4 September 2024
Understanding and implementing an effective PTO policy
What is paid time off, and why should you make it a point to implement it in your organization?
What is a PTO policy?
Paid time off (PTO) refers to any period of time where an employee gets paid without having to come into work. Typically, each employee gets a set number of days they can utilize, and they’ll specifically plan to take those days at certain times of the year.
At time of writing, there’s no federal mandate for PTO (although some states require paid sick leave be offered). You don’t have to provide a minimum number of days. However, there are plenty of benefits to having a PTO policy and giving your employees time to themselves. It can end up making them significantly more efficient at their jobs, and much less prone to burnout.
There are many PTO policy examples, and there isn’t a one-size-fits-all policy that will work for every company. This blog digs a little deeper into the nuances so you can build out a policy that works for your team- with software to support it!
Types of leave
To understand what makes an effective paid time off policy, it’s important to understand the different types of leave. The four most common types are:
- Vacation time- Employees can take personal time off work to go on vacation or enjoy some time to rest.
- Parental leave- Sometimes referred to as maternity and paternity leave, this provides time for new parents to recover and spend time with their new children.
- Sick leave- This is where someone is off work because they’re too sick to work or need medical attention. It may also cover time to recover from health problems (such as surgery).
- Bereavement leave- When someone close to the employee passes away, this is leave that gives them time to grieve, and make funeral arrangements.
Vacation time is the most commonly associated type of leave with PTO, but any of the above can be offered as a paid benefit.
Some of these will vary from state to state. For example, the Family and Medical Leave Act of 1993 mandates 12 weeks of unpaid leave is offered to new parents (whether they’ve had a newborn or adopted a child) by organizations that employ 50 or more people, but in practice this is rarely taken in full, due to money worries. Only thirteen states and the District of Colombia require any kind of paid parental leave.
Offering better PTO for various circumstances than is federally or state mandated can make you a very appealing place to work. The stats, with nearly a third of US employees having no access to PTO, show there’s a lot to be gained.
You may also want to look at floating vacation days, which are used at an employees’ discretion and are separate from. For example, if an employee doesn’t celebrate Christmas, they may have another day they want to take off for cultural, religious, or personal reasons. This can be helpful to ensure you have coverage during public holidays, and ensures employees have more flexibility.
Creating a comprehensive PTO policy
Sometimes, to create a comprehensive paid time off policy, you need to take things back to the drawing board.
Who’s eligible for PTO and in what circumstances? Do you have periods of the year where no one can take PTO? If so, why? What procedures are in place to request PTO? Is it automated, or does it all have to go through a certain department or person? What happens if that department is short-staffed?
Likewise, have you considered a PTO accrual policy? Does unused leave carryover each year? What about an unlimited PTO policy? It might be worth going to your employees and figuring out which appeals most to them.
These may seem like obvious questions, but by spelling out your expectations and policies in plain language will reduce the risk of misunderstandings.
You’ll also need to consider how to address emergencies and other specialized circumstances. What is a parent supposed to do if childcare suddenly falls through? Ensuring this area is robust is key, as it will minimize stress and ensure everyone knows how to act. You won’t run into issues with one employee getting approval one week, and another being rejected the next, which leaves you open to lawsuits.
Most important of all, you need to find the balance between the needs of your employees and the needs of the broader organization. Working people until they burnout will lead to an unhealthy workplace with high turnover, but equally you can’t have everyone taking PTO at the same time!
Best practices for implementing a PTO policy
The key best practice for effective PTO rollout is communication. Employees need to be informed and educated about the options available to them if they’re to have the biggest impact.
For example, one of the biggest issues with unlimited PTO policies is not employees taking too much time off, it’s actually them taking too little. If expectations aren’t set out, employees will err on the side of caution, and avoid taking time off. That can lead to huge problems with burnout.
As a follow on from this, you also need to make sure your managers are equally trained up on the policies. That will ensure it’s applied consistently and fairly across the organization. Without this, you can land yourself in trouble pretty quickly.
Finally, it’s key to understand that policies like this are almost never a one and done thing. They’ll need frequent adjusting based on feedback. Don’t build a policy around the employees you used to have, adapt it to the employees you do have!
Choosing PTO software
All of this is best managed using PTO management software. Sure, you could plug everything into a spreadsheet and rely on emails or texts, but the best system is one that allows employees to self-service and easily see what they’re entitled to, without your HR managers having to intervene.
The right PTO software will help prevent overlapping time off, improve HR department workflow, and can even help calculate compensatory time off. All of this adds together to create a smooth process with a lower risk of human errors. Collaboration across departments becomes so much easier when everything is centralized.
To learn more about People First, our ground-breaking HR platform, take a look over here.
