How Much Vacation Time Should You Offer?

How many vacation days are appropriate?
How many vacation days are appropriate?

As a consultant to small business I frequently get asked how much vacation is “the right amount.” So when offered this guest post I felt I should post this.

By Donna Stewart, writer for
How much paid time off is fair to give to your employees? How much is fair to your business and how much will it cost? Paid time off is an important issue for both employers and employees. For employees, it is a relatively (though not entirely) straightforward affair. For those on the management, executive, or entrepreneurial side, PTO is an issue with many moving parts.
What is Normal for Paid Time Off
In 2012, 84 percent of workers in private industry had paid time off. According to the Bureau of Labor Statistics, employers spent about as much on paid leave in 2012 as they did in 1992 (2.9 percent vs 2.8 percent, respectively). While a tenth of a percentage point isn’t entirely insignificant, it’s not much of a change, either.
What has changed in a big way is the type of paid leave that employees take. As a general rule, employees either don’t have or don’t take vacation time as they once did. Instead, more days are used for sick leave, family leave, and personal leave.
Personal Time Off Versus Vacations Days
Of course, personal leave days can be used for vacation. Employees are apt to take as large a chunk of personal days together as they would with vacation days, and personal days seem a little more flexible, necessitating less notice.
One benefit of personal days over vacation days is that “personal day” implies that your business works with the employee’s lifestyles. This is partially a practical difference, but also largely one of perception. In this case, the perceived difference is beneficial for employer and employee alike!
How Many Days?
In most businesses, the average paid leave is 10.5 days for employees with less than five years of employment at the same company, and 20 days for those with 10 or more years.
These averages are for employees who receive paid leave. Food service and other tipped workers, for example, don’t typically earn paid time off. Due to the way the data was gathered, this doesn’t count sick leave, but a few businesses may have figured sick leave into this average
Should You Let Your Employees “Roll Over” Time Off?
Some states, such as California, consider paid days off to be a form of wages. Such states consider a “use it or lose it” paid vacation policies to be a form of taking wages from the employee, and therefore illegal.
That doesn’t mean that employers have to let employees stack up paid leave days for years on end, however. Business owners and administrators can opt to pay employees for unused paid vacation days at the end of the year. For those worried about the accompanying headache of converting days off into wages earned, financial software or payroll providers can help keep things simple.

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