Summer Vacations Can Pose Thorny Issues for Employers

As summer approaches, many employers are being inundated with employee requests to take vacation days.

To address this, companies often establish formal vacation policies that give senior employees first pick of days or provide vacation on a first-come first-serve basis.

But these tactics may hurt employee morale and defeat the purpose of offering vacation days at all, experts say.

“There are companies that try to be flexible and say to employees, ‘We understand everyone wants to take time off, so let’s work together to enable everyone to do this,’ ” says Tom Klett, a consultant in the Stamford, Connecticut, office of Watson Wyatt Worldwide.

Employers need to be proactive and ask employees early on in the year when they are planning vacation days, says Jerry Glass, a managing partner at F&H Solutions Group, a human resources consulting company.

“Being proactive is important because there are two things that will upset an employee,” he says. “One is if a company tells them they can take a vacation and then says they can’t. The other is not allowing them to take the days when they want to.”

Canceling vacation is a rare occurrence, but if an employer does need to do this, they should reimburse the employee at least partially for any expenses they may have accrued from booking a trip, Glass says.

Many companies take a “Use it or lose it” approach to vacation, which is a way of encouraging employees to plan their vacation time in advance. Under this policy, employees lose their accrued vacation time if they don’t use it all within a calendar year.

But the use-it-or-lose-it policy can also hurt employee morale because employees often want more flexibility, Glass says.

To address this, companies should allow employees to carry over a certain number of days, like up to a week, into the next calendar year or receive compensation for days not taken, he says.

Some states, like California, don’t allow employers to adopt use-it-or-lose-it policies without some carry-over, says Gerald Hathaway, a partner in the New York office of law firm Littler Mendelson. Also, many states mandate that companies clearly communicate to employees their use-it-or-lose-it policies.

“It’s always prudent for employers to have these policies clearly stated in their communications and in their employee handbook,” Hathaway says.

To get the most out of employee productivity and keep employee morale high, which is the point of having vacation policies in the first place, companies should try to be flexible and creative with how they approach vacation, Klett says. For example, some companies have clubs or groups that plan trips for employees.

“There is more guilt associated with vacations today than there ever has been before,” Klett says. “If employers remove that guilt a little bit, it will pay off for them.”

—Jessica Marquez