March 2011   
The Vacation Policy Conundrum
Defining it Right AND Overcoming the Tracking Nightmare


Summertime is vacation season, and believe it or not, summer really will be coming soon - even though it doesn't even seem like spring yet!

One area that employers struggle with the most is their Vacation and Paid Time Off Policy. Have you ever asked yourself these questions?
  1. How much vacation time should I be providing to my employees?
  2. How can I get employees to take time off when it is easier on the company?
  3. Do I need to give paid sick days, and how many bereavement days are appropriate?
  4. How can I avoid vacation time payouts at the end of the year or at termination?
  5. How does an accrual system work and why is it valuable?  
  6. How do I enforce the policy that is already in place? 
  7. How in the world do I track all of this?
Paid Time Off (or PTO) policies should explain the rules for all  types of time off that an employee can take - vacation, sick, personal, holiday, bereavement, or any other.

PTO policies are NOT one-size-fits-all. While it is a good idea to make sure that your policy is competitive in the labor market today, it should be designed to meet the needs of YOUR organization. Once you have laid out a plan, document it. Include information about 'black out' dates (times during which no vacation time is allowed). Describe the steps that an employee must take in order to utilize PTO - written request? email to their supervisor? company form to be filled out? Describe what happens if an employee doesn't use up their PTO by the end of the year. Include details about how and when PTO time is earned. If you can't explain the plan in writing, you won't be able to communicate it to employees, and you won't be able to administer it consistently. Distribute a copy of the written plan to all employees and have them sign off on it. This will encourage them to read it and to ask questions sooner rather than later. The goal is to avoid any  misunderstandings.

The Benefits of an Accrual System

If you give you employees two weeks of vacation a year beginning in January, and an employee leaves employment in February without having used any of those days off, you are required by law to pay out those two weeks of vacation time upon their departure. If, however, you allow employees two weeks of vacation per year to be accrued at the rate of one day per month, you only owe the employee two days of pay (one for January and one for February) when they leave. An accrual system works like a bank account. The employer "deposits" time off into the employee's account as it is earned. The employee "withdraws" time off as they use it. What ever amount is in the PTO bank when an employee leaves is the amount that will be paid. An employer can allow "borrowing" of PTO time. If an employee leaves employment with a negative balance, then the employer has the right to deduct the amount owed from the final paycheck. By accruing time instead of simply awarding it, the employer can better control the cost of this benefit.



The only way to enforce a PTO policy is to stand by the rules, and to say "NO" when necessary. If 30 days notice is required in order to take PTO, and an employee comes to you and asks to take next week off, say NO! If you have a use it or lose it policy, and an employee comes to you at the end of the year and wants to be paid out for the five PTO days that he failed to utilize, say NO! If the policy stipulates that no PTO days can be taken in December due to high customer demand, and an employee wants to go to his cousin's wedding in Utah December 14th, say NO!  If employees don't follow the rules, then disciplinary action should ensue. If word gets out that the PTO rules are not being enforced, you might as well throw the whole policy out the window. If, however, employees discover that the rules WILL be enforced, they WILL follow them. You, in turn, will gain greater control over staffing levels throughout the year. 





Keeping track of PTO balances can be a HUGE headache. Why? Because customized policies designed to truly meet the needs of the business are too complex to be fully implemented by payroll systems, and most payroll companies will not (and cannot) police PTO usage on behalf of their client.  If you have encountered this difficulty, talk to Advantage Employment. Not only will we tailor a tracking system to meet your needs, we will maintain it for you. As we process payroll, we will record all PTO utilization, monitor accrual rates, and provide balance information directly to your employees. If an employee's usage does not comply with the policy, we will notify you. This will improve your efficiency, reduce errors, and keep your employees happy.



A written Vacation Policy is essential to any small business. If the policy is defined correctly, and hours are tracked properly, the employees AND you the employer will benefit. If you would like to talk about your PTO policies, call me!


Sandra Teague, SPHR
Advantage Employment, Inc.

Is an Offer Letter Necessary When Hiring a New Employee?

You've just completed a great interview, and have decided that the person sitting across the table from you is the right fit for the open position.  You say, "Can you start Monday?" What happens next?

Putting someone to work for your company based on a verbal discussion of terms is certainly legal, however, it might lead to disappointments, misunderstandings, and even conflict.

The Purpose of an Offer Letter

An offer letter should simply confirm in writing what has already been discussed and agreed to during the interview process. Maybe during the interview you said "We offer paid vacation time comparable to other companies in the area", but your soon-to-be new employee heard "We offer paid vacation comparable to the four weeks you are getting right now."  The candidate takes the job, and then finds out that new hires get two weeks of vacation, and only after they have been on the job for six months. Yikes! That could lead to a big problem. 

What to Include


In order to avoid any misunderstandings, here are a few things that can be included: 

  1. Title of the position  
  2. Salary or hourly rate offered
  3. BRIEF explanation of the duties
  4. Expected work hours 
  5. Commission information
  6. Vacation time available
  7. Benefits available
  8. Expense reimbursements offered

An Offer Letter is NOT a contract. In fact, it would be smart to state that right in the letter. It is simply a statement of the initial terms of employment that you have agreed to.  


Need Help?


If done correctly, each offer letter should be unique. The letter should be welcoming, not filled with legal jargon. It should send the message "We're excited to be entering into this employment relationship with you." If you need help writing an offer letter for you next new hire, contact Advantage Employment. We would love to assist. 


How HR Outsourcing Saves Money
In good times or bad, companies are always looking for ways to cut costs and function better, yet more efficiently. A key target area is employment. While wages and benefits should be maintained at competitive levels, the cost of administering employment can be reduced.  Here are just a few ways that Advantage Employment helps its clients:
  • Eliminate the internal cost of an HR administrator and outsource those duties for less.
  • Stop allocating high level executive time to handle sensitive or confidential HR issues. Focus on your business instead.
  • Stop paying an outside payroll provider steep rates for minimal do-it-yourself service.
  • Reduce your exposure to dangerous lawsuits by enlisting the help of HR professionals. Show your employees that policies are sound, and prevent trouble makers from taking advantage of a loosely run organization.
  • Reduce turnover in your staff by maximizing their understanding and utilization of the employee benefits that you already provide to them.
  • Increase employee loyalty by providing them a resource to solve any employment question or problem.
  • Don't lose a protestable unemployment claim. Each person who gets unemployment benefits who shouldn't can cost your company $4K to $6K in increased taxes each year.
  • Don't let workers comp claims malinger. Improper case management and lack of a return-to-work plan will increase the cost of the claim and increase your mod.
Things You Should Know
Is an Offer Letter Necessary When Hiring a New Employee?
How HR Outsourcing Saves Money

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