With these kinds of policies being more common in young companies, I highly doubt that paying back unused vacation can have any significant effect on normal operations. In the other case there's also generally limits on how much vacation time you can build up, generally taking a couple years of not taking vacation to max out.
> With these kinds of policies being more common in young companies, I highly doubt that paying back unused vacation can have any significant effect on normal operations.
It has an effect on the balance sheet, since vacation time accrued but not used is a liability; in companies whose operations are labor-heavy, and that have high-pay workers, that's may be a concern, especially when seeking investors, since concrete current liabilities can weigh heavily against hoped-for future returns.
> We should have no sympathy for 'balance sheet' or accounting reasons for anything.
I don't see what sympathy has to do with it. The state of the balance sheet is a concrete concern for investors, and therefore for companies seeking investors, independently of whether you have sympathy for it or not.
> Regardless of how much vacation time is on the books as a liability, the company's cash flows are exactly the same.
Possibly, but so what? The statement of cash flows matters, of course -- particularly in the short term -- but investors care ultimately about value, not cash flow. (After all, borrowing money produces a positive cash flow the same as selling product does, the difference is that the former also accumulates liability.)
Sympathy may have been a poor choice of word. What I meant was: accounting considerations should not have any bearing on how companies treat employees. Especially when the 'accounting' is not something that actually affects the money coming in/out of the company.
The liabilities may matter to investors, but that doesn't mean that they actually affect the business. If I have all of my vacation days left or none, there is zero impact on the the company's business. Value is not effected at all.
> The liabilities may matter to investors, but that doesn't mean that they actually affect the business.
If they affect investors, they (1) effect the current owners, serving whose interests is the whole purpose of having a business, and (2) they affect the company's ability to secure financing and the terms of that financing, which affects every aspect of its business.
So, no, you're just plain wrong here.
> If I have all of my vacation days left or none, there is zero impact on the the company's business.
It has exactly the same impact on a company's business as any other debt, which is substantially more than none.
> The liabilities may matter to investors, but that doesn't mean that they actually affect the business. If I have all of my vacation days left or none, there is zero impact on the the company's business. Value is not effected at all.
That's completely untrue. If you are billed out at some rate X, then having 2 weeks of vacation coming up this year directly impacts future value vs having 0 vacation days. That's X * 2 * 40 hours of future value. It affects value in the same way that any debt affects value.
Right, but if I'm understanding all this correctly, unused vacation time exists as outstanding debts that can be called in as soon as an employee departs.
In theory, that could be enough to tank a company that otherwise might've (somehow) survived the departure of their employees.
IANA Financial person, but... it does go on the books as a debt. I'd be highly interested in someone in the know putting some numbers up, but at my office I know of many people who have several months of vacation saved up (because seemingly people tend to under-use their vacation time). If that company is looking to get bought out, it must be relevant to at least some extent.
At my previous company, they specifically created a policy of no more than five days of rollover vacation from year to year specifically because of an on-the-books obligation of a couple million dollars (500+ employees) due to accrued vacation. Later, they changed that policy to NO rollover without VP level approval (e.g. honeymoons). In states like California that have strong employee laws they had to force all California based employees to burn down their accrued vacation every three months. Quasi-ethical and possibly borderline legal but that is what you have to do when employees hoard vacation under the mattress.
