Every good company is built on a set of documents, procedures, guidelines, checklists, handbooks, and other materials. HR takes up a good part of those documents - and for a good reason. You want to keep your employees happy and protected, all the while respecting the laws of your city, state, or country.
One of the most important policies is on paid time off. Every company needs to have it in place in order to provide payroll to their employees as well as abide by relevant employment laws. If you’re just starting up a business or revamping your PTO policy, you may be wondering - what do I do to prepare?
Here is everything you need to know to get prepared for offering paid time off in your company.
What is paid time off?
Paid time off or PTO is the time that employees in a company have to take as days off work. While there are different types of paid time off, the main term is usually used to categorize all of these at once, including sick leave, personal time, vacation days, or any other type of employee absence.
PTO is usually earned or accrued through time as your full-time employees spend a certain amount of time working for you. While much of these time off policies depend on the laws of the certain area you’re in, there is still plenty of freedom for you to design your own and reward your existing employees as well as attract new talent.
How does paid time off work?
In most cases, businesses give employees around 30 paid days off per year. This includes vacation days, holidays observed by their company, personal days, sick days, and more. Over time, as employees spend more time in the company, they can accrue more days based on seniority.
They can also roll over certain days to the next year or a period of time if they end up unused. These are common types of benefits to employees, and they’re usually given to full-time staff only - a temporary employee has different rules and regulations.
The benefits of offering paid time off
Offering PTO hours and sick time is actually required by law in many countries for a full-time schedule. So, it may not make a lot of sense to talk about the “benefits” of offering PTO as part of your human resources operations. However, let’s highlight some of the advantages so you can consider treating PTO more seriously as an offer for your existing and future employees.
If your employees can choose when and how to take their time off, you’re guaranteed to have a happier workforce. If their time off policies let them know that they can take a certain number of hours per week in case they get sick, they’ll know that you have their back.
A great way to attract talent
Time off policies are a great negotiating item that you can use during the hiring process. If you’re in a tough market and you’re having a hard time attracting candidates with salary alone, a generous vacation policy might just tip the scales in your favor.
People who take more days off are happier and as research shows, they’re more productive as well. As research shows, constant work without taking a rest can lead to burnout and burned out employees are not the most productive ones by default.
Fewer ill employees
When employees are not feeling well and they have to get to the office and work while sick, no one wins. Not only are they not productive, but you also risk whatever health condition they have spreading to other employees in your office.
But before you get all excited about PTO time planning…
Check your local laws
There are countless articles on paid time off online and they all cover different angles, benefits, tips and tricks, and different bits of advice. However, all of them have one more thing in common - advising you to check on your local laws.
Paid time off, vacation policies, sick leave - these are all important items regarding the employment status of your people, and they are not only governed by your business. More importantly, they are governed by local, state, and country laws.
If you break your PTO and employment laws, in the best possible scenario, you’ll be forced to compensate your employee or contractor for their unused PTO hours. In the worst case possible, they’ll lawyer up and sue you and you’ll end up spending thousands on legal fees, even if you win the case.
Since PTO policies are not something you do every year, make sure to create them once and hire a professional to help you.
Understand the differences between types of paid time off
While the umbrella term is PTO or paid time off, there is a whole host of different terms under it. Just offering paid time off is the very beginning of your journey. To provide a better experience for your employees as well as abide by your laws, make sure to know your different types of paid time off.
This is the most common type of paid time off and one that most employees look forward to. Vacation time can be used for traveling, spending time with family, relaxing or simply getting rest. There is some wiggle room here but look into the minimum amount of vacation time you can offer to your employees in your state or country.
Besides regulating how many days employees can take, make sure your vacation policy states how many months of employment a person needs to have before being eligible for it. Also, list how much advance notice employees need to give you before taking their vacation days.
One of the most important policies there is, sick leave tells employees how many days they get to take when they are sick and injured. Depending on where you’re based, sick leave may be mandatory, so inquire about your local laws.
While it may seem like additional paperwork, offering sick leave greatly reduces the risk of a sick employee spreading disease in the workplace. You also avoid employees coming in to work sick when they are not very likely to be productive.
This is a common type of time off that is offered to employees for handling various types of tasks, such as fixing a car, taking their child somewhere, or just doing some kind of chore. It’s usually not designated what the personal time is for.
No matter where you’re based, you need to give every full-time employee a certain number of holidays which are mandated by their place of residence. These could be days such as Christmas, New Year, Martin Luther King day or something else. In the United States, most states mandate up to eight days per year for holidays.
Things can get a bit more complex if you have a remote workforce scattered across different countries. I have worked in a few companies set up like this and the most common practice is to follow the bank holidays of the country where the employee is located.
This is the type of PTO your employees take in the case when someone in their close family is deceased. Depending on who the deceased person is (what the relation is to the employee), there could be different amounts of days allotted in this policy.
No matter how many days you give, make sure to state it explicitly in your PTO policy.
When a member of your team is pregnant or just had a baby, there is a special policy in place for these occasions. Parental leave varies from one country to another and it can be a matter of weeks, months or sometimes years in some countries.
Lately, the motion of giving paternal leave is becoming increasingly popular. If you want to attract younger people in your team, consider offering paid time off not just for mothers, but also for men who recently became fathers.
If you’re in the United States, your employees could be called up for jury duty at any point in time. If your state has jury duty laws, you’ll have to offer this type of paid leave to your employees. It’s a good idea to ask your employees for some proof that they were summoned for the jury before starting their PTO for this purpose.
Consider unlimited paid time off
In recent years, a trend came up as part of improving company culture and becoming a more desirable employer. Unlimited PTO policies were introduced in many companies as a way to entice more candidates to apply and more people to stay.
The idea is simple - if you meet certain conditions (days of employment, seniority, not clashing with someone else’s calendar, etc.), you can take as many paid days off per year as you wish. Eligible employees can just request a day and get unlimited time off.
It sounds great in theory and anyone who meets the minimum requirements can benefit from this kind of policy. In practice though, things are a bit different.
When unlimited is not really unlimited
You don’t have to dig deep to find accounts where employees speak badly of using unlimited PTO. Unfortunately, many companies are using this as a marketing trick to attract fresh blood to their team and once it’s time to claim their unlimited days, things take a turn for the worse.
In fact, many employees report taking even less than two weeks of PTO per year when they’re on an unlimited policy. The reasons are many, from conditions that are too hard to meet to the fear of looking bad in front of their peers.
So, if you are offering unlimited PTO, make sure to clearly express the conditions that your employees need to meet. And if they’re not taking enough days off - encourage them to do so.
If there’s one takeaway you need to get from us today, it’s that creating a great PTO policy is an investment that pays off greatly - for your employees and the future of your business. If you do it right, your PTO policy will result in happier, healthier, and more productive employees, all while improving your bottom line.
And to manage your employees from one place, you need dedicated HR software that handles the heavy lifting so you can focus on your people. Try Sloneek today and save up to 20 hours every week on mundane HR tasks!