In many organizations employees are eager to take all their earned vacation days every year without fail. In some rare cases, organizations are happy to either pay an employee all or a portion of their accrued vacation earned “In Lieu” or allow employees to roll-over their vacation days year after year, leading to these employees accumulating a significant number of vacation days.
This practice, although it may be convenient for an organization, could lead to financial and other troubles in the long run.
Firstly, allowing a system of vacation pay in lieu leads to employees suffering from burn-out, causing a reduction in productivity.
Secondly, allowing employees to be paid in lieu or to roll over their vacation year-after-year can have a significant unplanned financial impact if:
the employee’s salary is increased
the employee resigns or is terminated, as the pay-out would be significantly more (e.g. an employee who has accrued 30 vacation days at a current rate of pay of $10 would be entitled to $2400 vacation pay. If this same employee was given a salary increase the following day of $12/hr he would be entitled to $2880 outstanding vacation pay. An increase of $480 overnight.
Tracking outstanding pay information although very useful for planning and budgeting can be quite onerous and time consuming if done manually with spreadsheets.
By using the CUBE system employers can keep detailed records on all employees vacation earned and taken, as well as outstanding vacation balances and cost. Check out the features of CUBE's Leave Management Module.”
Author: Perry Longville
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