Paid Time Off: How Does Your Approach Measure Up?

It’s that time of year when everyone’s buzzing about vacations—whether it’s a beach getaway, a family road trip, or a summer camping and hiking adventure. People are looking forward to taking a break from their daily routines.

Paid vacation is a popular perk that helps employees recharge and stay motivated. This matters because a happy and energized team works harder, making your small business more competitive.

So, what’s your small business’s vacation policy? If you haven’t set one yet, now’s a great time to start. Here are some key points to think about before drafting your policy.

In the U.S., employers aren’t legally required to provide paid vacation. However, many business owners still offer it. Whether they want to treat others as they’d like to be treated, boost productivity, or both, they recognize that time off is vital for employee and business health.

When planning your vacation policy, consider your goals. Are you offering vacation time as a reward for long-term service, as an incentive to attract top talent, or to offset lower salaries?

The way you grant vacation time is your choice. Some common methods include:

If possible, get your employees’ input before finalizing your policy. They might have unique needs that could make one policy more appealing than another. Share the options you’re considering and ask for their feedback.

There are several additional details to iron out: What happens if an employee doesn’t use all their days? Can vacation time be banked or rolled over? Do part-time employees get any time off? Can employees be made to take their vacation days? How far in advance should they schedule their time off? Who needs to approve these requests? And what if multiple employees want the same day off?

Taking these points into account will help you create a vacation policy that benefits both your business and your team.