A leave donation or leave sharing program is a special type of program, employers allow employees to donate some of their accrued paid leave time to other employees who have already used all of theirs but who need additional hours or days to cover an emergency.
Typically, in this type of program, the donated leave is placed into a leave- bank. When another employee runs out of paid leave time but still needs time off, he or she can request or formally apply to use some of the leave available in the donated leave bank. Employers determine in advance what criteria must be met for an employee to be approved to take some of this leave and then apply those criteria to each applicant.
There are benefits to having such a program. Not only does it allow goodwill between coworkers, it also can reduce turnover by finding ways to keep employees on board who have run into difficult times and run out of leave. This becomes possible without costing the company more money in terms of the total number of employee absences taken (in some cases). Overall, this can lead to improved morale, especially during times of medical or other emergencies in which the leave is needed.
While there are benefits to implementing such a program, it’s actually quite a bit more complex than it may seem on the surface. Here are some of the many things to consider before implementing a leave donation program:
There are several reasons why an employee would choose to donate. Most importantly, the ability to donate accrued paid hours of leave allows an employee to help coworkers recover from family or personal medical emergencies in a manner that does not require a cash distribution. An employee who has been affected by a personal or family medical emergency or major disaster may not have enough accrued time to tend to the emergency. The ability to draw from a bank of paid leave donated by other employees gives a little extra time that otherwise would have to be taken unpaid, which would add to the already high burden of recovery.
In addition, donated hours of paid leave pursuant to an eligible medical emergency or major disaster leave-sharing program are not included in the donating employee's income for tax purposes. Thus, for employees in states that allow companies to have "use-it-or-lose-it" policies, employees that might have unused leave that would be lost can instead donate it without any adverse tax consequences. However, employees are also not entitled to claim charitable contributions for income tax purposes for making such donations. Also, any wage-based benefits such as disability, retirement or life insurance may be affected negatively for donors and positively for recipient employees.
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