Saturday, September 12, 2009

Poll: Should an employer allow employees to take vacation days they have not yet earned?

I am fascinated at the wide variety of ways that employers pay their employees. Not only is the basis for compensation varied (hourly pay versus commission versus salary), but the fringe benefits and the inner workings of vacation pay are especially interesting.

In the spirit of employer-employee compensation, this poll is about how companies pay out vacation pay. I have seen three ways that employers give their employees paid vacation.

1. Give employees an account of vacation days at the beginning of a year. When the days are deposited into that account, the employee owns those days. Therefore, at resignation, the employer must pay the employee for untaken days.

2. Give employees vacation days as they earn them. In this scheme, the days accumulate in the vacation-day account as the employee works more hours. As in (1), the employee owns all days that are in the account. Therefore, at resignation, the employer must pay the employee for untaken days.

3. Give employees an account of vacation days, but specify that these days are to be earned over the coming year. The employee does not own these days until he works the full year, but can own a fraction of the days as he works that same fraction of the year. The employee can take all of the vacation upon receiving the vacation days, but in so doing, becomes indebted to the company. At resignation, the year is pro-rated and either the employee owes the company, or the company owes the employee.

For example, suppose a company deposits 18 days into an employee's account, the employee works 1/2 of the year before resigning, and the employee takes 10 of the vacation days as vacation in the first half of the year.

In the first case, the company would owe the employee for 8 days untaken.
In the second case, the employee could have only taken 9 days vacation, and so, would not owe or be owed any money.
In the third case, the employee would have taken one day more than he earned. Therefore, on resignation, the employee would owe the company for one day of vacation.

So, based on this connundrum, here's the question of the week:

Should an employer allow employees to take vacation days they have not yet earned?

(a) Yes
(b) No

Please vote (early, often, and on the sidebar ---->) and tell your friends to vote. And if you have any ideas, I'm interested in hearing what you have to say in the comment box. The poll is open for a week. I'm excited to see your response.

1 comment:

  1. I think it is essential to allow employees to take vacation that is not yet earned. This will ensure that the employees as a whole will be able to spread their vacation days throughout the year as opposed to everyone earning throughout the year and cashing-in during the last quarter. This would cause many businesses to slow production due to lack of labor resources.

    ReplyDelete

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