Page 113 - Essentials of Payroll: Management and Accounting

ESSENTIALS of Payr oll: Management and Accounting
When used with some control features, it is possible to completely
eliminate the tracking of vacation and sick time by the payroll staff. In
this scenario, employees are placed on the honor system of tracking
their own vacation and sick time. Though this system keeps the payroll

staff from having to do any tracking of this information, there is also a
strong possibility that some employees will abuse the situation and take
extra time. There are two ways to avoid this problem. One is to insti-
tute a companywide policy that automatically wipes out all earned
vacation and sick time at the end of each calendar year, which has the
advantage of limiting the amount of vacation and sick time to which
an employee can claim that he or she is entitled. This step mitigates a

company’s losses if a dishonest employee leaves the company and claims
payment for many hours of vacation and sick time that may go back
for years. The other way to avoid the problem is to switch the tracking
role to employee supervisors. These people are in the best position to
see when employees are taking time off and can track their time off

T IPS &T ECHNIQUES

A common best practice is to merge different tracking systems for
personal leave days, vacation days, and sick days into an enlarged
number of vacation days, thereby reducing the number of tracking
systems from three to one. However, this can meet with consider-
able resistance by employees, who feel that the company is trying
to take away some of their time off. A good way to prevent this from
happening is to grant an increased number of hours of vacation car-
ryover time into the next year, at least for the first year or two of the
transition, so that employees have an adequate time frame in which
to use up excess leave days. This is seen as a particular benefit in
companies that did not previously allow a carryover of unused sick
time or personal leave days, but which will now roll into the vacation
category, where the time may be carried forward.

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