Top employers understand that focusing on retention not only saves their company money in the long term, but also leads to the development and engagement of employees.

One key tool that top employers use to retain their employees is offering a comprehensive benefits plan – one that gives them a competitive edge against other companies. A structured and transparent vacation and benefits package will help keep your employees happy and motivated.

Generally speaking, when your employees are happy, the business is too.

Whether you’re starting from square one or making amendments to your existing vacation policy, there are a few things you will want to consider:

What's the law?

In the United States, the Fair Labor Standards Act does not require payment for time not worked, such as vacations, sick leave, or federal holidays. These benefits are matters of agreement between employers and their employees, and are a key defining opportunity for companies. Information about your legal requirements as an employer in the United States can be found through the United States Department of Labor website.

In Canada, regulations for vacation pay are not as clear and consistent. Generally speaking, each province offers two weeks of vacation, apart from Saskatchewan, where employees are given three weeks, and Quebec, where employees receive one day per month.

Service Canada provides a breakdown of vacation entitlement requirements that serves as a great starting point for making sure your policy is compliant.

What are you trying to accomplish?

Are you attempting to minimize costs, create a rewards structure, or be competitive in your market? Each of these conclusions has its own merits, and by first outlining your ideal end result, you will be in a far better position down the line to deal with unforeseen circumstances when they inevitably appear.

In addition to the traditional two week allotment per year, many employers opt to allow their employees the added benefit of personal days, bereavement leave, sick days, national or religious holidays (look into your Federal laws for this one, as many are mandatory), as well as time-accrued or days 'in lieu'.

Can unused vacation days accumulate for future use?

An employer may elect to allow an employee’s unused vacation time to ‘roll-over,’ with the employee’s remaining vacation days moving forward into the next year’s vacation allotment. Many employers who allow roll-over time will set a cap-off date for the days to be used by, usually a date in the first few months of the following year.

How will you enforce your policy?

It is imperative that employers ensure their employees utilize allotted vacation time. Not sure why? Check out this article!

Having an online version of your company’s vacation policy available for viewing or providing employees a hardcopy version with their onboarding paperwork will help prevent feelings of disconcertion when it comes to what your employees are entitled to.

Employers should communicate clearly that it is in their own best interest and the employee’s best interest to make use of vacation time. 

Or, no policy at all?

One of the most significant movements in the business world has some forward-thinking companies adopting a new way of looking at the traditional vacation policy –one in which they forgo it altogether. For example, Netflix does not have a vacation policy at all, and instead asks that all employees follow the Golden Rule of Netflix and use their best judgment in taking the course of action that is best for the company.

The driving force behind this idea is that rather than making employees feel like they will be compensated for productivity, they will maintain increased productivity by not stressing about proving their self-worth within the organization.

‘Unlimited Vacation,' like anything else, is sure to have its pros and cons. Establishing what your company aims to achieve with their benefits plan will help you decide if no policy is the best policy for your employees.

Keeping track

Even if you’ve designed a comprehensive vacation policy, the unfortunate truth is that it can still be difficult to keep track of it all. Vacation requests, scheduling conflicts, black-out days, time-accrued, bereavement and maternity leave, sick days – there are numerous employee records to keep organized.

If your company is larger, it makes sense to invest in software that will help you efficiently and accurately measure your employees' days off. Luckily, there are tons of options in this realm. Consider Resource Guru, TribeHR, or actiPLANS.

Unconvinced about the importance of tracking employee attendance? Check out one of our free resources and learn what absenteeism could cost your organization in the long run.