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Is Your Time Off/PTO Policy Working For You?

Posted by Nancy Saperstone on Thu, Oct 08, 2009 @ 12:31 PM
  
  
  
Now is the time of year that employees begin to look at their vacation and PTO balances and realize that they have three weeks of vacation to take before the end of the year, or they'll loose it.  Do you allow them to take it all in one block?  Do you require them to break it up into shorter amounts (i.e. a week at a time) or do you make an exception and allow them to carry time over?  On the flip side, maybe you have an employee that already has a planned vacation but has already taken too much time this year and has no additional time to take...

Time Off is one of those HR policies and employee benefits that is very close to an employee's heart and therefore issues around time off can often be contentious between the employer and employee. Whether you have a vacation or PTO policy, having a well-defined and market competitive time off policy can help promote employee retention and employee motivation.   Your employee handbook should outline the policy and all the specifics around taking time, balances and the logistics.  When writing your policy consider the following:

  • Eligibility - When are new hire eligible to begin taking time?
  • Pro-rated time - What is the threshold for part-time employees to take time and how is it pro-rated?
  • Accrual amounts - How does time accrue?  Does it increase based on length of service, position or some other measure?
  • Approval process - What is the process for requesting time off?  Who keeps track of this?
  • Taking time - Are there requirements around how much time an employee can take in a row?  Do you limit employees to only a week at a time, or maybe 2?
  • Use it or lose it - What happens to unused time at the end of the year? 
  • Carryover - How much time can an employee carryover at the end of the year?  Are they required to take this carried over time during the first 3 or 6 months of the year?
  • Payout - Do you have a policy to payout employees for unused time?
  • Negative balances - What will you do if an employee wants to take time they have not yet accrued?
  • Termination - Keep in mind that any unused accrued time must be paid out to the employee upon termination.  You'll want to write your policy in a way that will not result in excessively high balances that require payout upon termination.

Once you've written and published your policy, the most important thing you can do is, STICK TO IT!  An employee policy that is constantly having exceptions made is not an effective policy and only breeds dissatisfaction among the employee and employer!

 

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COMMENTS

Nancy - great points here, and very timely. We've had several meetings on PTO recently. One of our challenges is dealing with those who have to wait until they've accrued enought time to take(usually at year end) which poses a staffing challenge for the Manager when everyone wants vacation at the same time. We start off accruing monthly at the rate of 15 days/year and accrue 1 additional day for each year of service. Max annual carryover is currently 40. Interesting discussions here about possibly looking at quarterly accrual vs. monthly, increasing max. carryover amount, and changing to rolling carryover vs. calendar year carryover. Thoughts?

posted @ Tuesday, October 13, 2009 8:42 AM by Jeanne Watkins


Nancy: Thanks for the great checklist of issues to keep in mind when updating PTO policies! Linda

posted @ Tuesday, October 13, 2009 10:55 AM by Linda Farley


Again New Zealand comments that may or may not be of assistance. 
 
We have a legislated 4 weeks leave per year of employment with some employers operating a "leave year" where all leave accrues within the same period but more commonly the accrual rolls over on the employees anniversary date. Payroll software does the tracking very well. 
The major principle is however that it is the employers responsibility to monitor the use of leave and if necessary to place an employee, who is not utilising the leave available, on Leave with 14 days notice. If this is not done the leave accrues until the employee takes it or resigns and receives a full payout of all accrued leave. ( A definite incentive to manage entitlements) 
 
Most carry forward policies limit the amount permitted to be automatically carried forward to a max of 10 days. Audits of leave balances quickly identify those who need to be placed on leave within the last quarter of the year so that accruals being carried forward are limited. 
 
Policies within an organisation need to include a management prerogative to manage the leave accruals against their bottom line and therefore retain the right to demand that leave be taken.

posted @ Wednesday, January 26, 2011 12:11 AM by Les Freeman


A good list of things to watch! Our company has a PTO policy that works extremely well for all concerned, takes into coniseration all the points you listed and has been in place for over six years with very few problems. I'd be happy to send it to anyone who would like it.

posted @ Monday, May 02, 2011 8:56 AM by Tony Miller


Sorry--I left out the address: sigmaboston@yahoo.com

posted @ Monday, May 02, 2011 8:57 AM by Tony Miller


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