Providing your employees with paid holidays and vacations is a very basic benefit that isn't too costly to businesses. After all, payroll is a fixed expense each month. You plan on spending so much money per month on salary and wages. The companies that don't provide holiday and vacation pay benefits are very rare these days, and those that do exist probably won't neglect this benefit much longer.

In addition to paid holidays and vacations, businesses sometimes provide employees with time off with pay for their own personal business, a death in the family, jury duty and military reserve training. Some larger companies also provide predesignated coffee breaks for employees during work hours.

When forming your own time-off-with-pay program, you need to balance the benefit with what you can afford to provide in both compensation and productivity loss, and what your competition is providing.

Holidays and Vacations

Paid holidays and vacations are a staple of the employee benefits package. Rarely will companies not offer these two basic items in a benefits package, and once these two benefits are set, they rarely change except for the better.

As an employer, it's essential that you understand the importance of providing paid holidays and vacations. These two benefits allow employees to rest and relax with family and friends, and come back to work rejuvenated and more productive.

So how much holiday and vacation time should you set aside for your employees? In terms of holidays, there are numerous ones through the year, but the big six are:

  • New Year's Day
  • Memorial Day
  • Fourth of July
  • Labor Day
  • Thanksgiving (and the following Friday)
  • Christmas

Almost every company recognizes these holidays. In fact, according to a survey by Hewitt Associates, a management consultant firm specializing in employee benefits, only one percent of businesses in America provide less than seven paid holidays per year. About 28 percent provide 10 paid holidays per year.

Other popular holidays include Martin Luther King Day, Presidents' Day, Good Friday and Veterans Day. Many companies also allow employees to take a personal holiday for their birthday.

Vacation time usually increases in conjunction with the employee's length of service. The most common vacation schedules among businesses are two weeks after one year of service, three weeks after five years of service, four weeks after 10 or 15 years of service, and five weeks after 25 years of service.

Social Responsibility Notice

Included under this category are several items you need to be aware of but are mostly optional except for bereavement and jury duty.

Allowing time off for a death in the family is actually optional, but one we feel should be extended. Nothing is more traumatic to an individual than the death of a family member. The stress and grief of the moment should not be compounded by an insensitive time-off policy. Most companies usually provide at least a day for bereavement. Many average close to three. If the death is in the immediate family, i.e. mother, father, husband, wife, son or daughter, then time is extended if necessary.

Jury duty pay is something that is hard to get around based upon your obligations under the law. Generally, the pay the employees will receive should equal the difference between their regular salary and what they receive for serving on the jury.

Another legal obligation is military reserve training allowance. Employers are required to allow employees time off to fulfill their military training commitments, if any. Although most companies don't reimburse the employee's time unless they use vacation time, some larger companies pay all or a portion of the military training time off.

Sick leave is another common benefit companies offer. This is a paid absence due to illness. Obviously, if the employee is suffering from an illness and cannot be productive at work, there's no sense in making them come to work and pass the illness along to the rest of the work force. Generally, most companies provide the employee with anywhere from four to six sick days per year. (The Family and Medical Leave Act is also something you should know about and we discuss it below.)

Sabbatical is a time-off-with-pay benefit that is usually confined to executive-level personnel. A sabbatical is a paid leave of absence during which the employee is granted a longer period of time beyond their vacation to accomplish a specific objective such as additional education, fulfilling an obligation to work with a worthy nonprofit organization such as the Peace Corps, or to just get away from it all and come back with renewed enthusiasm for their job.

Another common benefit companies offer is flex-time, which offers more flexibility for parents, commuters or students. Also called "time-sharing," this program takes into account the schedules of a busy mother or father who needs to take their children to school, sport practices, day care, or other extra-curricular activities. Employers may work out split-shift schedules or offer different starting and ending times to help busy parents out. Or commuters who wish to avoid morning or evening rush hours are allowed to come in earlier or later than the regular shift, as are students who need to work earlier in order to arrive on time to an evening class.

Some companies also offer personal leave in addition to sick leave in order to alleviate the abuse of sick leave. Usually, these programs allow the employee to take three to four personal holidays per year to conduct personal business or just to get away from the hustle and bustle of the office for a day or two.

The Family and Medical Leave Act

The benefits discussed in this article don't include your legal requirements under the Family and Medical Leave Act, which requires employers of 50 or more employees to provide up to 12 workweeks of unpaid, job-protected leave for certain family and medical reasons. To learn what constitutes FMLA leave, read " The Rules of FMLA Leave ." To navigate the FMLA paperwork maze, read " Complying with the Family and Medical Leave Act ."


This article was excerpted from The Small Business Encyclopedia.