The Impact of PTO: A Guide for HR Managers

Masha -

All HR managers are familiar with paid time off (PTO) requests. This offer is becoming increasingly popular and is a decisive factor when hiring new employees. Everyone loves the freedom of being able to take a vacation without having to worry about their salary at the end of the month. This post will tell you everything you need to know about paid time off policies and more.

  • Paid vacation days
  • Paid time off in California
  • Average compensatory time off in the USA
  • Managing PTO
  • Paid time off best practices
  • Track PTO

Definition: What is paid time off?

A basic definition of PTO is that it is a benefit program that allows employees to take a certain number of days off from work and still get paid. Generally, these absences are due to vacation, illness or personal circumstances. European workers are usually guaranteed between 20 and 30 days off per year. However, there is no such regulation in the USA. There are no paid time off laws for paid holidays, vacation days, or paid sick days. Instead, companies in the US set their own guidelines for building PTO. An absence policy can include the following:

Medical leave

If an employee is sick or caring for a sick family member, they may need intermittent leave. This leave also covers doctor's visits or hospital stays.

Bereavement leave

This leave can be taken when an immediate family member passes away and is known as bereavement leave.

Annual leave

This leave is granted to employees and can be used for any occasion. This may include religious holidays, birthdays, anniversaries or emergencies.

Parental leave

This includes any time that a person has to take off to care for children. This can be paternity or maternity leave, paid leave or adoption leave.

Vacation requests

Vacation PTO is one of the most common types of vacation. It is the time that an employee spends on a trip or vacation.

While there are no federal laws governing PTO, some states have their own regulations that limit the accumulation and use of PTO. California is an example of this. In California, paid time off is regulated so that companies can limit the number of hours accrued to 48. Thereafter, employees must use a portion of the accrued hours before they can be accrued again. Additionally, California allows companies to limit PTO use to 40 hours per year. The remaining time is carried over to the next working year.

Average paid time off in the US

So how much PTO is normal? Countries such as France, Germany, Spain and the United Kingdom have a total of more than 30 days of vacation per year. However, the average in the US is 10 vacation days per year, depending on company policy, plus days for sick leave and personal matters. However, a payout is not guaranteed these days. In this sense, the US is the only advanced economy that does not guarantee PTO to its workers.

Although this is increasingly being included as an important factor in company policy, the number of exemptions is not increasing. Due to increasing work-related pressures, employees are less likely to take time off, even if they are eligible for PTO. In addition, a large proportion of employees indicated that they often work during this period. However, this is not good news for companies. A break allows people to switch off from work and recharge their batteries. As a result, their productivity increases, which is undoubtedly good for a company's long-term growth.

How does paid time off work? - Using a Paid Time Off Tracker

Because the nature of work varies widely, a company's workforce may include salaried, part-time, and hourly employees. Therefore, it is important to know how to calculate paid time off for each individual. Below is a breakdown of the differences between each type of employee.

Paid time off for hourly employees

Normally, paid time off is based on a time credit. In this sense, it is calculated depending on the number of hours worked by the employee. For example, if an employee accrues one hour of PTO for every 40 hours worked, that means that after 50 weeks of work, they have accrued 50 hours of PTO, which is equivalent to 6.25 paid days off. A calculator for calculating paid time off will help any HR manager calculate the hourly time off of employees.

Paid time off for employees

For salaried employees, most companies offer a predetermined number of vacation days, which includes vacation time, sick time, and other personal requests. This is becoming increasingly common in the US and helps attract new employees to a company. A paid time off calculator can help you calculate any additional PTO employees may receive on top of their fixed amount.

Paid time off for part-time employees

If you offer your permanent employees a certain amount of compensatory time off, it seems logical that you would simply halve it for part-time employees.

A sample PTO policy is a good starting point to ensure you comply with paid time off laws. But of course, there are also some best practices you should consider before you get started.

Requesting time off

To simplify administration, consider using a paid time off request form when managing different types of time off requests. This form allows a person to formally request a planned absence from work. Whether it's a paid time off policy in a small business or a large organization, using this form ensures that HR keeps track of time off taken and helps with record keeping.

Determination of company holidays for applications for paid time off

A good practice for any policy would be to create a list of paid vacation days when the office is closed. This could also include national holidays such as Christmas or Independence Day.

Time restrictions

One thing that should be made clear is setting time limits on accrued PTO. Is there an expiration date for the PTO or can it be used the following year? This needs to be included in the policy.

PTO vs. Vacation

While the term "vacation" refers only to paid time off from work, PTO generally includes any paid time away from work. Some companies even offer unlimited PTO! So what absences will you include in your policy? In addition to vacation, do you also offer paid sick and bereavement leave? These are crucial factors that you need to decide on before moving forward.

Another best practice that can be incorporated into company policies is tracking PTO. Paid Time Off Tracking allows HR managers to keep track of the number of hours employees have accumulated, as well as the timing and reasons for taking time off. Typically, PTO software comes with a simple PTO tracking tool that can be used for this purpose. Ultimately, this software is an automated leave management system that assists employees in requesting leave and helps managers approve and manage it.

A time-off tracker provides HR departments with a template application form and an Excel template to enter and store information. This can make it easier for HR managers to approve requests for paid leave. Additionally, it can also be used to track employee accrual rates and maintain a log of employees' paid time off plans. Using this software is a much more streamlined and efficient way of managing PTO. Not only does it save time and money, but it also increases productivity as employees can take their vacation with the confidence that it has been approved.

In conclusion, understanding and effectively managing Paid Time Off (PTO) is crucial for HR managers. Implementing tools like IceHrm can streamline the process, ensuring accurate tracking, compliance, and enhanced employee satisfaction.