Are All Companies Required to Give Holiday Pay?

Holiday pay is required by law in some countries. The United States only requires that holiday pay be paid if it was included within the terms of employment. There is no legal requirement on United States employers to pay holiday pay under the provisions of the Federal Fair Labor Standards Act (FLSA). Under government employment contracts, holiday pay and fringe benefits are established according to the McNamara O'Hara Service Act. Employers may provide paid vacation leave as part of packages, usually calculated on the basis of leave entitlements at the existing salary rate.

Workplace issues regarding paid holidays

The basis of US employment practices works under the principle that the employer is under no obligation to pay for time not worked. This is the same principle upon which sick leave and other forms of leave are usually unpaid leave. The US is progressively adopting a more flexible approach to holiday pay. In the US, holiday pay and paid leave of other types is often used as an incentive in employment packages. These incentives can be quite valuable, particularly in senior positions. In the rest of the Western world, holiday pay is a basic amenity. In Australia, for example, four weeks paid annual leave is the common standard allowance by law for permanent employees.

American employees are much pickier about their employment packages. Paid leave is often a salary negotiation. The employment market is getting the message, but paid leave is still considered an extra benefit.

Holiday bonuses and employee benefits

All indications are that holiday pay, employee benefits and bonuses are becoming the way of the future for America's top employers. Google, for example, spends a lot on its employees. Its reputation as a great place to work is one of its primary attractors for the world's best talent, and other US companies have also been picking up on this "headhunting by reputation" approach.

The systems of employee benefits and bonuses are also generally accepted to be good employment practice. These extras greatly improve employee morale and productivity. The holiday bonus approach also short circuits any negative effects of the lack of a system of holiday pay. For employers, the holiday bonus operates as an affordable, controllable outlay which doesn't involve massive payroll commitments in advance. It's a good way of acknowledging employee values without undue obligations.

Indirect funding and incentives for employees

Some incentive schemes are excellent money earners for employees, and more than make up for the lack of holiday pay. Incentives are another form of payment that establishes good working values for employers and employees. These incentives operate as a fair value of exchange between parties. It is easy to schedule payments for the employee's convenience when holiday funds are required. This mutually acceptable system covers both outlay issues and maintains the principle of no obligation to pay for time not worked.