[Stuart Wingate]

As a young company, we are going through many of the start up questions that are already carved in stone elsewhere -- and the biggest one we are struggling with is vacation/sick leave time.

We have a very generous 15 vacation days / 5 personal/sick days / 8 holidays.

I'd like to ask everyone out there how they handle the following:

• Accrual of days: What is the best method for accruing days? By hours worked, days worked or a set number of days per month worked?
• Anniversary vs. Calendar date Accrual: What is the easiest way to mange the time off? Based on hire date of the employee or annually? For instance each year, on January 1, the clock resets for the entire company vs. individually for each person.
• Carryover of unused vacation days: Here's one where we have one department working almost 24/7 to build out OfficeArrow.com so they don't have the time to take vacation by year's end. So, how much should be allowed to carry over? And when would that expire.

So, please help out your OfficeArrow staff by answering some of these questions for us!

Thanks!

[Jodith]

These are good questions that you may want to talk to an HR professional about. Here's my take on these:

1. Accrual of days - How you accrue is going to be based on your staff. Is most everyone hourly part-time? Then you'd be better off going by hours worked to be fair to everyone. Is everyone salaried? Then a monthly accrual plan is nice and easy to calculate. Most places I've worked have had a set monthly accrual for full-time workers, and part-timers accrued based on their FTE that month, up to the full-time rate.

2. Annual vs. Calendar year accrual is a matter of preference. Annual is easier for accounting; calendar makes sure someone who's been there for a month doesn't get a 2 year rate instead of a 1 year rate. You have to decide what is easiest for you.

3. Vacation accrual can be a financial problem for the company. If you allow vacation to accrue past year end, then you are liable for vacation payouts when someone leaves the company. Most companies have either a calendar year, use it or lose it plan, or they have a maximum amount of accrual that you can gain, with the employee losing any accrued vacation over the max if they don't take their time off. You need to come up with a method that balances the needs of the employee (and the ability to attract and retain employees) with the financial needs of the company. If you go with the calendar year plan, you can have a policy for carryover if work reasons keep someone from using their vacation by year end, usually to be used within the first month to three months after the first of the year, with supervisor approval.

As I said, these can be complex decisions to make and I do recommend that you speak with an HR professional about them as well as with your accountant. State laws vary on these issues. Some mandate vacation payouts, some mandate that you must have cash on hand to pay out all accrued vacation at one time if necessary. So, check the laws in your state and get some good financial and HR advice before setting policies in stone.