HRM textbook

CHAPTER 13 BENEFITS AND SERVICES 427
Vacations and Holidays
Most firms offer vacation leave benefits. About 90% of full time workers and 40% of
part timers get paid holidays, an average of 8 paid holidays off. 11 The most common
U.S. paid holidays include New Year s Day, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day, and Christmas Day. Other common holidays include Martin
Luther King, Jr. Day, Good Friday, Presidents Day, Veterans Day, the Friday after
Thanksgiving, and the days before Christmas Day and New Year s Day. 12 On average,
American workers get about 9 days of vacation leave after 1 year s employment, about
14 days after 5 years, and 17 after 10 years. 13 Elsewhere, vacation allowances vary from 6
days in Mexico to 10 days in Japan to 25 days in Sweden and France.
Firms have to address several holiday- and vacation-related policy issues. They
must decide, of course, how many days off employees will get, and which days (if any)
will be the paid holidays. Other vacation policy decisions include:
* Will employees get their regular base pay while on vacation, or vacation pay based
on average earnings (which may include overtime)?
* Will you pay employees for accrued vacation time if they leave before taking their
vacations?
* Will you pay employees for a holiday if they don t come to work the day before
and the day after the holiday?
* And, should we pay some premium such as time and a half when employees
must work on holidays?
More firms are moving to a more flexible vacation leave approach. For example, IBM
gives each of its 350,000 plus employees at least 3 weeks vacation. However,
IBM doesn t formally track how much vacation each person takes. Instead, employees
simply make informal vacation arrangements with their direct supervisors. 14
Wage surveys and Web sites like www.hrtools.com provide sample vacation policies
for inclusion in the firm s employee manual.
SOME LEGAL ASPECTS OF VACATIONS AND HOLIDAYS Although federal
law does not require vacation benefits, the employer must still formulate vacation
policy with care. As an example, many employers vacation policies say vacation pay
accrues, say, on a biweekly basis. By doing so, these employers obligate themselves to
pay employees pro rata vacation pay when they leave the firm. But if the employer s
vacation policy requires that a new employee pass his or her first employment
anniversary before becoming entitled to a vacation, the employee gets no vacation pay
if he or she leaves during that first year.
One frequent question is whether the employer can cancel an employee s scheduled
vacation, for instance, due to a rush of orders. Here it s important that the employer
formulate its vacation policy so it s clear that the employer reserves the right to require
vacation cancellation and rescheduling if production so demands.
Sick Leave
Sick leave provides pay to employees when they re out of work due to illness. Most
sick leave policies grant full pay for a specified number of sick days usually up
to about 12 per year. The sick days usually accumulate at the rate of, say, 1 day per
month of service.
Sick leave is problematical for employers. The problem is that while many employees
use their sick days only when sick, others use it whether sick or not. In one survey,
personal illnesses accounted for only about 45% of unscheduled sick leave absences.
Family issues (27%), personal needs (13%), and a mentality of entitlement (9%) were
other reasons cited. 15 Absenteeism costs U.S. employers perhaps $100 billion per year,
with personal illness accounting for about a third of the absences. 16
sick leave
Provides pay to an employee when he or she
is out of work because of illness.