Paid time off, commonly referred to as PTO, is a time when an employee receives compensation despite not working. While it may surprise some people, paid time off is not a guaranteed right<\/a> for the majority of workers in the US and it instead relies on individual businesses to decide their own policies.<\/p>\n In the US, it\u2019s generally up to employers to decide whether they want to offer paid time off, and the policies they use to do this. This can be an important decision for managers, as there are some distinct benefits and drawbacks to PTO.<\/p>\n 76% of American workers<\/a> have access to paid holidays, so the majority of businesses see the benefits in offering paid time off, but they each implement it in their own way.<\/p>\n As legislation surrounding PTO is thin, it means businesses need to think hard about how they want to approach this issue. Any policy has to benefit both the business and its employees, but often paid time off can end up being a hassle for both.<\/p>\n At its most basic level, employment is about getting paid to work. Smart businesses don\u2019t pay people for their time, they pay them for their output. Humans have a limited attention span, and they have limited energy reserves. If we don\u2019t replenish those energy reserves from time to time, then our output can drop drastically.<\/p>\n Image Source<\/a><\/p>\n Sure, there\u2019s always that one person that lives for work and never takes holidays \u2014 but does this ultimately enable them to do their best work?<\/p>\n More time spent working doesn\u2019t necessarily mean you get more work done. In fact, regular breaks (both short breaks during the day, and longer breaks throughout the year) make people more efficient in the long run.<\/p>\n If your business doesn\u2019t offer PTO, then your employees have less incentive to take the time they need to refresh themselves and maximize their output. Anything you can do to improve your offering benefits your business.<\/p>\n A good paid time off policy can lead to improved performance, better employee morale, and fewer accidents and errors.<\/p>\n Paid time off is largely decided by employers, which means there are different ways it can be enacted. Every business is unique, which means the way they manage paid time off is going to be different.<\/p>\n It\u2019s about balancing the needs of your business with the needs of your employees and scheduling your workforce to get maximum efficiency.<\/p>\n If your paid time off policies isn\u2019t achieving this balance, then it\u2019s time to look at new ways to use PTO to benefit your business.<\/p>\n Paid time off is often broken down into two categories: traditional PTO and unlimited (discretionary) PTO.<\/p>\n Traditional paid time off<\/strong> is probably the system we\u2019re most likely to think of when thinking of PTO. Employees are given a set number of PTO days or hours, and each hour they use comes out of that bank. For example, your business might assign employees 80 paid time off hours per calendar year.<\/p>\n Within traditional PTO, there are two common ways to assign PTO hours. The first is accrual, where employees earn PTO for each day or hour they work. The other is a bank, where employees are given a set number of hours for a certain time period.<\/p>\n Up until recently, virtually all businesses would have a traditional PTO system. In recent years though, businesses have been thinking hard about how they can benefit more from paid time off policies, and unlimited time off has become more and more popular (LinkedIn, Netflix, Oracle, and many others offer this<\/a>, including ZoomShift. Yes, we practice what you preach.<\/p>\n With unlimited PTO<\/strong>, Employees have no limit on the number of paid time off hours they receive, but the time has to be OK\u2019d by a manager. While there is still oversight over when paid time off is taken, this method empowers your employees<\/a> by giving them the responsibility of running their schedule so that they get the most out of their performance.<\/p>\n Along with employee <\/a>scheduling<\/a>, ZoomShift can help you manage your paid time off in both traditional and unlimited PTO policies. It comes without any additional cost.<\/p>\n PTO can be used as the employee sees fit. Paid time off policies is a recognition that employees have busy lives outside of work, and sometimes, they need some time off to tend to certain things.<\/p>\n To have a prosperous, efficient workforce, it\u2019s beneficial for your employees to have the time they need to take care of their home life. PTO allows workers to do this by giving them control over how they spend their time.<\/p>\n The variety of different types of paid time off can make your policies much more complicated. This is something you need to think about and decide where your company stands in each area.<\/p>\n Paid time off is an important part of the business that has big repercussions for both management and employees. Complicated policies that aren\u2019t well-articulated and calculated properly cause needless hassle, so it\u2019s important to have a clear idea of your obligations in the following areas.<\/p>\n What are your legal obligations relating to paid time off?<\/p>\n For example, not every state requires<\/a> employers to pay an employee’s unused vacation time, whether they leave on their own accord or are terminated from their position. However, some states, such as California, are legally required to pay out unused vacation time.<\/p>\n Each locality has its own framework you\u2019ve got to work with, but it\u2019s up to you how you develop your policies beyond that.<\/p>\n This is one of the first questions you will have to answer. How do you want to assign paid time off?<\/p>\n Will you give everyone a set amount? Will employees earn time off based on the hours they work? Will you go with the unlimited option?<\/p>\n Each option will come with its benefits and drawbacks, so think about which option best matches your needs.<\/p>\n What happens if an employee doesn\u2019t use their paid time off?<\/p>\n You offer paid time off because you want your employees to take a break, but what happens if they don\u2019t use it? Do you let it roll over to next year? Do you pay it off? Do they lose it?<\/p>\n These are sensitive questions you will have to answer.<\/p>\n Another policy you have to decide on is what happens to unused paid time off when someone finishes their employment. Do you pay it off, or do they lose it?<\/p>\n It might seem like a small detail, but it\u2019s something you will need to think about with your paid time off policies.<\/p>\n Depending on your business, there might be certain dates where you just can\u2019t afford to have employees off work. If this is the case, then you may have some blackout dates where PTO isn\u2019t permitted.<\/p>\n This works well in a seasonal business, but remember, the more you restrict the times when employees can take PTO, the more likely you are to have multiple people off at the same time.<\/p>\n Paid time off is a concept that\u2019s developed over time. At first, the thought of businesses paying people not to work must have been quite alien to people, but over time, we\u2019ve started to see the benefits of these policies.<\/p>\n The right PTO policies can have a big impact on many different areas of a business, but it\u2019s not without its challenges.<\/p>\n Pros<\/strong><\/p>\n Cons<\/strong><\/p>\n One of the most important aspects of PTO is that managers and employees can easily keep track of how many paid days they have available. The easier you can make this, the more effective your policies are likely to be.<\/p>\n How is PTO calculated, will depend on your PTO policies. Here we discuss all the possible ways to calculate PTO.<\/p>\n The annual PTO bank calculation is perhaps the most simple.<\/p>\n Decide how many hours of paid time off employees start the year with, and subtract the hours as they use them.<\/p>\n Say Kelsey starts the year with 80 hours and decides to take a week of vacation<\/a>. Simply subtract 40 (5 days times 8 hours) from the original 80 hours, and she\u2019s left with 40 hours of PTO.<\/p>\n Wondering how to calculate PTO accrual. Well, this method assigns PTO based on the number of hours worked.<\/p>\n Kelsey works a full-time schedule of 40 hours per week, and she works 50 weeks per year. Taking the 50 weeks times her 40-hour workweek, you get a total of 2,000 total hours worked per year.<\/p>\n If Kelsey\u2019s company offers 80 hours of PTO a year, then the calculation will look like this.<\/p>\n 80 Hours of PTO \u00f7 2,000 total work hours = 0.04 PTO hours accrued per hour worked.<\/p>\n For every hour Kelsey works, she will receive 0.04 hours of paid time off. Many businesses see this as the fairest way to assign PTO.<\/p>\n Daily PTO accrual is a simple method for employees who work regular 8-hour days.<\/p>\n Your company offers 80-hours of PTO, and Kelsey is expected to work 250 days a year (5 days a week times 50 weeks). 80 hours of PTO divided by 250 days means that Kelsey earns 0.32 PTO hours per day she works.<\/p>\n This calculation gives your employees a clear idea of how they earn PTO, and \u201chow much their time is worth.\u201d<\/p>\n Weekly PTO accrual is very similar to the daily PTO calculation.<\/p>\n Instead of breaking the time down into days, you\u2019re simply dividing your total annual number of PTO hours by the number of weeks you work. So, in Kelsey\u2019s case, this will be 80 PTO hours divided by 50 weeks of work \u2014 1.6 hours of PTO earned each week.<\/p>\n Again, this calculation works better for employees on full-time schedules.<\/p>\n With unlimited PTO, there\u2019s no need to keep track of how much PTO employees are taking, so there are no calculations. However, in such a flexible system, it\u2019s vitally important that you have a good employee scheduling system<\/a> in place so that you can keep track of when everyone is working.<\/p>\n This system can be quite hectic if you\u2019re not properly organized, so it\u2019s important you have good systems in place to help you manage your unlimited PTO.<\/p>\n Whether you choose a traditional PTO method or unlimited, the most important thing is how you implement it. You may have the best intentions with your PTO policies, but if they\u2019re not enacted properly, then you\u2019re going to struggle to see the benefits.<\/p>\n Scheduling is vitally important- you need to have a clear idea of who is working when. You can\u2019t have everybody off work at the same time, so your ability to keep track of when people are taking PTO is essential.<\/p>\n You also want your PTO policies to be fair and give people the rest they need. You can\u2019t do this without having a good way of tracking PTO. It needs to be quick and easy for employees to see how much time they have left, and for you to be able to approve hours.<\/p>\n Without the right systems, this is going to be extremely challenging and can add a huge amount of extra work for your HR team.<\/p>\n Paid time off is important for any business, but it\u2019s also got to be efficient. If you\u2019re using outdated methods to keep track of PTO, then you\u2019re not likely to see its full benefits of it.<\/p>\n ZoomShift makes PTO easy by bringing everything together in one place.<\/p>\n Not only can you create efficient schedules in minutes using intuitive templates,\u00a0track employee timesheets<\/a>\u00a0and attendance but you can also manage PTO directly through the system. This allows management and employees to see exactly how much PTO they have available, making it simple to plan ahead.<\/p>\n<\/span>Why Offer Paid Time Off?<\/span><\/h2>\n
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<\/p>\n<\/span>How Does PTO Work?<\/span><\/h2>\n
Traditional vs Unlimited (Discretionary) PTO<\/h3>\n
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<\/p>\n<\/span>What Can PTO be Used for?<\/span><\/h2>\n
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<\/p>\n<\/span>Paid Time Off Policies<\/span><\/h2>\n
1. Legal<\/h3>\n
2. How Do Employees Accrue Paid Time Off?<\/h3>\n
3. Will Unused Days Roll Over?<\/h3>\n
4. What Happens if Someone Finishes their Employment and Has Unused PTO?<\/h3>\n
5. Are there Certain \u201cBlackout Dates,\u201d where Employees Can\u2019t Take PTO?<\/h3>\n
<\/span>Pros and Cons of PTO<\/span><\/h2>\n
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<\/span>How to Calculate Paid Time Off<\/span><\/h2>\n
1. Annual PTO Bank Calculation<\/h3>\n
2. Working PTO Accrual Method<\/h3>\n
3. Daily PTO Accrual Method<\/h3>\n
4. Weekly PTO Accrual Method<\/h3>\n
5. Unlimited PTO<\/h3>\n
<\/span>Keys to Enacting Successful PTO Policies<\/span><\/h2>\n
<\/span>Scheduling and Managing PTO with ZoomShift<\/span><\/h2>\n