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What is Paid Vacation?

Tricia Christensen
Updated May 16, 2024
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Paid vacation is a benefit offered to employees that may be voluntary on the part of the company or state-mandated. The most generous paid time packages exist in the European Union. Especially where employees do not have mandated amount of paid time, amount of time given may depend on a variety of factors — not least among these is the company’s rules regarding paid vacation.

Where paid vacation exists, workers may accrue time on a weekly basis adding a certain amount of hours per week to their vacation total. Other companies give employees access to all their year's vacation time at the beginning of employment. The accrual method is more common, however. If employees are laid off during a work year, the company might have to pay them the amount of vacation time accrued, although this is not always the case. Moreover some vacation time is offered on a “use it or lose it” basis and employees may have to take the time within a certain established period or forfeit it.

A company can offer paid vacation and sick time, or they may alternately offer something called paid time off (PTO) or flexible PTO. Flexible PTO may lump vacation and sick time together so that employees can take days as needed for any reason. This can help prevent workers from calling in sick when they truly aren’t. Other examples of PTO include pay for things like serving on a jury, bereavement, or holiday pay.

In busy companies, paid vacation doesn’t necessarily translate to actually getting to take a vacation. Especially in countries where vacation time is a benefit and not a right, employers can frown upon people taking time off and may restrict their right to take certain times off during the year. Some companies may additionally hamper an employee’s right to choose vacation times by having things like yearly shutdowns, especially around the holidays. This is common in many factory jobs and most employees end up having to use most accrued vacation time in order to get paid while the company offers no work.

Some employers don’t have paid vacation but may allow employees to take unpaid leave for a specified period each year. In countries like the US, where paid vacation is not mandated, there are still some things that a company of medium to large size must allow. Employees who have worked full time for at least a year with a company can take six weeks of unpaid family leave to deal with family emergencies, births of children, or the illness of a family member, as mandated by the Family and Medical Leave Act.

SmartCapitalMind is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Tricia Christensen
By Tricia Christensen
With a Literature degree from Sonoma State University and years of experience as a SmartCapitalMind contributor, Tricia Christensen is based in Northern California and brings a wealth of knowledge and passion to her writing. Her wide-ranging interests include reading, writing, medicine, art, film, history, politics, ethics, and religion, all of which she incorporates into her informative articles. Tricia is currently working on her first novel.
Discussion Comments
By BrickBack — On Aug 15, 2010

Greenweaver- You know I heard there's a paid vacation act of 2009 but in the works. It is a bill sponsored by Alan Grayson but it is now in committee.

This law will require employers to offer a minimum of one week paid vacation to all its employees.

While I think this it is a nice to get a company to offer this benefit, it could also hurt the company and the employee in the future. A company that absorbs the added costs often has to reduce them elsewhere.

I would hate to think that some people might be laid off, or not hired because of this potential law. While many other countries are more generous with their time off, there are also struggling financially to continue to their generous benefits.

By GreenWeaver — On Aug 15, 2010

Sunshine31-Sometimes I wish we had more vacation time. If you take a look at the paid vacation by country you will find that the United States offers the least amount of vacation time.

In France for example, their paid vacation act stipulates that all employees are entitled to six weeks of vacation per year. They feel this is necessary in order to create a balance between work and family life.

It is not common to find stores for example in Europe that close by noon on a Saturday, and are completely closed on Sunday.

Many European employees don't even work a full 40 hours like their American counterparts do so it makes sense that they would offer more vacation time than they do in the US.

By sunshine31 — On Aug 15, 2010

The employee handbooks in most companies outline the paid vacation days for the standard employee.

It should include information on how the employee accrues vacation time and what the vacation policy is.

Some companies prohibit vacation during their peak season. For example, if you work in the retail sector it is almost unheard of to take a vacation during their fourth quarter Christmas season.

Most retailers make about three quarters of their profits during this time frame.

A company offers the vacation pay to the same rate that the employee would've earned had they been working. For example the average paid vacation days is about 10 or two weeks. The employee would take the time off and continue to receive a paycheck during that time frame.

Although a vacation is an employee benefit, a company has to agree to the timing of the vacation, in order to grant it.

Tricia Christensen
Tricia Christensen
With a Literature degree from Sonoma State University and years of experience as a SmartCapitalMind contributor, Tricia...
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