Benefits of Understanding Your Company's Policy on Holiday Pay

Holiday pay is provided by law in some countries and at employer discretion or as part of employment packages in other countries like the U.S. It’s worth your while to understand the holiday pay policies of your employer, whatever the situation, because you may be able to use them to your advantage.

Understanding your company's policy on holiday pay will help you see your options in the workplace and may also provide you with a valuable bargaining chip in salary negotiations.

Employer Policies

Employer policies are based on business issues. Holiday pay is a cost, and in some companies, that cost is high, relative to the business revenue and overheads.

In small- or medium-size businesses, holiday pay may simply be impossible. A fortnight or a month’s pay might represent significant amounts of money, compared to business turnover. In difficult economic times, holiday pay is even less likely to be an option for these businesses.

In larger businesses, holiday pay is likely to be part of specific employee packages, rather than a universal policy. This is a policy based on relative values, where payment of holiday pay has less of an impact on revenue because of relative work and productivity values. A person in a job which makes $100,000 a week for the business can get $5000 of holiday pay on a quid pro quo basis.

You can see why understanding employer policies is so relevant. In the same business, others may not get holiday pay as part of a basic policy because of the numbers of people involved. The cost basis is different, and the requirement to hire temporary staff and fill positions in their absence effectively doubles the payout. Giving all staff at all levels holiday pay could be highly expensive, on those terms.

Asking for Holiday Pay

Therefore you need some tact and realism when you ask for holiday pay. Your employer won’t want to set a precedent by making payments, if the general policy is not to provide holiday pay. Holiday pay, in fact, may be the one area the employer is not prepared to discuss.

Be cautious in your approach to any request for holiday pay, and listen closely to any statements from management on the subject, because you may be entering a no-go area. When approaching an employer, you need to have a clearly reasoned argument in favor of the proposal and a good idea of cost.

Important: Don’t make an issue out of the subject, if the employer is strongly resistant. There will be a compelling reason for the employer’s position, and you could wind up in a clash with management.

Understanding a holiday pay policy can also be an opportunity. In salary negotiations, if you’re asking for a raise and meeting some resistance, holiday pay can become a bargaining chip as part of a package proposal.

There are some real advantages to using holiday pay as a negotiation tool. These reasons include:

  • The holiday pay figures out as about 4 to 8 percent of your total salary, depending on the amount of leave taken.
  • The payroll is already created, and doesn’t require adjustments.
  • It can be done as a discretionary deal by the employer, not compromising the basic policy about holiday pay for other staff.
  • In some cases, holiday pay can be used in lieu of a bonus, if it’s convenient for both parties.