Three big vendors forcing vacation

Three big vendors forcing vacation

Next week promises to be very quiet, as three big IT vendors try to save some money during the current economic slowdown by putting their employees on forced vacations.

Compaq has joined Sun Microsystems and Hewlett-Packard in closing down operations next week around the midweek Independence Day holiday. All time off will be paid vacation days for the employees.

In addition, Compaq is going to lay off some employees, according to a human resources e-mail memo obtained by Computerworld. Compaq confirmed that the e-mail was sent to employees Thursday, but wouldn't comment on the magnitude of the layoffs pending the release of its quarterly earnings sometime next month.

Compaq employees in California were given the option of taking next week off because that state's labor laws could require the company to pay overtime to any employee during a mandatory vacation. Some essential employees, like those on "mission-critical projects" and in customer service, will work every day but the Wednesday holiday, a Compaq spokesman said.

Sun, however, reads the California law differently and will require all 38,000 of its employees nationwide to take the vacation time. In addition, Sun employees won't be able to carry over vacation time from year to year, a Sun spokeswoman said. The new vacation policies won't effect this fiscal year's results, since Sun closes its books on fiscal 2001 Friday.

Hewlett-Packard said it's asking employees to take either eight days of vacation by the end of its fiscal year on October 31, a 10 per cent pay cut or four days off with a 5 per cent pay cut. If employees don't have vacation time left for this year, they can't take the vacation option.

All of the measures are voluntary, however, said Dave Berman, a spokesman for HP. Employees can accrue up to eight weeks of vacation from year to year. "I would say this is a short-term fix," he said.

HP is also cutting back on travel, cell phone and executive car allowance costs in the long term, Berman said.

Accrued vacation time is a liability on the books for a company, since it's technically money owed to employees, Berman said. For example, many employers have to buy back vacation time when an employees leaves the company.

In April, Carly Fiorina, HP's chairwoman, president and CEO, said the company is requiring employees to take six days off sometime before the end of the year. HP also said it would eliminate 3,000 management jobs, or 3 per cent of its workforce, to cut costs. Earlier this year, the company said it would lay off 1,770 employees, mostly in its marketing department.

Berman said the workforce reduction efforts will be renewed with employee performance reviews and new assessments of the staffing needs for each business unit.

"I think that there's a renewed emphasis in dealing with poor performers," he said.

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