How to Formulate Vacation and Holiday Pay Policies

How to Formulate Vacation and Holiday Pay Policies
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Holiday Pay Policies for a Business Organization

It is important for any company to have well-defined vacation and holiday pay policies. A pre-determined policy ensures that there is no cause for a conflict later on between the employee and the employer, and no chance of discrimination in dealing of such matters for different employees. The policies must be clearly communicated to the employees and mutually agreed. As far as possible, the policies should be made informed in writing or made a part of the employment contract. If any changes in the policies are introduced at any time, they must be informed in writing to all the employees.

Sample Policy for Holiday Pay

The following is the list of annual holidays observed by our organization:

  • New Year Day
  • American Independence Day
  • Labor Day
  • Thanksgiving Day
  • Christmas

Only full-time employees will be eligible to receive a full day’s pay for these holidays, subject to the condition that the employee must have worked a full day preceding and succeeding the holiday, except in unavoidable circumstances such as sickness, for which a medical certificate must be provided.

Any shift differentials applicable to any employees will not apply on these holidays, which will be payable only at the regular pay rate.

Holiday pay will not be applicable under the following circumstances:

  • The employee has joined the organization less than 120 days prior to the holiday.
  • The employee has been temporarily laid-off.
  • The employee is not a full-time or permanent employee of the company.
  • The employee is already on a leave of absence at the time of the holiday.

Employees who work on special duty during any of these holidays on company’s request, will receive their regular play in addition to the holiday pay.

In the event that any of the listed paid holidays fall on a Saturday, the holiday will be observed on the preceding Friday. Alternatively, if the holiday falls on a Sunday, the holiday will be observed on the succeeding Monday.

Provision for Floating Holidays

Apart from the listed annual paid holidays, every full-time employee will be eligible to receive three floating holidays per year. These are flexible holidays which can be chosen by the employees as per their preference. If an employee wants to combine a floating holiday with another holiday to have an extended vacation, it will be permissible to do so under this provision. A formal request for availing such floating holidays must be made at least one week prior to the scheduled holiday.

Paid Vacation Time

All full-time employees who have completed at least two years with the organization will be eligible to receive 5 days of paid vacation each year. This will be in addition to the scheduled and floating holidays provided by the company. All vacation applications must be approved by the HR department at least 15 days in advance. The vacation pay will be computed on the regular pay rate of the employee, and any overtime premium or shift differentials will be excluded from this pay. The company reserves the right to reject or cancel a vacation request for a particular year if the circumstances necessitate such an action.

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