How many days off should I give my employees?

QUESTION:

One of our founders asked the question, “How many days off should I give my employees each year?  We’re a startup, and every day counts!  What do other startups do in this regard?

ANSWER:

I think every startup struggles with this question.  You want to be nice to your employees, but at the same time, a startup needs to go all out until it’s profitable.  Just keep in mind that people do need time off.   As a starting point, here’s a good reference:

Average number of total paid days off in the United States:

Years of serviceAverage days per year
Less than 1 year14
2 year of service17
3 years of service18
4 years of service 18
5 years of service 21
6 years of service 23
7 years of service 23
8 years of service 23
9 years of service 23
10 years of service 25
11 years of service 26
12 years of service 26
13 years of service 26
14 years of service 26
15 years of service 27
More than 15 years of service27

NOTE:  The above includes sick time, personal time off, vacation days, etc.

Average number of vacation days in the United States:

Years of serviceAverage days per year
Less than 1 year9
2 years of service11
3 years of service12
4 years of service12
5 years of service14
6 years of service15
7 years of service15
8 years of service16
9 years of service16
10 years of service17
11 years of service18
12 years of service18
13 years of service18
14 years of service19
15 years of service19
More than 15 years of service21

Source: Society for Human Resource Management, 2004 SHRM Benefits Survey.

When it comes down to it, it’s really a decision about what type of culture you want to build.  I’d probably stick with the averages above, since they are a good reference point.  If you feel vacation time is really important, like most Europeans do, then you can go higher.   I don’t recommend going much lower because it can backfire on you.  Employees will feel cheated, and they won’t be as productive.

If you have a question of your own, just ask our Virtual Board of Advisors.

Note:  Before making any business decisions based on information on this site, it is your responsibility to check with your counsel or professionals familiar with your situation.

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Comments & Advice:
  1. How about you not have a vacation policy? If everyone is an adult, and everyone is committed to the start-up's success, why not let people decide when they can take time off and when and how much is inappropriate?

  2. Under federal law and the laws of most states, employees don't have any right to vacation days or pay, so it's theoretically possible not to offer any paid vacation at all. However, I wouldn't recommend that for obvious reasons.

    In California, the laws are a bit tricky; paid vacation is considered a type of compensation, and whatever your policy is needs to be carefully and consistently applied. For example, “use it or lose it” vacation policies are prohibited in California (although you can put a cap on how many vacation or PTO days/hours an employee accrues; companies like to do this for accounting reasons). When an employee is terminated, any unused vacation time must be paid along with the final paycheck.

    Given how hard most people work at startups, one thing to consider would be to have a relatively skimpy number of paid vacation days or PTO hours, but offer “comp time” to those who put in lots of extra long hours, nights and weekends, etc. (I'm talking about overtime exempt employees here, such as engineers; it's a whole different ballgame for nonexempt employees.) This is usually done informally, such as the manager telling the developer who pulled an all-nighter to take the next day off, and has no effect on the number of accrued or used vacation days.

  3. Clay says:

    @Dror: I assume you’re talking about employees, rather than cofounders…

    Yes, people should be treated as adults, but the relationship between employer and employee is about two adults exchanging time for money. When both sides agree up front on exactly what is being exchanged, it sets expectations and prevents future disagreements.

    Without the ‘time’ half of the equation, the salary negotiation is a bit surreal: “I’ll give you $70000 in exchange for ???.” What if the employee and employer have different ideas about the ??? part? Then there will be conflict down the road.

    Saying “vacation is unlimited as long as you get your work done” would not be helpful unless there is agreement up front on how much is expected to be done. Is the employee expected to do 52 weeks worth of work? 42? 62? They won’t know whether they agree on what is “appropriate” unless they discuss it.

    The two parties could arrange terms based on specific deliverables/projects, rather than quantity of time/effort, but this has it’s own disadvantages. If you go the “money for time/effort” route, you should say how much time/effort is expected.

    I suspect you wouldn’t say “people are adults, let everyone take the amount of salary they feel is appropriate” :-)

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