Guide to Vacation and Holiday Pay for International Remote Employees

To make a competitive offer when hiring remote employees from abroad, you should explore whether you want to offer vacation and holiday pay. This is because most workers highly rate employee benefits (like vacation and holiday pay) that improve their work-life balance.

But are international remote employees entitled to holiday pay? How do you set up and manage holiday pay for international remote workers?

This international remote worker holiday pay guide will answer these questions. It’ll discuss different ways to set up holiday pay and five tips for managing this employee benefit for international remote workers.

By the end of this article, you’ll be one step closer to designing competitive packages that help you attract and retain top international remote employees.

What Is Vacation and Holiday Pay?

Vacation and holiday pay both refer to financial compensation employees receive for days taken off work. But they differ slightly in the reason for the time off.

In the case of vacation pay, the absence from work duties is for the purpose of rest, relaxation, or attendance to personal matters. But when it comes to holiday pay, the absence from work is to observe special days designated as federal or public holidays.

Vacation and holiday pay ensure employees have time off without forfeiting their wages.

The holiday leave also ensures employees enjoy time off from work on public holidays without charge to their vacation time allowance. Thus, when employers offer holiday pay, employees will enjoy this leave (and get paid) in addition to other paid time off (PTO), such as vacation leave, sick leave, and so on.

Do International Remote Employees Get Holiday Pay?

The US Department of Labor does not require companies to offer holiday pay. But it’s a common and significant perk to include in the compensation package when making an offer to international remote employees.

Holiday pay is not a legal requirement in the US. According to the Fair Labor Standards Act, your company does not have to pay for time employees do not work, including public holidays. So, if you choose to give employees time off during national holidays, you do not have to pay them for that time. 

You’re also not required to give extra compensation to employees who work on holidays, except where their employment contract stipulates it. 

However, holiday pay is a perk that many workers expect with their jobs. Paid time off, including holiday pay, is among the top benefits and perks you can offer to attract the best remote employees.

Though not required by law to offer holiday pay, many US companies offer this perk. However, depending on how you hire your international remote workers—whether as an employee employed by your overseas legal entity or an employer of record or as an independent contractor—your legal obligations and the expectations of your remote worker may vary.  See our guide on classifying your foreign employees to understand the different ways to hire remote workers.

When dealing with international remote employees, the standard practice is to offer paid time off on some recognized public holidays in the US and/or the employee’s home country. 

How To Set Up Vacation and Holiday Pay for International Remote Employees?

Your company can implement one or a combination of the following strategies for deciding on vacation and holiday pay.

Unlimited PTO

Unlimited PTO is a paid leave structure in which employees are not assigned a set number of leave days at the start of the working year.

Under unlimited PTO, employees can take an unlimited amount of paid leave as long as it does not disrupt work. Once they meet expectations and coordinate their leave with others so that absence from work does not impede work, they are free to request time off.

Because employees can take unlimited paid leave in a year, unlimited PTO is one of the best perks you can offer international remote employees.

Set days 

“Set days” refers to the more traditional paid time off structure where employees are assigned a set number of paid leave days at the start of the working year.

For holiday leave, employers would have a list of recognized holidays they give paid leave for.

For vacations leave, employers would specify how many days employees can have as paid vacation leave. Employees can then put in vacation requests for days they want to take off (except days specifically blacked-out for leave). But how much time off they are allowed in the year is set; once they use that up, they can’t take any further paid vacation leave.

When offering “set days” paid time off, employees would look at how much leave time you allow. The higher the days you allow, the more attractive your offer will be.

Floating holidays

Floating holidays are additional paid time off that employees can take at any time to enjoy holidays not included on the company’s calendar. It is called “floating” because the “holiday” does not fall on any specific date. Instead, employees can take time off at their own discretion.

Floating holidays differ from regular holiday paid leave. Holiday PTO allows paid days off for holidays that are federally recognized and on the company calendar. But floating holidays allow employees paid leave for national, cultural, or religious holidays not on the company’s calendar.

It is a nice perk to offer international remote workers because they may have national, cultural, or religious holidays in their home countries that your company does not recognize. They can use these floating holidays to celebrate such events.

Workers generally like the additional time off that floating holidays offer. They can use the time for whatever reason they see fit and improve their work-life balance.

Both local and US holidays

Another way to set up holiday pay for international remote workers is to recognize their local and US holidays and give employees paid time off on these days.

Doing this improves the work-life balance of remote international employees. They can use the local holidays paid leave to observe their special holidays, then use the US holidays days off for whatever they see fit.

If most of your team is in the US, it doesn’t make much sense to have your international workers online on US holidays when their US-based colleagues are off. So you can allow everyone a day off without impacting your workflows. 

For globally distributed companies, we recommend workers are allowed to have their national holidays off. With a bit of forward planning, this doesn’t need to lead to any work disruptions among your team. 

Tips for Managing Vacation and Holiday Pay for International Remote Employees

The following tips will help you successfully manage vacation and holiday pay for international remote employees.

1. Create a holiday pay policy

Giving everyone paid time off for every single holiday may be impractical. So, you should create a holiday policy: a document that lays down the rules and regulations related to the holidays you provide paid time off for.

A holiday pay policy will outline:

• The number of holiday paid days you’ll offer.
• The specific holidays you recognize and give paid time off for.
• What happens when a recognized holiday falls on a weekend.
• Whether you offer other forms of PTO, such as floating holidays.
• Who qualifies for particular holidays.
• How employees are to request days off for holidays.
• The maximum notice you need to approve time off (if submitting a request is essential).
• Compensation (if any) for employees that have to work on holidays.

The holiday policy outlines your expectations and removes employee misunderstanding regarding holiday pay. It also helps you maintain consistent payroll practices regarding holiday pay.

2. Support workers taking vacation days

Let your remote team know they can and should take vacation time off. Ensure they know what your time off policies are and clear up any confusion about whether, as remote workers, they are entitled to the same or different conditions as in-house employees.

While paid vacation and holiday time off is an investment in employees’ welfare, it is also a catalyst for better performance and refreshed attitude when they return.

So, create a company culture that makes employees feel like they can and should take vacation leave. This means you should:

• Let your remote employees know that their work will be taken care of during their absence.
• Assign a point of contact for matters while the employee is out on leave.
• Adjust deadlines around holidays so employees are around for projects dependent on them.
• Have paid time off policies in place so employees will not forfeit their salaries when they take vacation time off.

3. Encourage proactive communication

86% of employees and executives cite ineffective communication as the main cause of workplace failures. So, if you don’t want an employee’s vacation and holiday time off to cause problems, encourage proactive communication.

Encourage remote team members to submit vacation and holiday leave requests well in advance. This helps reduce problems with getting approvals or disgruntlement if requests are not approved.

Encourage team members to communicate appropriately with their colleagues when they will be taking time off. This prevents other team members from expecting deliverables from them and causing unnecessary delays.

4. Set up a vacation reply

Set up vacation replies (such as auto-response emails) to inform team members of an employee’s “on vacation leave” status when they contact the employee.

Also, ensure that other communication platforms can show that an employee is taking time off and is unavailable for work. On most collaboration platforms, you can do this by updating the notification status.

Setting up a vacation reply is one way to create processes that support employees taking vacation days off and encourage proactive communication when taking time off.

5. Pre-planned vacations

Another way to successfully manage holidays for international remote workers is to accommodate their pre-planned vacations.

When hiring remote workers, ask candidates if they have any vacations already planned. Once you hire them, you could offer paid time off for their pre-planned holiday or vacation.

You may also explore the option of unpaid time off for employees to enjoy their pre-planned vacations. An employee will likely be open to taking the time off (though unpaid) than being made to fulfill work requirements and forgo their vacation. We have had clients that have agreed with the candidate that their pre-planned vacation would be unpaid, and they were both happy with the decision. 

Can Part-Time Employees Be Entitled to Vacation and Holiday Pay?

Whether part-time employees are entitled to vacation and holiday pay depends on local labor laws and company policies.

Where a country’s labor laws mandate vacation and holiday pay for part-time workers, a company has to provide these employee benefits. Even when not required by local labor laws, a company can elect to offer vacation and holiday pay to attract and retain top talents.

So, vacation and holiday pay can be arranged as part of the compensation package for part-time employees. However, most companies that hire part-time employees do not include vacation and holiday pay in the compensation package.

You may also be interested in “5 Compensation Strategies for Remote Workers”

Having a look at what international workers may be used to or expect when it comes to paid time off, even for part-time workers, may be useful. Some of the countries that mandate vacation and holiday pay for part-time employees are:

• Australia
• Canada
• The UK

Australia

Australian labor laws require that part-time employees get the same minimum entitlements as full-time employees, but on a pro-rata basis.

Thus, employees receive leave entitlements commensurate with the work they put in. If part-time employees work half the hours of a full-time employee, they’ll get half the leave entitlement.

Canada

Canada’s labor laws require that part-time employees get the same general holidays as full-time employees.

However, the pay is adjusted to the number of hours the part-time employee works.

The United Kingdom

The UK’s treatment of part-time workers is similar to Australia’s. Part-time employees receive similar entitlements as full-time employees but on a pro-rata basis. 

For example, while a full-time worker (who works five days a week) is entitled to 28 days of time off, a part-time worker (who works three days a week) is entitled to 16.8 days.

Final Thoughts

Vacation and holiday pay are employee benefits you can include in your compensation package to make your offer attractive when hiring international remote employees. 

Whether you offer international remote employees vacation and holiday pay via unlimited PTO, set days, or floating holidays, the five tips discussed above will help you successfully manage the process and avoid problems with work or employee discontent.

However, before preparing an attractive compensation package, you need to know where to get the best international remote workers. This is where Near comes in.

We help US companies hire highly skilled English-speaking remote employees from Latin America (LatAm). Near will help you assemble your remote team in record time and for up to 70% lower than it would cost you to hire locally.

Hire the best LatAm remote employees for your US business. Fill out this form to get a list of pre-vetted LatAm talent and start interviewing for free.