HR Policies Paid and Unpaid Leave

Breaking Down Your Vacation Policy

All employees look forward to a little vacation. Some look forward to a lot of vacation.  Meanwhile, you have to keep the business running.  As the employer, how do you handle this?

Vacation policies can be grouped into three categories:


Some businesses do not have a formal policy.  All requests are on a case-by-case basis, along the lines of, “boss, can I take off next week?”  

This is the worst option.  It results in real or perceived favoritism and organizational chaos.  Personal requests can be stressful to everyone.  

These companies need a formal, written policy.

Traditional Vacation Policy

Most businesses have a written vacation policy.  This includes:

  • Who is eligible (full-time employees, for example)
  • When they are eligible (after a certain number of days employed)
  • How much time off they are eligible for (i.e. accrual)
  • How and when to apply for time off
  • What are the considerations for approval (department staffing, busy season)
  • What to do with unused vacation time (use it or lose it, carried over, paid out)

Written policies address many of the problems of the case-by-case approach.  It provides an orderly process and structure.  

Unlimited Time Off

This concept was pioneered by tech companies whose culture supports “work-life” balance.

The primary concern is that employees will take advantage of the system and take excessive vacations.  In fact, at these companies employees do not take off any more time than they would at companies with strict policies.  The ones who take advantage are the ones who take advantage of any system.

If you are using an Unlimited Time Off policy, you still must provide many of the same guidelines as a traditional vacation policy.  For example, can an employee take vacation during the busiest part of the year?  Can the entire department take off at once?  What exactly is “unlimited”? All of this must be considered in the policy.


Vacation is one of the most important employee benefits.  It is a no-brainer to create a written policy; the details can be a little trickier.

Interested in the right vacation policy for your business?  Schedule a free consultation with Aspire HR today.