comparing the options, conduct some research on the vacation time laws that apply in your locale. They could prohibit some types of carryover policies. For example, California doesn't allow time-off to expire when it goes unused. Employers must carry over vacation days to the following year. State and local laws are always subject to change, so it's important to remain aware of the latest regulations. Look to your state’s Department of Labor for details.

When businesses set carryover limits, they often range from five to 11 days. This approach prevents the stress and staffing issues that can result when employees accrue excessive numbers of vacation days. At the same time, it gives workers some flexibility and encourages them to spread time-off throughout the year. A strict policy with no carryover compels employees to take long vacations in the summer or autumn.

To some extent, the best strategy depends on the flexibility of your organization. If most staff members aren't essential to the firm's operation and managers usually grant time-off requests, it's not as important to allow unlimited carryover. However, employees will become angry if they must deplete their time-off by the end of the year, but staffing issues prevent supervisors from approving vacation requests.

If you're still not sure, look for data on the time-off policies of other firms in your industry. Ask managers and employees in your company for input. Regardless of the policy you establish, consider notifying staff members when they accrue a certain number of vacation days. Sophisticated human resources software can help you automate time-off carryover, notifications and tracking.

Tags: paid time off time-off policies carryover policy
Category: Vacation Time

Staff Files has been helping small- and mid-sized businesses manage their employees' time-off accruals for over 10 years. Try out the free demo/trial edition of this personnel software to see how easy it can be to manage vacation, sick time, holiday time, personal time, PTO, or any other type of time off your company keeps track of.


Have questions about Staff Files? Call us at 1-800-874-8801 or email us at sales@abs-usa.com

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