Employment Practices: What You Need to Spell Out – Part Four

hiringCompany Benefits

These are all the things you offer your employees besides salary. They can really make a difference when recruiting because they are often more important for employees than money. You don’t need to go overboard, but do determine what is standard for your industry, and then make yours just a little bit better. Most importantly, figure out what benefits reflect and reinforce your unique culture. Don’t be afraid to be creative!

For all benefits you’ll need to decide the following:

  • When does it start accruing?
  • Do employees lose it if they don’t use it within a given period?
  • Does it get paid out at the end of each year, upon termination, or on some other schedule?
  • When are employees eligible to participate?
  • Under what circumstances do benefits change?

The best gauge I know for what you’re willing to give is what I call the “resentment test.” What benefits are you willing to give and not be resentful about? When you hit the resentment threshold, you’ve got the right number or policy.


What are you willing to offer for vacation? Two weeks per year to start is standard, and it can go up from there. You’ll also need to decide if executives have a different standard than other employees or if everyone’s vacation will be the same. Also think about what you can do to encourage employees to use vacation so that they come back refreshed and ready to work. And what can you do to make sure they don’t dread vacation because of the mountain of work that piles up while they’re gone?

Sick Time

Sick benefits are tricky. One company I worked with had twelve annual sick days, but, if you used them, it was reflected in your year-end bonus. As a result, people came to work sick and made the healthy employees sick. There were others who used up their sick time and everyone knew they weren’t sick, but the CEO wouldn’t change the policy because “that’s the way it was.” Consequently, this was always a contentious issue among employees and caused a lot of needless conversation and angry feelings. One remedy might be to declare that, after three days, people need a doctor’s note. On the other hand, just about anyone can get a doctor’s note to say they’re sick. And do you really want to be in the business of checking up on your employees?

Personal Time Off (PTO)

This is the solution I prefer to the sick leave conundrum. Personal Time Off or Paid Time Off is just that: time when the employee is not at work for whatever reason. Most large organizations have gone to this type of policy because it takes them out of the police business. Vacation and Sick time are combined into a single leave package for employees to use as they please. I’ve also seen holidays and other types of time off rolled into PTO as well.

If you go this route, you’ll have to decide how many days and how you’ll pay it out if someone leaves your company. Sometimes, with PTO that includes sick pay, leave is not paid out in full when an employee departs, but that is a decision you’ll have to make in ac­cordance with your company’s values.


What holidays will you pay out? The typical holiday list includes six, but some organizations (government and banks) include up to twelve, which can be attractive to employees. Standard holidays include:

  • Christmas
  • New Year’s Day
  • Thanksgiving
  • Labor Day
  • Memorial Day
  • Fourth of July

Optional holidays include:

  • Christmas Eve
  • President’s Day
  • Day after Thanksgiving
  • MLK Day
  • New Year’s Eve

Other Time Off

This includes such things as bereavement, jury duty, family leave, prolonged sickness, and sabbaticals. Again, be clear on your policy here or roll all of those into PTO. Doing this would let you avoid having to deal with the employee who wanted to use bereavement leave when his hamster died. However, you decide to do this, make sure it is very clear from the start so you can avoid potential minefields (like a disagreement about what constitutes bereavement) where you are never going to be the nice guy.

Excerpted from my book, “Putting Together the Entrepreneurial Puzzle: The Ten Pieces Every Business Needs to Succeed.” Available here on Amazon.