Organizational Wellness

How HR Leaders Can Get the Most from Their Vacation Time Policy

Dec 13, 2022
Last Updated May 16, 2024

How do you foster loyal employees who will stick around for the long run? Many companies find that giving them a break from the stress and demands of their everyday life works well. While you aren’t legally required to offer vacation time, companies that want to prioritize employee wellness often do.

There are some major advantages of including vacation time in your benefits package, but like every policy, there are challenges, too. Understanding the ins and outs of vacation time can help HR leaders make the best decision for their organization.


What is Vacation Time?

Vacation time is an allotted period that employees can use to take time off of work at their leisure. People typically use this policy to get away from work and rest or travel. Many people and organizations consider vacation time a basic need for achieving work-life wellness and preventing burnout.

The Difference Between Vacation Time and PTO 

It’s easy to confuse vacation time and PTO, as the terms are often used interchangeably. However, there are key distinctions between the two types of OOO.

Paid Time Off

Paid time off is any time an employee gets paid while away from work. This includes vacation time in addition to other reasons to be away from work. Some examples of common PTO are:

Many organizations include paid vacation on this list, though not all offer paid vacation time. However, when they do, vacation time would fall under PTO. Some companies offer unlimited PTO, so in those cases, you may not even specify the vacation time versus other PTO.

There are several key PTO benefits, such as:

  • More flexibility for employees
  • More honesty when using sick days
  • Less tracking for managers and HR to take care of

PTO can be an attractive benefit to employees and helps you stand out from competing employers. Ultimately, it can be one of the most effective tools for building better relationships between employees and management to meet the needs of employees.

Vacation Time

Vacation policies vary from company to company. The average vacation benefit for employees that have been with a company at least one year is 10 to 14 days, according to the Bureau of Labor and Statistics. This increases to 15 to 19 days a year after 10 years of service. Other notable elements of vacation time include:

  • Vacation policy types. Some companies will throw your vacation time into your PTO policy or with your sick days
  • Paid vs. unpaid. Vacation time can be paid or unpaid, and some employees may want to negotiate for that PTO when considered for hire.
  • Who is typically eligible. Many companies only offer vacation time to full-time employees or add other stipulations.
  • Accrued vacation time. Some policies allow you to accrue vacation time, meaning you can let a certain amount of days build over time and then use those days to take a prolonged break. You can also sometimes let vacation days roll over into the next year (though some policies require you to use those days by a specific date).

Are Companies Required to Have a Vacation Policy?

There aren’t any federal or state laws that require employers to provide employees with unpaid or paid vacation time. However, many organizations bring greater contentment to their employees and get better performance from them, too. Seventy-six percent of American workers said it is very important that employers provide paid vacation time according to Zippia, which is a huge chunk of the workforce. Employers that encourage their teams to use vacation time also help create a more rewarding work environment and company culture.

Vacation time also varies depending on the industry. For example, 95% of employees in manufacturing and finance have access to vacation time, according to the BLS, which is the highest across industries. At the very least, it’s wise to research industry standards and see what your peers offer so that you remain competitive for talent acquisition.

Pros and Cons of a Vacation Policy

A vacation policy is an attractive aspect of any benefits package, but there are also pitfalls you should be aware of when constructing your vacation time policy and the related PTO.


  • Motivates employees. Knowing that there are breaks ahead can motivate your employees to work harder so they can fully enjoy their vacation time.
  • Attracts potential recruits. If you have a more competitive compensation package, such as vacation time benefits, you often bring in the top talent that you seek.
  • Increased employee productivity and engagement. When employees deal with burnout, it can take a serious toll on their ability to perform at work and stay productive. Set vacation time gives them the freedom (especially when it’s encouraged by employers) to recharge and come back more engaged than ever.
  • Relaxed and innovative employees. Having employers who help others take the time they need to regroup creates employees who are relaxed and manage their stress. This also means that teams enjoy greater clarity at work since they know their leaders support their time off.


  • May create staffing problems. Unorganized vacation time can leave the rest of your team in the lurch, so it’s best to have extra structure and support for those times.
  • Employees may take all their time off when not expected. Depending on the structure of your policy, employees may take time off for their vacation during inconvenient times that you have little control over.
  • PTO versus vacation time. Employees may use up all their PTO time on vacations, leaving no sick days and then consequently coming to work sick.
  • Unused time off may accrue.  Accrued vacation time can be an appealing aspect of their PTO, but it can cost your company more in the end when that flexibility is offered.

How to Encourage Employees to Use Vacation Time

Sometimes, even with set vacation time available to employees, people struggle to actually take time off. It often helps to build a work culture that makes your coworkers feel comfortable and motivated to use their well-earned time off. 

If you do decide to offer vacation time at your company, here are some ways to help employees get the most out of it.

Leading by Example

When company leaders don’t take time off, it may send a message to employees that they shouldn’t either. To combat this, executives and managers can model expectations by using their vacation time — and talk positively about their experience. 

Showing that leaders take time off too can be as simple as acknowledging someone’s absence and celebrating their priority to unwind. You can even create an informal channel for people to share vacation highlights and ask managers to celebrate their time off. This can help break down the misconception that taking a vacation might be viewed negatively.

Promoting the Benefits

You can show your support for vacation time by reminding employees of its advantages. For example, consider emphasizing how rest is important for mental wellness, creativity, and long-term performance. Sharing success stories of employees who felt re-energized after their vacations can also be very motivating. 

This messaging reminds employees that HR cares about them as people — and that the entire company is impacted when employees burn out. Whether it’s including an article about preventing burnout in your internal newsletter or having the occasional wellness workshop, help your employees remember the importance of time off.

Simplifying the Vacation Request Process

Another way to help employees take time off is to reduce the difficulty of getting approved. Complicated procedures can discourage employees or make them feel like it’s not worth the hassle. 

You can focus on making the process as straightforward as possible as they make their vacation time requests. Emphasize that requests will be handled fairly and promptly, which may mean investing in some HR tools. For example, many companies rely on human resource management platforms or calendar apps to process requests and stay organized.

Addressing Workload Concerns

Many employees worry about how their work may pile up during their absence. Managers can help by planning ahead and putting systems in place when the team is down a member. 

This could look like temporarily redistributing tasks or hiring short-term help. Especially if you have employees request vacation time with plenty of advance notice, both managers and employees can be better prepared and more relaxed.

Creating a No-Contact Policy During Vacations

To truly unplug, employees often need uninterrupted time away from their work responsibilities. You can help employees fully detach, both physically and mentally, with a no-contact policy. 

This means establishing clear boundaries with fellow coworkers that anyone using their vacation time should not be contacted for work-related matters unless it’s an emergency. Give your team clear instructions on how to manage their additional workload and offer extra support when questions arise before someone returns to work.

Help Employees Feel Energized Year-Round

Wellness benefits like vacation time are a critical part of your organization’s talent retention: a full 87% say their wellbeing is as important as their salary. 

In addition to a robust vacation package, you can meet these needs with a wellbeing program. Supporting your staffers with tools like meditation apps and gym memberships can help them experience the rejuvenation of a vacation in between trips. 

For help making your benefits package more competitive, talk to a Wellbeing Specialist!

Company healthcare costs drop by up to 35% with Wellhub! (* Based on proprietary research comparing healthcare costs of active Wellhub users to non-users.) Talk to a Wellbeing Specialist to see how we can help reduce your healthcare spending!



Wellhub Editorial Team

The Wellhub Editorial Team empowers HR leaders to support worker wellbeing. Our original research, trend analyses, and helpful how-tos provide the tools they need to improve workforce wellness in today's fast-shifting professional landscape.


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