I cannot figure out the reason for a my husband’s employers very strange vacation policy - but I’m not at all sure there’s a factual answer, so here goes. Everyone must take vacation either the week that contains Christmas or the week that contains New Years. Supposedly, employees who don’t have enough PTO left will have to take the week unpaid - although in practice, that seems to happen only to the hourly employees. I don’t know if that’s some sort of glitch or if it’s intentional- but the written policy is that even exempt employees won’t be paid if they are out of PTO.
I can’t figure out the reason for this - I know there are companies that shut down for a week and advise employees to save vacation time because otherwise they won’t be paid for the shutdown. I also know there are places where employees might be able to take one week or the other but not both, so that everyone can have one of the weeks off if they want to. But this isn’t either one of those things and I’ve been going a little nuts for the last couple of years trying to figure out why. Any ideas?
My employer has been making people take a day or two of leave along with giving several paid holiday days during the week of Christmas the last few years, so they can close the buildings and turn down the heat. It’s a large employer with a lot of buildings, though, so if your husband’s company is small there must be some other reason. For sure it’s to save money on something, though.
It’s in partial shutdown because approximately half of the employees are off each week - but they aren’t saving anything substantial on payroll because after the first year, I’m sure the hourly employees just saved a week of vacation to use in December (rather than say September or April) and they’re giving the exempt employees an extra week of vacation (probably unintentionally, but after they were paid the first year even if they didn’t have any PTO left, most of them didn’t bother saving any). Vacation never rolled over to the next year, so that’s not a factor. The office and warehouse are still open since orders are still being taken (although fewer than there could be since half the sales reps are off each week) and deliveries are going out so they aren’t saving on electricity or heat. Shutting down altogether would make sense to me (and that’s what they did years ago ) , but this doesn’t.
It’s an accounting trick. Your accumulated payable time-off is an asset to the employee, and a liability to the employer. By shutting down for a few days and paying employees out of their accumulated time-off (which is already an asset belonging to the employee), they force employees to spend down their accrued time-off. Thus, the employer does not accrue new payroll expense during that time.
They may not be saving in payroll directly, but they may be saving in payroll for unproductive time. In other words they may figure that if they don’t have this rule, they may end up with some employees being paid for standing around not doing much, because other employees are away or because it’s a quiet time of year. It’s better to make employees take time off at a time when it’s quiet than when it’s busy.
In addition to the above, I wonder if there are some business numbers that they might be trying to make look good/not look bad. Like labor cost vs. revenue? I think vacation time does not factor into that, since it has already accrued to the employee. So, if sales go down in December, then making employees get paid from the leave bank rather than regular pay can perhaps keep the numbers looking good.
This is kind of the same as what the last two posts said as well, but focusing in on the idea of hitting a benchmark. I worked for someone once who was obsessed with labor percentage. The managers got called on the carpet whenever it was above an arbitrary number. It was a pain, as we were a customer service oriented business. So if it was slow and employees got sent home, and then it got busy again, things got ugly quickly. And we were always right around the same number, just slightly above, or slightly below it.
My company does a company shutdown the week of Dec 20-24, and everyone is going to take the following week off as well. They want us to use up our vacation time, and they shut down all the manufacturing plants.
Now we’ve been sold off and no longer have any manufacturing, and the majority of our employees are overseas. I wonder what our holiday schedule will be like next year.
One of my previous jobs had a weird thing where everytime on the 1 year anniversary of your first day on the job you had to take that entire week off and come back the week after your anniversary. It was unpaid but you could choose to use your sick leave that week if you really needed to get paid.
Nobody really have me a good explanation on why the job did that, supposedly by not working you a full 52 weeks and just 51 weeks a year it loop holed some law.
My guess is there isn’t much work going on at the end of the year so they are trying to force their employees to take their vacation when there isn’t much going on. Without this policy someone could burn their vacation in September and then spend the day standing around at work getting paid for not doing anything while. With the September vacation the other employees have to cover when they are gone while with the December vacation there is no work to cover.
I do something similar with my company. We shut the doors for two weeks for a paid holiday but I offer two less weeks of vacation then I would otherwise. This effectively force my employees to take vacation when there is less work going on then when I’d be scrambling to cover them. It also means I have to pay out less accrued vacation if someone leaves.
In fact, my first employer after college had a literal shutdown for 10 calendar days every year- from a few days prior to Xmas up to the first workday after NYE. We were a manufacturing facility so it made some actual sense, since a huge chunk of our hourly people were long-time employees and tended to take off time around then anyway.
Where it sucked was if you were a new hire and didn’t have enough vacation accrued, or God forbid, took some earlier in the year. Then you had to take unpaid leave, even if you wanted to work. I recall it being very frustrating in the almost 3 years I worked there, because I spent most of each year accumulating vacation time so that I wouldn’t have an unpaid stretch right after the holidays.
Personally I think the whole PTO concept (one bucket of combined vacation/sick time) is actually worse overall, but that’s a subject for another thread.
We do the same but we let people who don’t have the accrued time work if they want to - there’s always something to do, and we do need some skeleton staff. It usually works out.
My boss and I (2/3 of the IT department) ended up working out a compromise with the company leadership by the last Xmas I worked there - basically we pointed out that we still had to come in and change out the backup tapes on the schedule, because there were enough no-life engineers who would come in and work of their own accord during the shutdown, and we were having to work unpaid to support these clowns. Basically they agreed to pay us for the days we came in and changed the tapes, which was every other day, IIRC.
Plant shut downs at certain times of the year are not that uncommon depending on the industry. A two week “layoff” at Christmas/New Years may be to avoid paying statutory holiday pay, depending on the legislation or Collective Bargaining Agreement language in your jurisdiction.
If it’s an industry that tends not to be that busy at that time of the year anyway and also because employees want time off, it probably addresses several issues.
When Cisco bought the company I worked for, they talked a lot about the holiday shutdown. It turned out that they changed the policy from differentiating between sick and vacation time (plus paid company holidays roughly following the federal schedule).
So we got 20 total days of PTO, to be used as we saw fit - except for the 3 days that fell during the holiday shutdown, which came off the allotment - so we really got 17 total discretionary PTO days (actually measured in hours), and most people started at 3 weeks paid vacation meaning they really only had two days to be sick per year, and lost PTO in the transition.
Plus, of course the customers who didn’t shut down were not happy to wait until we returned to fix their problems, so I worked many PTO days anyway.
Sometimes it could be a legacy policy whose reasons are now lost to history. Changing employee handbooks can be a pain for HR so it’s easier to just leave them be. My first full-time job was at a small (under 20 employee) architecture firm with a policy that you weren’t supposed to use vacation time to extend holiday time off. That’s a pretty common thing to do around long weekends like Memorial Day, Labor Day, Thanksgiving, and sometimes the 4th of July. While it wasn’t strictly enforced, they still made a big fuss over it, so after a lot of pushback the bosses finally admitted that they didn’t have their own reason for the policy, other than they didn’t like having a lot of people out of the office at any one time. That was just how the template they used to create the office manual was already set up. Apparently it came from a client who owned some florist shops, and in a retail setting those holiday-adjacent days are prime shopping time, so in that context they needed to maintain staffing levels. That’s not applicable in a professional office environment though, and they eventually pulled that language out of the manual.
Wait, if vacation goes away Dec. 31, does the time off after Jan 1 come from last year or this year?
Unused vacation time is carried as a debit on the company books, so the reason might be to clear it out if they close books Dec. 31 and make the balance sheet look better. I worked for one company that, when things were bad, forced us to take the July 4 week off specifically to use vacation time up.
He has worked there a long time , but to the best of my recollection, the vacation time that is credited on Jan 1 2022 is based on how many months were worked in 2021 so that if someone is hired in July and gets two weeks vacation a year, they will be credited with one week of vacation on the next January 1. I could be wrong about that * - but it definitely isn’t a system where you get credited with X hours/days of vacation every pay period or for every Y hours worked.
It’s not to clear out vacation time - ever since he has worked there, they have had a “use it or lose it” policy. What’s become different in past few years is the mandatory week off that isn’t actually a shutdown which theoretically ** will be unpaid if someone has already used up all of their vacation time. Another bit of weirdness that I was reminded of the other day is that the VP of sales actually wants the all of the sales reps to take off the same week - which makes even less sense, because what are the warehouse workers and truck drivers who are working that week going to do if the sales reps aren’t making sales? That would really be paying for unproductive time.
People have come up with some ideas that I hadn’t thought of - most of them don’t really apply to this business ( for example , a numbers game wouldn’t matter, because it’s a family-owned company ) but I suppose the HR consulting company they now use might have come up with this policy based on other businesses they have dealt with.
* It could be that they get credited with two weeks vacation in Jan 1 2022 even if they were hired in October 2021. But they definitely get all vacation credited on Jan 1
** The hourly workers really aren’t paid if they’ve used up all of their vacation, but there appears to be some sort of glitch for salaried employees , since they get paid even if they already used up all of the vacation - but that could get fixed at any time.
Interesting. In the last few places I worked vacation accrued per pay period, but they had limits to accruals, but no use it or lose it policy.
AT&T had a vacation credit Jan. 1. When the Trivestiture happened, and the package was so good that 1/3 of my center left at once, the leave date was Jan. 15. That meant I got 6 weeks of vacation paid to me when I left. We also had some personal days, which didn’t accrue and didn’t get paid, so I spent half my last 2 weeks there taking them.
So anyone planning a layoff with the Jan 1 credit policy should plan on doing it late in the year.