Notice
You should set a requirement for how much notice your employees must give before they can take a vacation. For example, you might require an employee to submit a request for vacation time at least a month in advance. Vacation time should be awarded on a first-come-first-served basis. If another employee has already requested the time off, you may have to deny the request to the second employee to ensure adequate coverage.
Paying Out
You can also set a policy regarding whether you'll "pay out" vacation time or whether you have a "use it or lose it" policy. When an employee leaves the company, for example, she may have accrued a significant amount of vacation time. You can offer to pay this out as money that she's earned.