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How to write your Company Vacation Policy
We include this 5 page template with Human Resources Contract Pack and the Proposal Kit Professional. You will get more content and software automation for data merging, managing client documents, and creating proposals with line item quoting with a Contract Pack or the Professional.
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Use cases for this template
Lena Ortiz Aligns PTO With Growth at Nimbus Analytics
The Challenge
As Nimbus Analytics scaled, HR director Lena Ortiz faced confusion over how much notice was required for vacations, what happened at the end of the year near the accrual cap, and whether new hires in a probationary period could tap personal time, all while managers struggled to cover peak sprints without burning out teams or risking legal compliance.
The Solution
Lena selected a Proposal Kit vacation and leave contract template to formalize the paid vacation plan and then used Proposal Kit's AI Writer to craft supporting documents-a rollout plan, FAQs, a manager's guide, and a comparative proposal explaining vacation pay and floating holidays-while line-item quoting built a cost model for alternatives such as additional time banks and temporary backfill.
The Implementation
A cross-functional group gathered feedback, mapped notice rules to busy releases, and published a site hub with the request form, examples, and a clear outline of valid reasons for personal leave; HR hosted office hours so employees could speak with supervisors and learn how to use accrued PTO throughout the year without hitting the cap.
The Outcome
Within one quarter, employees' time was scheduled earlier, absenteeism fell, energy and employee well-being rose, and leadership had data-backed options to decide future enhancements, thanks to the quoted scenarios and the new documents supporting the contract.
Riverbend Fabrication Maps Leave Around Peak Production
The Challenge
Operations chief Calvin Brooks at Riverbend Fabrication needed to reduce last-minute call-offs during peak periods, clarify a week's notice for short absences versus longer vacations, and standardize tracking of accrued time as crews rotated shifts and employees left for military training or jury duty.
The Solution
Using the Proposal Kit, HR adopted the vacation/leave contract template and created matching forms, then relied on the AI Writer to produce a capacity impact report, a shift-coverage plan, and an executive study referencing labor statistics on PTO and absenteeism, while line-item quoting priced overtime, temps, and holiday pay options for different scenarios.
The Implementation
The team piloted the program in one plant, trained supervisors on approvals, integrated the form into daily standups, and published a simple "request-to-approval" process guide so workers knew when requests were permitted, who to notify, and how the policy would lead to scheduling during crunch times.
The Outcome
Requests arrived earlier, production met deadlines, employees were able to use time off without worry, and the organization gained crucial visibility to balance coverage and well-being, supported by precise quotes and clear documents that reinforced the legal contract.
Bright Harbor Creative Replaces Unlimited PTO With Clear Accrual Rules
The Challenge
At Bright Harbor Creative, founder Maya Chen saw that an unlimited PTO experiment left teams unsure about vacation pay, the number of days they could plan, and whether carry to next year was allowed, creating uneven access for remote staff across offices and lowering morale.
The Solution
They adopted a standard accrual method using a Proposal Kit contract template and produced supporting materials with the AI Writer: a change-management memo, a benefits overview, and an employee guide with examples of valid reasons for personal leave and special days, while line-item quoting estimated the budget impact of floating holidays and tenure-based increases.
The Implementation
The rollout began with new hires on day one, then expanded to all teams, pairing manager training with a feedback channel so employees could speak up about challenges and learn how the notice rules typically apply to different project phases.
The Outcome
The clear vacation policy improved transparency and engagement, reduced scheduling friction, and gave leadership an essential, data-backed view of options to refine the program as the agency grew, all supported by Proposal Kit's additional documents surrounding the contract.
Abstract
This vacation and leave policy outlines how employees earn, schedule, and use paid time and other leaves, helping maintain a healthy work-life balance while aligning with business needs. It applies to full-time staff (32+ hours per week) and full-time temporary employees. They earn vacation leave at an accrual rate of 10 paid vacation days (80 hours) per calendar year during the first five years of continuous service.
Accrued vacation time can build to a cap of 160 hours; after hitting the cap, employees stop accruing until they use a portion. This cap functions like a use-it-or-lose-it limit on additional accruals and encourages employees to take time for rest, self-care, and productivity.
Accrual follows an annual accrual policy tied to hours worked and pay status. Employees earn the full monthly accrual only when in pay status for at least 15 days in the pay period. The policy requires advance notice when requesting time: five or more consecutive vacation days need four weeks' notice; four days or fewer need two weeks' notice.
All requests for time must be submitted via the company's written authorization process using the Vacation and Time-Off Request Form. Management approval considers business needs, busy periods, and peak periods to allow proper planning and scheduling.
The plan covers various types of paid leave beyond vacation, including sick days, jury duty, military training pay (up to 21 days), and holiday pay for listed national holidays. When required to work on a holiday, employees receive another day off or compensation under the overtime rules. Family leave provides up to six months of unpaid time for birth or adoption, a serious personal illness, or a qualifying family illness.
To qualify, employees must have 1,250 hours in the prior 12 months and must first use accrued but unused PTO in the form of sick or vacation leave. Benefits continue during family leave if the employee returns. Administrative leaves and extended military leaves are unpaid and do not accrue PTO.
Examples: an employee with three years of service planning a one-week trip must submit the form four weeks ahead; a team member approaching the 160-hour cap should schedule time to avoid halting pto accrual; a Guard member attending training provides orders and receives regular pay for up to 21 days.
This standard vacation policy does not create unlimited pto or unlimited vacation policies and does not specify a pto payout or how to pay out unused time. Employers should ensure compliance with applicable laws, federal law, and state law, disclose clear rules in the employee handbook, and maintain legal compliance in administration. Many employers add guidance on unused vacation time, accrued but unused PTO carry to the following year, and eligibility by years of service to help employees understand how much time they have and when the vacation year starts.
Proposal Kit helps organizations assemble a clear PTO policy and related documents quickly. Its template library, document assembly, automated line-item quoting, and AI Writer enable HR teams to write an employee handbook, benefits package summaries, and other leave policies with consistent language that is easy to manage and update.
Expanding on the policy, this paid vacation plan defines accrual by calendar year, so an employee's vacation year starts at the beginning of the year rather than a rolling schedule from the first day of employment. That makes sense for administration, but note that clear vacation policy language should tell new hires whether any full vacation time or a set amount is eligible in a probationary period and whether employees can use personal time for special days or meetings. Employers may decide to add floating holidays, a PTO bank, or longer vacations tied to an employee's length of service and tenure to attract top talent and support employee satisfaction, well-being, and employee health.
From a company culture perspective, allowing employees more flexibility to spend time on family matters and personal responsibilities throughout the year enables employees to recharge and return productive and engaged. Many small businesses prefer a simple accrual method with a defined number of days per year, while larger organizations might implement different types of leave programs, including personal leave and other types of paid time off PTO. While this policy lists specific holidays, some workers value additional time or floating options; interns and contractors are generally not eligible, so the employer should outline eligibility by job and workforce segment.
Administration details also matter. The policy already states how much notice is required; some teams add a week's notice minimum for half-day requests to address office scheduling challenges and critical tasks. Track accrued time and accrued PTO to avoid caps at the end of the year and plan carry to next year only if permitted by regulations.
At termination, payout of unused time can be a compliance matter; regulations vary by state (for instance, California), so employers should comply with applicable laws and promptly notify employees. Include examples and feedback loops on the company site so employees understand vacation sick coordination and what is permitted when an employee leaves.
The Proposal Kit helps an organization establish and implement the right vacation policy program. Its document assembly, AI Writer, and extensive template library make it easier to outline policies, compile an employee handbook and benefits package, and keep consistent updates. Automated line-item quoting can help leadership compare plan options and factors, improving access, effectiveness, and communication without added worry.
Adding further context, the importance of defining vacation pay is important for clarity and fairness. Typically, in the industry, policies spell out how vacation pay is calculated and recorded so managers can plan employees' time and avoid disputes. Labor statistics routinely link consistent PTO use to lower absenteeism and higher morale. When employers encourage employees to use earned time for valid reasons, employee well-being improves, energy returns, and teams stay productive.
Greater flexibility in scheduling is also crucial. Establishing simple rules that make it easy to request changes and speak with supervisors helps balance coverage and workload. Example: a department can stagger time off so critical tasks are covered while still allowing restoration time. Clear communication about blackout windows, alternatives, and who can approve changes can lead to smoother operations throughout the year.
Make well-being a priority by reminding staff that time away is part of doing great work. Encourage managers to model usage and to check whether planned absences align with project milestones. This approach typically reduces last-minute scrambles, supports focus, and aligns with what the broader workforce expects from modern leave programs.
Proposal Kit can help HR teams in establishing and documenting these crucial details. Its document assembly, AI Writer, and template library make it easier to outline approval steps, define terminology, and align policy language with business processes so organizations maintain consistency while supporting employees.
Writing the Company Vacation Policy document - The Narrative
This document provides Company Name employees with important information and guidance concerning the company's policies and procedures, its code of conduct, its stated mission and goals, and all other organizational policies that govern all vacation and/or time off taken by employees of Company Name. This document should not be considered a complete and comprehensive guide as to what is acceptable behavior or company policy, but should serve as a guide to aid staff with the most common or frequent questions and concerns they may have. Policies, procedures, and guidelines contained in this document are subject to change, and all staff are encouraged to consult a Human Resources Manager should they have any questions that do not appear to be covered here. In all cases, the policies stated in the Human Resources Guide shall prevail in the event of any conflict between the information contained in the Guide and verbal statements about the Human Resources Guide or other company policies or procedures.
All employees must read and become familiar with these policies and procedures and refer to this policy if they have questions and concerns about vacation or time-off requests and the company policies or procedures that govern such requests.
Definitions of Personnel
"Full-Time Employees" shall be defined as all employees or agents of the company who are scheduled or authorized to work 32 or more hours per week and who have been recognized by the company Human Resources department as full-time employees and for whom a written contract is on file with the company Human Resources Department. "Part-Time Employees" shall be defined as all employees or agents of the company who work less than 32 hours per week and who have been recognized by the company Human Resources department as part-time employees and for whom a written contract is on file with the company Human Resources Department. "Contract Employees" ("Contractors, Subcontractors") shall be defined as all personnel or agents of the company who have a temporary employment contract with the company, regardless of how many hours they work per week.
Responsibility of Company
Company shall be responsible for distributing to all new employees, part-time employees, contractors, and other staff a copy of the Vacation and Leave Policy in print or electronic format(s). Responsibility of Employees, Vendors, Contractors, and Other Staff. All policies and benefits are subject to change at Company's sole discretion and are not intended to be part of any compensation agreement or promise.
Vacation Leave
Full-time employees and Full-time temporary employees are entitled to time off with pay for vacation or other personal reasons. An employee accrues vacation leave credits for all hours in which he or she works.
Vacation leave may be used for:
- normal work hours
- paid vacation leave
- paid sick leave
- paid jury duty
- paid military leave
Accrual of vacation leave is as follows:
Full-time employees and full-time temporary employees with less than 60 months of continuous service with the company shall earn vacation leave at the rate of 10 days or 80 hours per calendar year.
Maximum Accrual
Full-time employees and full-time temporary employees may accrue vacation leave up to a maximum of 160 hours. After 160 hours have been accrued, an employee shall not accrue any additional hours until the employee reduces the total number of accrued hours to less than 160 total hours. Vacation Leave Accrual for Partial Employment.
Full-time employees and full-time temporary employees shall earn vacation leave at the full monthly rate when in a pay status for fifteen (15) or more calendar days during the pay period. When working less than fifteen (15) days during the pay period, employees will not earn vacation leave. Scheduling and Approval of Vacation Leave. Employees must request all vacation leave that totals five (5) or more consecutive days at least four weeks in advance of the date that the leave is requested to take place.
Vacation leave that totals four (4) days or less must be requested at least two weeks in advance of the date that the leave is requested to take place. All leave is subject to the approval of management and employees must make their requests using the Company Vacation and Time-Off Request Form. Requests for leave that are not made through the Company Vacation and Time-Off Request Form shall be deemed inappropriate and shall not constitute official notification to the company of the employee's request for leave.
This includes authorization made through verbal, email, or written formats not using the Company Vacation and Time-Off Request Form.
Family Leave
Under special circumstances, employees may request an extended family leave for personal reasons. Company grants employees who must be absent for personal reasons up to six months (the "Family Leave Term").
Family leave without pay may be requested by employees for the following reasons:
- the birth or adoption of a child
- a serious personal illness
- the serious illness of an employee's immediate family
Family Leave Qualifications
Time off for family leave is available to all full-time employees or full-time temporary employees who have worked a minimum of 1,250 hours over the previous 12-month period. When possible, employees are asked to submit family leave requests 30 days in advance. The company recognizes that taking time off for family leave may not be a foreseeable event, and will consider all of the situations and circumstances under which approval for the leave is being requested. Before a family leave is granted, employees must first exhaust all available sick and vacation leave.
The company will continue to underwrite any healthcare benefits during the family leave so long as the employee returns to work after the family leave is complete. Company reserves the right to recover all amounts it subsidizes or pays for health insurance for the employee if an employee does not return to work from family leave. An exception shall apply in the case where the employee cannot return to work because of his or her continued illness or that of a family member.
All sick leave, vacation leave, retirement credits, or other benefit credits shall not accrue while the employee is on family leave. An employee while on family leave who is found to have applied for work, accepted a position, or is employed by another company, will be immediately terminated and the company shall recover all costs associated with the employee's family leave. Any employee failing to return to work from family leave as indicated on the Family Leave Term, or failing to properly explain the absence to the Company Human Services Department, will be considered as having voluntarily terminated his or her position.
Military Leave
Full-time employees and full-time temporary employees are entitled to military leave of absence when ordered to active duty for training as members of the National Guard or the U.
Armed Forces
Regular full-time employees and full-time temporary employees who are ordered to active duty or drafted shall be entitled to reinstatement to their former positions or comparable positions with the same salary or pay grade. Employees placed on extended military leaves of absence will not receive pay from the Company nor accrue annual vacation or sick leave.
Military Leave for Training
Full-time employees and full-time temporary employees who are required to become active duty personnel for the purpose of attending training or other active duty events shall not suffer any loss of their regular pay during the first twenty-one days of their absence from work. All full-time employees and full-time temporary employees are required to provide a copy of their training orders or other paperwork to their supervisor or manager and their Human Resources Department.
Administrative Leave (Disciplinary)
Regular employees and full-time temporary employees placed on disciplinary administrative leave by the company shall be subject to the Company Disciplinary Guidelines as defined in the Company Disciplinary Handbook. Employees placed on administrative leaves of absence will not receive pay from the company nor accrue annual vacation or sick leave.
Administrative Leave (Non-Disciplinary)
Regular employees and full-time temporary employees placed on non-disciplinary administrative leave by the company shall be subject to the Company Disciplinary Guidelines as defined in the Company Disciplinary Handbook.
Jury Duty or Witness Summons
Regular employees and full-time temporary employees selected for jury duty or to give testimony in a court proceeding that is not of their own making may request to take sick time off for the days they are required to be absent.
Bereavement Leave
Regular employees and full-time temporary employees shall be granted up to three days per year of bereavement leave for the death of a spouse, child, parent, life partner, brother or sister, grandparent, grandparent-in-law, grandchild, son- or daughter-in-law, mother-in-law, father-in-law, brother-in-law, sister-in-law, stepchild, child-in-law, aunt, uncle, niece, nephew, and first and second cousin. All other relationships shall be excluded unless in the case where the employee is a guardian. All bereavement leave is non-accumulative.
The total amount granted by the Company to an employee shall not exceed three days within any calendar year. If additional days of absences are required, the employee may request sick leave or vacation leave. Time Off for Religious Observances and Work Schedules. If an employee needs accommodations for a religious holiday or belief, the Company will attempt to aid the employee's wishes, provided such accommodations do not affect the safety and health of other employees; that no undue hardship is created for the Company or its employees; and that the accommodations do not violate the standards set forth in the Company Human Resources Guide.
The Company will be closed for normal business operations in observation of regular holidays and other holidays as determined by the management and posted by the Human Resources Department. Regular employees and full-time temporary employees who are not required to work will be excused on such days without being charged leave or losing pay. In the event such staff members are required to work on a holiday, they will be granted another holiday or be paid in accordance with the Company's overtime policy.
Regular Holiday Schedule
- Labor Day (1st Monday in Sept.
- Thanksgiving Day (4th Thursday in November).
- Christmas Day (December 25th).
- New Year's Day (January 1st).
- Memorial Day (Last Monday in May).
- Independence Day (July 4th).
The Human Resources Department will post the yearly schedule of holidays.
Contact Information
Questions, comments, or concerns regarding the Vacation and Leave Policy may be directed to Human Resources Email or to the following Human Resources Manager or Company representative:
Human Resources Name
Changes to this Vacation and Leave Policy. The practices described in this Vacation and Leave Policy are current as of Current Date. Company reserves the right to modify or amend this Vacation and Leave Policy at any time.
Appropriate notice will be given to all employees concerning such amendments.
Effective Date: Current Date
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Ian Lauder has been helping businesses write their proposals and contracts for two decades. Ian is the owner and founder of Proposal Kit, one of the original sources of business proposal and contract software products started in 1997.By Ian Lauder
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