What is PTO?

Everyone is familiar with the term PTO, which refers to paid time off. However, many people don’t know exactly what that means. Employers all offer some variations of paid time off, including sick days, personal days, and vacation days. However, most companies have started using a new PTO model in more recent years. This article will discuss what PTO is, how it works, and how to easily implement it. 

What is the PTO Model?

PTO allows employees to take time off and use it for anything, including sick days, personal time, and vacation days. There are a few different types of PTO systems businesses use. It’s typically best for companies to choose one type of PTO and stick to it to allow fairness among employees. You should also consider whether the days you’re allotted can change the longer you’re with the company. Typically, companies will offer more days off if you’ve been working there for a set number of years, which can help boost employee morale and encourage loyalty. Here are the different types of PTO that employers may offer:

Set number of days

Many employers go the easy route and give employees a set number of days they can use for time off. Typically new employees are not eligible for time off within the first 90 days of employment, but once they’ve finished their probationary period, they will receive the same PTO benefits as every other employee. Typically, ten days is the average number of days off companies allow employees. Of course, these ten days of paid time off do not include sick days and holidays, which will be reported elsewhere on your employment contract or employee handbook. 

Accrued time off

Accrued time off allows employees to earn time off each pay period. Accrued time off has to be calculated using a formula that multiplies the number of days allowed off by the time an employee would work on those days. For example, if an employee gets ten days off per year and they work eight-hour shifts, they’ll earn 80 hours of PTO per year. Dividing those hours by 52, the number of weeks in a year, the employee would earn around 1.5 hours of paid time off per week. 

Rollovers

Some employers allow employees to roll over their unused paid time off from one year to the next. So, for example, if you’ve only used 5 of your ten days of PTO, you can use those unused five days within the next year. While this may seem generous to many small businesses, they can set limits on how much you can roll over before you start to lose your PTO. 

On the flip side, many employers have a policy where if you don’t use your paid time off within the year, you’ll lose it. However, this can cause many employees to use their unused PTO at the same time, particularly at the end of the year in December, when many businesses are busy. While employers can deny PTO, it’s typically best to allow employees to use their time before they lose it. However, some employers may choose to negotiate with employees who want to take time off during the end of the year by allowing them to roll over some of those hours into the new year. 

Benefits and Drawbacks of PTO

With the old model, workers would be told how many sick days, vacation days, and personal days they would be allowed in a single year. Employees would then have to disclose the purpose of their time off in a request to the employer, which would sometimes lead to lying about being sick so employees could start vacation early or attend personal events. In some work environments, lying isn’t necessary because most employers don’t mind how you spend your time off. However, in toxic workplaces, employees feel the need to lie about why they were taking time off, which can impact trust and overall faith in the employee-employer relationship. 

The PTO model gets rid of the need for lying by letting employees decide how to use their time off without having to deal with judgment from higher-ups. This system also allows for better planning, allowing workers to decide how much time off they need for personal and family needs, vacations, and holidays. PTO can be influenced by a company’s culture, taking individual preferences into account to determine how employees use PTO. 

In the case of unlimited PTO, workers are trusted to make good decisions about their work-life balance and expected not to abuse the company’s lenience when it comes to time off. Unlimited PTO is often used by companies with successful, healthy cultures based on trusting employees. These employees are typically more engaged in their work than employees with a set number of days they can take off work. Additionally, by offering better PTO, you can reduce employee turnover and prevent burnout. 

Employers may choose to be more lenient with PTO policies. However, it’s important to treat all employees fair. If you’re allowing one employee more PTO, it’s time to adjust your employment contracts so everyone can have the opportunity to focus on their mental and physical health.

PTO Best Practices

If you’re using the traditional method of employee time off, including tracking sick days, personal days, and vacation days separately, you might find it easier to track employees by implementing PTO. Here are PTO best practices for employers. 

Ask for Proper Notice

Sometimes your employees will have emergencies forcing them to take a day off now and then with little notice. However, whether your employees work remotely or in an office, it’s important to receive proper notice for most time off requests. Remember, with PTO, your employees are not obligated to tell you why they’re taking off, but with proper notice of at least two weeks, you can allow for proper project management to ensure their projects will be taken care of while they’re gone. 

Try Unlimited PTO

Some companies cannot operate by allowing employees to take unlimited PTO. However, many can; they simply just don’t trust their employees to be respectful of the business, its clients, customers, and their coworkers. Believe it or not, dedicated employees can take off as much time as they feel is necessary to protect their mental health during times of stress while still finishing all outstanding projects. If possible, try allowing unlimited PTO for a short time to see how it works within your organization. 

Determine the Type of PTO

Before you can implement PTO In your business, you should determine whether you’ll give employees unlimited PTO, a set number of days off, or allow them to accrue time off. Most employees prefer to get a set number of days they can use throughout the year and aren’t forced to wait until they accrue enough paid time off to take a break from work. However, it’s up to you to decide what’s best for your business and its employees. 

Decide How Much Time

If you don’t want to try offering unlimited PTO, you can decide how much time off your employees can take. While the average PTO in the U.S. is around ten days, many employers offer more than that to allow their employees to take sick time and personal days and still have enough left over for a vacation. 

Does Your Company Need PTO?

Most states have laws companies need to follow concerning PTO. Before you begin drafting your PTO policy, it’s best to speak with an employment lawyer or HR specialist who can tell you what the laws are for PTO in your state. 

While your company might not be legally obligated to provide PTO, it’s a necessity if you want to keep your top talent. Your employees expect to be able to take time off for important life events and want employers to respect the need for personal time. If you’re not offering PTO, you could lose the best employees to the competition willing to offer them better benefits to improve their health and wellness. 

Bio: Ashley Nielsen earned a B.S. degree in Business Administration Marketing at Point Loma Nazarene University. She is a contributing writer at 365businesstips.com where she shares knowledge about general business, marketing, lifestyle, or financial tips. During her free time she enjoys being outside, staying active, reading a book, or diving deep into her favorite music.