Paid time off is an employee leave policy under which the company sanctions a pool of leaves for its employees, for which there will be no loss of pay. It considers a variety of reasons - sickness, marriage, bereavement, vacation, or sometimes, even personal time. The employee can avail them at his/her discretion as and when required.
PTO is considered to be one of the primary benefits offered by a company to its employees. Attractive Time-off policies act as a major plus point for companies that are looking to hire good talents. It becomes highly essential for a company to provide its employees with a good time off policy that complies with all the rules and regulations of the country or state laws.
The company grants an employee a pool of leaves which combines the different kinds of leaves. The average number of leaves given to an employee in a year depends on the company. Let’s assume 30 as the number - 10 vacation days + 10 casual leave days + 8 sick leave days + 2 personal leave days. PTO provides employees with all those 30 days under one category - Time-off.
How the employee avails and uses these days differs from company to company. Some companies sanction them at once, while some split the days into 7 for each quarter, and others unlock 15 days every six months. The individual PTO policy of each company determines how the PTO is put to use.
Apart from the fact that it gives employees the freedom to choose their time-off, there are other advantages to PTO for the employer and employee.
The leaves are sanctioned into the employees' accounts daily/weekly or on a monthly basis. In this type of policy, the number of days an employee can avail leave depends on or is directly proportional to the number of days the employee has worked.
How many days they earn for each day/week/month they have worked is up to you to decide and define in your company’s time-off policy. For example, working 40 hours a week can earn an employee 5 hours of PTO. Some firms allow their employees to avail time off in advance and compensate by later working for it to avoid loss of pay.
Bank of PTO is the most popular type of PTO policy there is. In this type of policy, the employee is offered a fixed number of leaves, all at once, at the beginning of the work-year or at each quarter or once in six months. The employee can use his/her time off as and when required, there is no categorical separation (Sick, Vacation, Personal) of the days provided as Time-off.
Some companies allow their employees to carry over unused leaves from one year to another.
When an organization adopts an unlimited PTO policy, it means that it leaves...leaves to the discretion of its employees. Employees can apply for leave or vacation whenever they think it’s best. The company does not interfere in the process and there is no cap on the number of leaves.
There are different reasons why your employee would like to take time off from work, this ranges from sickness, vacation to maternity, bereavement and personal time. If you do not follow the unlimited time-off policy, then it is intelligent to classify the number of days provided to your employee as time off into categories for accurate tracking. Allocation of the days for different reasons also become easy when categories are present, for example, if your country gives 180 days for maternity leave, it helps to bucket that inside the category maternity leave. This way no discrepancies and confusion will happen while your employees apply for time off and in the tracking process. So, what are the common types of PTO/ Leave that are probably best to have in an organization? Let's see.
The standard kind of leave provided to employees for them to avail when they are sick. Adding attachments is a common behavior associated with this type as sick leave sometime requires Medical Certificate by the organization.
A set number of days provided to employees for them to avail of vacation time when they want a couple of days for holidays or trips. It is usually set to avail in bulk and informed prior to the team.
Leave that is assigned to take for personal works of the employee like functions to attend, meet-ups and other personal works in their life.
A set of days that are commonly celebrated or recognized as public leave when is not officially granted by the company but is an optional day that the employee can use as time off. Usually, employees are allowed to avail a few days from the exhaustive list.
Leave that is allocated to the employees for them to avail during grieving periods like the death of a close person in their life.
When an employee has a call of duty from the jury or the military, provisions are made for them to miss work to meet the obligations assigned by the jury/military without losing their financial support.
Leave assigned to a woman/man for when they become mother/father respectively. Maternity leave is a long set of days that are supposed to be used in one go when a woman births. Paternity is commonly allowed to be split up and used by the new father as per his convenience.
Paid leave given to an employee to pursue education related to the current job.
A few days allocated for one financial year that can be used when all other leave types are used up, when not used, the leave day salary gets encashed with the year-end salary or as a bonus for the employee.
Paid leave provided to an employee while they are on their sabbatical that is a short period of time away from work, mostly 6 months to 1 year.
Very few companies in the world have Unlimited PTO as their employee leave system. It is a relatively new concept that some companies are trying to implement successfully.
Although most organizations are skeptical about Unlimited PTO, most employers who shifted to the Unlimited PTO system say that their employees took fewer days off after the switch.
So, is Unlimited Time Off the right type of PTO policy for your company?
Not all companies are suitable for the Unlimited PTO system, not yet. For example, the Healthcare Industry would need its employees to work regularly as their role affects people who depend on them for critical reasons. On the other hand, organizations that thrive on the creativity and productivity of its employees to run its business can implement unlimited PTO as a way of encouraging its employees to focus on the results rather than on the number of work hours.
Consider the Pros and Cons of an Unlimited Time Off policy before implementing it as the Time off policy for your organization.
The first step to implementing a PTO system in an organization is drafting a PTO policy.
A PTO policy communicates the organization’s time off guidelines, procedures, and restrictions to the employees. It is everything employees and managers should know before applying or approving leave.
Guidelines communicate the PTO policy to your employees and need to be drafted carefully after analyzing your company, its culture, and your State Employment Laws.
Surprise! Laws are different for each state/country so you need to analyze what is applicable in your state before drafting your policy. Some states require employers to carry over unused time off of their employees or have a minimum of 40 working hours to avail PTO and so on. It is important your guidelines abide by the state laws to avoid any kind of legal trouble.
A guideline should solve all your employee’s doubts with regard to Time off.
Some common doubts covered under guidelines are:
Guidelines form a major part in a PTO policy directly affecting the working of your PTO system.
It is easy to implement a Time-off system in your company. Getting your employees to use it adequately and correctly is the real challenge. Step one is equipping them with clear knowledge of how your PTO system works. This includes,
The employee's complete knowledge of the procedure can make the system smooth and hassle-free.
Any type of PTO policy comes with restrictions to make sure employees do not misuse the system and to help managers know when and what action to take. Some basic restrictions that need to be part of your policy include,
Frame your restrictions based on your company, its needs, and the requirements of employees. For example, a hospital and digital marketing agency cannot have the same restrictions, the requirement of people round the clock on the former is something to consider.
Most employees fear that time off can negatively impact their career so they end up not taking time off, as much as possible. As a result, they burn out or might not deliver their best at work. However, you can encourage employees to take a break or go on a vacation by emphasizing it enough.
When you announce your PTO policy, add in a line that says, “We encourage employees to take at least 15 days off using PTO by end of the year,” It assures employees that the company would not mind or judge them based on the days they take off.
Ask your managers to fix their team’s Work calendar in a way there is not much work for your employees during the Summer or Holiday Season. Instruct your managers to arrange all meetings, releases and check runs before the vacation period to make sure the office does not come back to a load of pending work.
Announce a company/team surprise holiday after a major release goes out or a shut down of the company during the holidays. Make sure to do it without affecting your clients and customers. Have few people from each team who have already taken a vacation come to the office to take calls and attend to work that develops.
If an employee really needs a vacation, ask them personally to take off. As an employer, it would put you in a good place among the employees showing you care about them and you get back your employee refreshed and productive.
If you want your employees to take a vacation, take one yourself and set an example. Encourage your managers to take time off to inspire the employees and also clear their fear of taking Time offs.
Freshteam enables you to create policies, implement workflows, track and manage all employee time off in one place. Its simple and intuitive UI makes it easy to learn and use for everyone in the organization.
Creating a policy is the most crucial step while setting up a PTO system. With holidays, calendar and work weeks of over 10 countries built-in, building a policy becomes less a hassle and more an easy checklist item.
Freshteam also allows you to create custom policies for different regions, shifts or teams when necessary.
Employees can use Freshteam’s self-service portal to raise leave requests. The leave requests are forwarded to their managers and HR partners who can approve or decline them.
The Freshteam Time off dashboard eliminates the need to toggle between emails, calendars, and sheets for Time off. You can access new and pending requests, approve or decline a request, apply your own Time-off, monitor your team/company’s Time off Trend - all in one place. A quick glance of the dashboard will help you comfortably plan your team’s work for the day/week based on the availability of employees.
Bonus: Freshteam offers data export options to feed your payroll systems.
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