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March 31, 2009

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To keep the bottom line healthy, a company needs a sick leave policy that works. That means a flexible policy that allows employees to take responsibility for balancing their work and personal needs.

Traditionally, some companies have set up silos "where you get 'x' number of days for sick days, and 'x' number of days for holidays and so on," says Terry Smith, a principal with William M. Mercer, Inc. in Princeton, NJ. "Companies have given sick, vacation, personal and floating days. I've seen some unusual silos - marriage, bereavement, divorce."

But as recruitment and retention became more difficult, companies began realizing that they needed to be more flexible in meeting employees' personal needs, he says. As a result, more forward-thinking companies now pool these various types of leave into a bank that employees can draw from.

"The message is: 'We are giving you flexibility, but also responsibility," Smith says. The amount of leave in the bank is generally determined by tenure and salary grade and may be used by employees for whatever they wish.

No 'Little White Lies'

"It allows employees to schedule days off without telling little white lies," Smith says. "An employee is going to think twice about calling in sick because there isn't the mentality that 'I have 10 sick days a year, I have to call in sick 10 days.'"

It also means employees don't feel cheated because they are not eligible for leave in certain categories, Smith says. "What good is leave for a sick child for an employee who does not have children dependent on his or her care?"

A few companies deduct one day off for a scheduled day of leave but deduct a day and part of another if the employee calls in unexpectedly. "They're trying to send the message that it's very difficult to schedule back-up help and if the employee knows something is coming up make arrangements ahead of time."

~How much time should the company put into the bank? On average, Smith sees banks set up for relatively new non-exempt employees with paid time off ranging from 17 or 18 days into the 20s. Professional, long-term employees could have 37 or 38 days - including vacation, personal or floating holidays and some scheduled holidays.

Seeding the Bank

"You've got to recognize the need for a healthy workforce. You have to properly 'seed' the bank at the beginning of the year and recognize that your population is going to be sick. "Employers can't be too stingy about the number of days. Do not let the amount of paid time off keep someone from joining the firm or cause them to leave the firm," he tells HRMN.

Flu Complications

The flu season can be special problem, Smith admits, because employees - especially new employees - may not have enough time in the bank. In many companies "a new hourly employee stricken with the flu may take unpaid leave later in the year. In certain cases we see employees granting extra days, but it's not that prevalent," he says.

Some companies reward employees for not taking any sick days, but that may mean rewarding them for coming in to work sick and spreading germs. "Especially in the healthcare setting, you don't want to be build in an incentive for sick people to come in to work," Smith says.

And some companies allow employees to buy and sell time off, which poses legal complications. To comply with Internal Revenue Service rulings, the time must be sold in the year preceding the year it is earned or, if it is sold in the same year, at a reduction of what it is worth.

If the company has a carry-over option, the best practice is to require employees to use at least half of their leave time each year, Smith says, and "preferably one week ought to be taken in a single block. Vacation is important for mental health."

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Filed Under: Workplace Issues

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