Just because employees have time off available doesn’t always mean they take it. That’s one reason some companies opt for a mandatory vacation policy, also called mandatory time off (MTO). This can be beneficial for all parties, from improving employees’ work-life balance to helping a company avoid large PTO payouts to employees who leave after accumulating a large amount of unused paid time off.
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Key takeaways about mandatory vacation
- Mandatory vacation policies require employees to take a minimum amount of paid time off each year
- Employers can use MTO policies as part of recruitment efforts and may experience increased overall productivity
- Employees can reduce stress and gain peace of mind because of the flexibility to use time off when needed
In this employer’s guide, we’ll explain how these policies work, how they compare to other types of vacation policies, and some guidelines for companies that want to add MTO to the mix.
What is mandatory vacation?
First things first, a mandatory vacation policy is a workplace practice that requires employees to take a predetermined minimum amount of paid time off (PTO) each year. They are designed so that employees actually use their accrued vacation time, rather than letting it accumulate or in some cases, even forfeiting it.
Now that we better understand what mandatory vacation is, next let’s cover some of the characteristics of MTO that employers and employees appreciate.
Benefits of mandatory vacation
Mandatory time off has benefits for both employees and employers that can make good business sense.
Advantages for employers
There are several pros that a mandatory vacation policy can have for employers, including:
- Avoiding PTO payouts: As previously mentioned, some states require employers to pay out a departing employee’s unused PTO. Requiring mandatory vacation time can help employers avoid potentially large payments.
- Recruitment: Companies that require time off are attractive to many employees because it shows that an employer cares about their well-being — not just their the work they perform.
- More productive employees: Studies show that employees who use their vacation time are more productive and more creative than those who don’t. This offsets the lost labor when an employee is out of the office.
Advantages for employees
The advantages of a mandatory leave policy for employees are perhaps more obvious:
- Vacation: First off, employees are “forced” to take a vacation every year. In all seriousness, this can have a direct impact on the well-being of workers.
- Flexibility: Minimum PTO allows staffers to use it when they need it, so if when life events come up — from having to miss work for a wedding, funeral, or an unexpected reason — they have the flexibility to step away.
- Prevents burnout: Taking a break can help team members “recharge the batteries” and return to work feeling refreshed and more productive.
Comparison with other types of leave
Are vacation days mandatory? Not in most states. But different companies employ a range of PTO policies. That’s essential for HR compliance in many states. However, mandatory vacation differs from other common types of leave.
Mandatory vacation vs. sick leave
Sick leave is an optional PTO period that employees can take for a variety of reasons. Usually, these include personal illness or injury, family care, bereavement, or exposure to a contagious disease. While mandatory vacation pushes you to take time off, sick leave is available only for health-related issues.
Mandatory vacation vs. personal leave
A personal leave is when an employee takes time off for personal reasons. Again, unlike mandatory vacation, it is optional.
Moving mandatory vacation policies forward
If your organization is considering adding MTO to the mix, here’s some things to keep in mind before moving forward.
Communicate and educate employees
For people who regularly take advantage of the time they earn, a mandatory vacation policy is likely music to their ears. For others, MTO may take some getting used to. It could be a good idea to organize a company-wide meeting to explain the new policy, highlighting its benefits for employee well-being, addressing concerns, and answering questions. This approach can help employees understand the policy’s purpose and ease the transition, especially for those who may feel guilty about taking time off. it can also be a good idea to add a section to your employee handbook, explaining how the policy works, when it was first implemented, and who employees should go to if they have questions about using the time throughout the year.
Creating flexibility
Because not all employees will think a year ahead to plan their vacation time, there’s the possibility that mandatory vacations can disrupt workflow — especially if your company has traditionally busy times of the year. As such, you may want to build some flexibility into your program in order to accommodate team members. For instance, if an e-commerce business is in the heart of its holiday promotions and an essential employee hasn’t taken their mandatory time off, you may want to make an exception and let them take their leave next year.
Tracking and policy reminders
If adding mandatory time off is the cards just remember you’ll want to have a system for tracking employee time off (whether it’s a spreadsheet or HR software). Human resources teams may also want to send a reminder to staffers once a quarter (or whatever their comfort level), using email or an internal messaging system to make sure they are aware of — and taking advantage of the policy.
Why do companies consider mandatory vacation policies?
Mandatory vacation policies can have advantages for both employers and employees. Research shows that workers who take time off tend to be more productive, happier, and even more energetic upon returning to work. For companies, these policies attract job seekers, retain top talent, and potentially even boost overall productivity.
If you’re considering a mandatory vacation policy, it can be a good idea to invest in HR tools to manage it (instead of trying to keep it all in spreadsheets). OnPay can help you manage your PTO policy, and make sure payroll and human resources operations are running smoothly.
Take a tour to see how easy payroll can be.
Jon Davis is the Sr. Content Marketing Manager at OnPay. He has over 15 years of experience writing for small and growing businesses. Jon lives and works in Atlanta.