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How to encourage and plan around employee vacations

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How to encourage and plan around employee vacations

The United States is notorious for its (lack of) vacation – it’s the only advanced economy that doesn’t guarantee paid vacation and according to a recent TIME magazine cover story, in 2013 169 million vacation days go unused and do not carry over – and the amount of unused vacation time continues to increase.

While a number of companies are establishing innovative ways to encourage employees to take time off – including unlimited vacation policies and even paying workers to go on holiday – these initiatives are anomalies in a nation that apparently prefers financial gain to vacation time.

Replicon analyzed 664 companies in the United States between July 1, 2014 to June 30, 2015 to compare against existing studies. We found that:

  • In the last year, December was the busiest month for vacation time, with 12.41 percent of total time off taken compared to other months, followed by November and May respectively
  • In contrast, June had the lowest percentage of vacation time (5.75 percent), a 53 percent decrease against December. Meanwhile, April (7.15 percent) and October (7.17 percent) were the second and third lowest months for time off respectively
  • Employers are most likely to say no to time off requests in October, with one in 87 hours rejected by companies
  • On average, however, less than one percent (0.85 percent) of time off requests were rejected last year by employers

While it’s not a surprise that December is the busiest month for vacation – and businesses are well aware that this is a slower time of the year – it can be challenging for companies to plan and allocate resources as effectively during the other high and low vacation periods.

Here are three simple ways to help businesses both encourage, and forecast against time off:

1. Make sure your employees know your vacation policy and provide easy avenues for them to ask questions.

Company time off policies and procedures should be clearly documented and accessed (e.g. in the employee handbook, on the staff intranet). This should include any work periods when vacation is prohibited or restricted, and deadlines for submitting requests so that your business has enough time to anticipate schedules and can allocate resources to meet team requirements. Similarly, supervisors, managers and anyone who approves time off requests should be aware of the policies and what their rights are to rearrange or reject employee vacation schedules.

2. Know what the vacation rules are in the jurisdictions where you have employees.

Not all vacation policies are created equal. For example, California labor laws can prevail over state laws and in some cases supersede federal laws as well. In California, vacation accrues each day, cannot be forfeited once earned, and any leftover vacation can be paid out to an employee once he/she leaves the company. In other jurisdictions, employers may also be required to pay overtime at a higher rate (e.g. 1.5 times the normal rate), but also be allowed to require staff to take time off in lieu at the normal rate. Brushing up on wage and hour laws in a particular city, state, province or country is critical to maintain labor compliance.

3. Set up a system that provides a full picture of employee’s schedules and time off requests and accruals.

While going on vacation is the most popular time off request, also take into account sick leave, maternity leave and other employee absences when you’re planning your staff levels, particularly during peak periods. A good system for to centrally track, manage and plan against time off requests and accruals will help you easily understand staff resources for any given work week. This also ensures that you are not operating on a skeleton staff who are overburdened with their co-workers’ deliverables, while driving productivity and operational efficiencies.

Once you have an idea of when people will be out of the office, it’s crucial to ensure that the person taking time off documents work in progress, as well as access to related files, contact information and other important information to meet deliverable deadlines.

By establishing the right policies and procedures around time off, companies can make sure that time and resources are always optimized across every level and every department. Preparation is key – not only does it help keep business operations running smoothly – your employees will appreciate it too.

Study Methodology

Replicon reviewed aggregate and anonymized time off transactions from our internal database logged by 685 businesses in the United States, between July 1, 2014 to June 30, 2015. The study is not based on a probability sample and therefore no estimate of theoretical sampling error can be calculated.

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Jose Gaona


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