Human Resource Blog

layoffs due to lack of work - vacation

I am an small business owner in PA. We presently employ 12 people. My business has slowed down and I would like to cut my employees hours, one day a week, since it is slow. The employees that I would like to layoff all have accrued vacation time. Am I required to use their vacation time for the hours not worked? Our policy states a full time employee is 32 - 40 hours per week. I have always been able to have 40 hours per week of work,up to now. Thank you for your prompt response. Dave M

Many small and large businesses are in the same position. No, you are not obligated to allow the employees to use their paid vacation while their hours are reduced.

There is no law in Pennsylvania or elsewhere that an employer must offer paid vacations to workers. If the employer does offer them, the employer sets the policies regarding them. In every state, vacations can be scheduled at the employers convenience — not the employees. Many employers have taken the step of temporarily suspending vacation requests. They simply inform employees that no vacation requests will be granted for the next 3 months, or whatever period you choose.

When you reduce the employees hours, be sure to let them know that you are reluctantly taking this action because the other option is to lay employees off.

Many, perhaps most, employers have the blanket policy that an employee is not permitted to use vacation time to total  more hours than they would have been scheduled during the week. If your employees were still working 40 hours per week, you probably would not allow them to work 40 hours one week and use an additional 8 hours of vacation, so that they were paid for 48 hours total. By the same token, if they are scheduled for 32 hours, you do not have to allow them to use vacation time to increase the total to 40 hours. Doing so eliminates any payroll savings to you, which is the main purpose of reducing hours.