Vacation Days Becoming Employee-Friendly Commodity

At year’s end, vacation days are a source of stress to employees everywhere. Many wish they could get more time away from the office, while others watch unused vacation days go to waste.

Some employers offer a worker-friendly solution – allowing employees to buy or sell vacation days or paid time off. For companies facing tight economic conditions, it’s a way to offer a benefit that costs the company little but may help attract and retain employees.

Employers who offer it say it gives people the flexibility they need to manage their lives.

Stacey Rodriguez at Atlanta-based AGL Resources buys an extra week of vacation every year. She started buying the extra week when she joined the company at age 25.

“I thought it was great,” she said. “Now, I get four weeks (of vacation), but I still buy an extra week,” said Rodriguez, 46, who uses the extra time to visit family in Tampa.

A 2010 survey of employers by consulting firm Mercer found that 14 percent of respondents allowed employees to buy or sell vacation days. About 9 percent allowed the option to sell, while 7 percent offered the option to buy, the survey found. Buy and sell provisions are slightly more common in paid time off plans that combine sick time and vacation time, as compared with vacation-only plans.

Kate Mahoney, who has worked at Kimberly-Clark in Roswell, Ga., for ten years, said she buys a week of extra vacation every year. She and her husband are from Wisconsin and use the extra time off to spend Christmas with their family.

“I do love the benefit,” said Mahoney, who works in sales at Kimberly-Clark. A survey conducted by Harris Interactive for destination club Inspirato found that one-tenth of employees who get vacation time from their employer would prefer more time off over a higher salary or promotion.

Natural-gas distributor AGL Resources has long offered the option for non-union employees to buy up to five additional vacation days at their pay rate during open enrollment for benefits. The amount is deducted from the employee’s paychecks spread out over the entire year. If they don’t use those days by the end of the year, the company will refund their contribution. About 30 percent of eligible employees buy extra vacation days.

“Employees know best the amount of time they need off work,” said AGL Resources Vice President Wendy Henderson.

Buying or selling days off may be less important to employers who allow workers to roll over unused vacation time. One challenge for employers is tracking the time bought and sold, said Julie Stich, director of research at the International Foundation of Employee Benefit Plans. But for firms that value flexibility for workers, “it’s definitely a benefit that may fit your company culture,” she said.

Chris McDade, a regional operations director at AGL Resources, oversees about 100 employees and said it could be “a little bit challenging” to cover the workload of his field technicians and meter readers if all employees bought the extra week. He said he plans ahead in January to understand how many weeks each employee has off.

McDade buys the extra week himself to help care for his young children when school is out or when they get sick, taking turns with his wife, who also works. He said the benefit also helps him when bringing new employees on board who want to maintain a certain amount of vacation time.

“Employee work-life balance, in today’s world, it’s probably the most important thing we can do to understand and help our employees,” McDade said.

Because refunding unused vacation days from an extra week results in a payout near the end of the year, some employees at AGL Resources use it like a savings account. Others whose employers allow them to sell some of their regular vacation time also use the extra cash for the holidays.

Building materials company USG Corp. allows its employees to buy or sell extra vacation days.

“It’s a popular benefit,” said USG spokesman Bob Williams. The company has offered the benefit since the mid 1980s, and about 53 percent buy the extra week, while about 5 percent sell a week to the company.

Allowing employees to sell vacation days can provide companies a work-around to cope with the challenges of trying to get more work done with fewer people.

“Some employers, when it comes to the year-end, have a difficult time letting people take time off,” particularly at places like hospitals, said Alan Dale, a principal in Mercer’s health and benefits practice. “So they offer the sell option because they know they can’t let employees take that time off.”