Please read the case and answer the questions below:
1. What, if anything, should the company do with regard to salaried personnel who have vacations planned later this year and now don’t have enough vacation time?
3. Should the firm change its current policy that requires salaried employees to charge their vacation bank whenever a shutdown occurs? Why or why not?
Ships, Inc. is a large shipbuilding company located in one of the eastern states. One September afternoon the firm made the decision to shut down operations due to an approaching hurricane. This was based on the forecasted arrival of tropical storm force winds to the local area as early as noon on Wednesday. They made that decision at approximately 2:00 p.m. on a Tuesday afternoon and some employees were told Tuesday by supervisors that the shutdown would occur beginning with the next morning’s shift and that they were not to report to work. They were also told that the time they lost would be excused with pay.
By Tuesday evening it was very clear that the hurricane would not hit the area until Thursday at the earliest. Nonetheless, the shipyard decided to maintain the decision to shutdown on Wednesday. The emergency hotline message confirmed this information but also said that missed time for salaried personnel would be charged against each employee’s vacation bank.
By Wednesday evening the emergency hotline message was updated to state that the shutdown would be continued through the first shift on Thursday with normal operations commencing on the second shift. The hurricane subsequently hit the area Thursday night (during the second shift), leaving many roads littered with branches and debris.
On Friday morning, when all personnel reported for work again (many of them without electricity), they were hit the fact that they had just lost two days of vacation— two days gone with the wind. Hourly personnel had the option of charging the two days off to their vacation bank or taking time off without pay, but salaried personnel did not have a choice—they were required to charge the leave to their accrued vacation bank. Thus action was in line with the company’s policy fro complete shutdowns despite what some personnel were told prior to the shutdown.
Within a few days, many people became very upset with the way the company handled the situation and the fact that they just lost two vacation days for no good reason. Why did the firm close down operations so soon instead of waiting for the storm to hit? Why didn’t it close down operations on Thursday, the day the storm actually did arrive? Some had already scheduled vacation for over Thanksgiving and the Christmas holidays and now realized that they had insufficient vacation days left. Those who had already paid for their airline and cruise tickets were particularly upset. Others were offended by the fact that they would now need to work uncompensated overtime to make up for the work missed, an action expected of all salaried employees.
The company’s vacation policy states that salaried employees accrue vacation time based on length of service. Employees with less than five years seniority receive one day per month, those with five to ten years experience earn one and one half days per month, and those with more than ten years earn two days per month. Employees have the right to carry over unused vacation time to the next year. The policy also states that if the shipyard is shutdown for any reason for any reason the time lost by salaried employees will be charged to each person’s vacation bank. Furthermore, the policy states that in the event of a partial shutdown, salaried employees who report to work and are then sent home will be paid for any time missed and will not be required to charge lost time to their vacation banks.