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How to Create Vacation and Sick Leave Policy Template

Learn how to put together your vacation and sick leave policy template.
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Having a productive and motivated workforce is the holy grail of every business owner. 

However, stats show that 55% of employees are not engaged at work, while 14% are actively disengaged. In addition to this, the absenteeism rate is 3.2%, according to the Bureau of Labor Statistics. 

Stress, fatigue, and burnout contribute to such disheartening survey results, which is why you should have a vacation and sick leave policy template in place. 

This will allow you to cater to the needs of your employees and give them enough time to attend to their personal matters and pursue interests. Time off, be it for the purpose of a vacation, recovering from illness, or improving mental well-being, is crucial for a happy and highly engaged workforce. 

Here are some tips for putting together and optimizing your vacation and sick leave policy template. 

What Are the Benefits of Creating a Vacation and Sick Leave Policy Template?

Many employees struggle to meet the demands of their job and be up to standard. 

This will inevitably take a toll on their mental and physical health and, as a consequence, diminish their productivity and quality of work. 

In short, both your employees and your business will suffer, as it’s like a chain reaction. 

Plus, a vacation and sick leave policy template will help you offer an attractive benefits package, which can do wonders for your hiring and retention efforts. 

A fat paycheck isn’t the only reason why employees quit. 39% of participants in a survey about the reasons why employees quit stated working too many hours as a major trigger for giving two-weeks notice. 43% of them cited not having good benefits, including paid time off, as a huge deal breaker. 

Finally, if we bear in mind that absenteeism annually costs the US economy more than $2 billion, or between $16 to $81 (small employers) and $17 to $286 (large employers) per employee per year, it’s crystal clear why putting together a vacation and sick leave policy template is not an option but a necessity. 

What You Should Know Before You Create a Vacation and Sick Leave Policy Template

Laws are different when it comes to vacation, sick leave, and days off, so it’s essential to mention that there’s no one-size-fits-all solution for a vacation and sick leave policy template. 

In this section, we’ll talk about legal regulations and define some of the most common terms associated with the vacation and sick days policy. 

Vacation vs. Sick Leave vs. Paid Time Off

Before discussing a vacation and sick leave policy template, it’s necessary to distinguish between these three overlapping concepts. That will help you better understand what kind of benefits package to offer to your employees. 

Vacation Leave 

This is one of the most common benefits that companies offer, and it’s vital for preventing burnout. 

It’s usually requested and approved in advance.  

Although there’s no federal law that requires paid vacation time, employers who decide to offer their employees full salary for this period have to follow certain rules. These include 

  • Consistent accrual standards to prevent discrimination
  • Adhering to state restrictions, such as regulations regarding the accrual of vacation time, whether you can tell employees when to use their vacation, or who can be excluded from the benefits package. 

Also, some individual states and jurisdictions mandate paid time off that employees can use for any purpose they need. For example, in Maine, businesses with more than 10 employees have to provide paid time off. In Nevada, this regulation applies to those with more than 50 employees.   

Vacation time is used for rest and employees aren’t supposed to spend their vacation days for illnesses. However, if an employee doesn’t have any more sick days left, then they can use vacation time. 

Since employees in private companies aren’t entitled to paid vacation time, there’s no legal requirement as to how many days they get. On average, employers in the US typically offer 10 paid vacation days a year.

Sick Leave 

Sick leave can be unplanned and planned, depending on the medical issue in question. 

Also, it can be paid or unpaid. 

It’s worth mentioning that federal law doesn’t require paid sick time, but there are state laws and city ordinances that mandate paid sick leave for employees. Moreover, these laws also allow employees to use their sick leave to look after a family member. 

States that require employers to provide paid sick leave include:

vacation sick leave policy

Even if your state doesn’t require you to provide paid sick leave, by failing to do so, you leave employees no option but to come to work even when they’re not feeling well. Apart from being unproductive, this will increase the odds of spreading infectious diseases. 

What counts as a sick day? 

As simple and straightforward as it may seem, you should still define this in your sick leave policy. Employees are entitled to a sick day when they feel unwell, when they’re injured, or when they have to look after a family member (child, spouse, parent, or another dependent) that requires medical attention. 

If you’re required to provide sick leave or decide to do so, think about the following terms and include them in your vacation and sick leave policy template: 

  • Do your employees need to obtain a doctor’s note when requesting sick leave? 
  • Will you pay your employees for accrued sick leave when the employment is terminated? 
  • How many days of paid sick leave can every employee get? 

So, how many sick days do most companies allow?

Generally speaking, in most companies, employees can earn between 5 and 9 days of paid sick leave, and the average is 8

It’s also worth mentioning that your vacation and sick leave policy template should determine how sick leave is accrued. Commonly, when it’s paid, sick leave usually has to be accrued, that is, earned or accumulated. 

As a rule of thumb, for every month they work, employees accrue one-half of a sick day. 

Also, employees can’t use their paid sick leave before they accrue it.

What about unpaid sick leave?  

In this case, thanks to the Americans With Disabilities Act (ADA) and the Family and Medical Leave Act (FMLA), federal law outlines that every employee has the right to unpaid sick leave. 

As you can see, there are different laws, acts, and regulations, both federal and state, that you have to comply with. So, before you create your vacation and sick leave policy template, make sure you understand what provisions to include in it.  

Paid Time Off (PTO) Leave 

PTO is a model for combining paid sick leave and vacation into a single pool of off days. 

The reason why many employers decide to bundle up paid time off into a lump sum that employees can use as they wish is to 

  • Put an end to sick leave abuse 
  • Offer employees the flexibility to use their days off as it suits them. 

For example, if an employee has accrued 20 days of PTO, they can use 10 days for vacation, 7 days as sick leave, and the remaining three days for personal reasons. 

What happens if an employee doesn’t use all their paid time off by the end of the year? 

It depends on the state since there are separate provisions that regulate this area.  

There are two scenarios: 

  • In case your state allows the “use it or lose it” policy, then all unused days expire at the end of the year. 
  • In case your state doesn’t allow the “use it or lose it” policy, you can allow your employees to roll over the time they didn’t use to the next year or compensate them financially. 

These provisions should also be clearly stated in your vacation and sick leave policy template. 


What to Consider When Creating a Vacation and Sick Leave Policy Template?

Here are some things you should factor in when drafting your vacation and sick leave policy. 

  1. Who’s Eligible? 

Think about the eligibility of your employees for sick leave and vacation. Many employers offer paid days off only to their full-time workforce, but some also provide this perk to part-time employees. 

  1. Determine Accrual Rate

Vacation, sick, and time off are benefits that are accrued over time, and you need to establish how much employees earn every week or month. 

This way, your employees will know what to expect and how much time they can get at any point. 

  1. Guidelines on How to Use Vacation and Sick Time

When talking about sick time, it’s not exactly something one can plan. 

People wake up only to discover that they have a fever or some other symptom and call in sick, giving you no more than an hour’s notice. 

But it’s possible to plan some absences. 

That’s why your vacation and sick leave policy template should include that employees are required to announce planned doctor’s appointments, and if it’s ad hoc, then let you know at least before their shift is about to start. 

To sum up, an effective sick leave policy will spell out the following: 

  • How much time is available to employees
  • Whether the vacation/sick time will be paid or unpaid or combined
  • Whether employees should provide evidence to get approval
  • Whether there are consequences for violating the policy 
  • Request procedure
  • Accrual and rollover provisions. 

How Can Timeero Help You? 

Regardless of the time-off model you opt for, keeping track of your employees’ vacation, personal, and sick leave is a complex endeavor. 

Instead of using a manual method that is both time-consuming and error-prone, automate the process with Timeero. 

Our Time Off Tracking feature facilitates employee vacation and PTO management. 

It allows you to:

  • Approve or deny requests quickly and easily from your mobile or email 
  • Track your employees’ PTO 
  • Get request notifications. 

You don’t have to worry about how many days off a particular employee has or whether you have calculated their PTO properly. 

Also, in case an employee calls in sick an hour before their shift, you can use Timeero’s powerful scheduling functionality to quickly find a replacement. 

Plus, thanks to payroll integrations, you can export time-tracking data to QuickBooks or any other app you use.  

So, How to Cover All This With Your Vacation and Sick Leave Policy Template? 

First of all, make sure you understand what your state mandates and make sure to comply. Also, remember that offering a generous vacation and sick leave benefits package will be an excellent investment because you’ll attract and retain top talent. Finally, check out our vacation and sick leave policy template for inspiration.

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