Far more than just a trendy benefit, flexible time off represents a fundamental shift in how organizations approach employee well-being, productivity, and organizational culture.

Today, it might be difficult for organizations to compete without offering employees the flexibility we’ve become accustomed to.

But it’s not just employees who benefit from flexible time off policies – the business does, too.

Keep reading, and we’ll explain all you need to know about FTO and why flexible time off makes your company better.

What is Flexible Time Off (FTO)?

Flexible time off, or FTO, is a broad term for PTO policies that don’t have strict limits on how much PTO an employee can use.

Unlimited PTO, or unlimited vacation, is a typical example of an FTO policy.

With unlimited PTO, employees can take as much time off as they want (within reason).

Unlimited PTO provides the ultimate level of flexibility (if managed correctly – as we write here, unlimited PTO doesn’t always function as well in practice).

FTO could also be other policies that aren’t rigidly structured, such as minimum vacation, where employees are encouraged to take a minimum number of vacation days per year (but with no upper limit).

Or it could just be that the company doesn’t have a strict PTO policy, and employees are allowed to take time off as needed. 

You might also see flexible time off referred to as:

• Flex time off
• Flex PTO
• FTO leave
• Flexible vacation
• Flex leave
• Discretionary PTO
• “Use what you need” PTO

These all refer to the same thing – a time off policy that doesn’t place clear limits and controls around PTO.

6 Key Benefits of Flexible Time Off Policies

There are many benefits to flexible time off, which apply both to the business and the employee.

Let’s examine these benefits now.

1. Enhanced Employee Productivity and Engagement

Though traditionalists may be concerned about reduced work output, flexible time off actually tends to increase productivity.

By removing rigid time-tracking constraints, employees feel trusted to manage their time effectively.

This autonomy leads to higher levels of intrinsic motivation, with team members more likely to go above and beyond when they feel respected and valued.

2. Improved Mental Health and Work-Life Balance

Flexible time off policies acknowledge that employees have their own personal needs and responsibilities.

In doing that, and providing a flexible approach to time off, you’ll give them the space to maintain a fulfilling life outside of work.

These policies demonstrate an organization’s commitment to supporting employees as whole individuals, not just workers.

Whether managing family care, pursuing personal development, or just taking time to disconnect regularly, employees will be able to sustain a higher level of mental health and reduce the likelihood of burning out.

3. Competitive Recruitment and Retention Advantage

Flexible time off is a significant differentiator for companies looking to hire the best talent.

Younger professionals, particularly millennials and Gen Z, consistently rank workplace flexibility among their top job considerations.

Providing this flexibility may attract more talented job seekers to your company, even convincing them to take your job offer over another role that pays more.

In addition, flexible time off may convince your existing employees to stay instead of jumping ship for another job offer, reducing your turnover rate and the costs associated with turnover.

4. Cost-Effective Alternative to Traditional PTO

Traditional paid time off (PTO) models often involve administrative overhead, such as tracking and managing time off and paying out unused days or hours.

A flexible time off policy may be easier to maintain and have a lower administrative load, as you don’t need to manage within a rigid structure.

You may also save on paying out unused PTO, as employees only use what they need.

5. Cultural Transformation and Trust-Building

Implementing a flexible time off policy sends a powerful message about organizational values. 

It demonstrates trust in employees, communicates respect for individual autonomy, and signals a modern, progressive approach to work. 

This cultural shift can improve workplace morale, collaboration, and organizational commitment.

6. Adaptability to Diverse Workforce Needs

Flexible time off policies provide the adaptability needed to support a diverse workforce. 

No two employees have identical life circumstances. 

These policies offer the necessary flexibility for modern workplaces, whether employees need time for medical appointments, family obligations, personal projects, or mental health days.

Flexible PTO may also support employees in different areas of the world or from different cultural backgrounds who may have different needs or desires regarding their working schedule.

Key Considerations for Implementing Flexible Time Off Policies

While the benefits are compelling, with greater flexibility and fewer constraints comes an increased risk of something going wrong.

Successful implementation of a flexible time off policy requires a thoughtful approach. Here are some things to consider if you’re planning to implement a flexible time off policy for your business:

• Clearly communicate expectations and the spirit with which you expect the policy to be followed.
• Adapt performance-based evaluation metrics, which track employees’ actual output and judge them by functional productivity rather than their attendance.
• Apply the policy consistently throughout the organization and ensure it’s fair and equal for all employees.
• Conduct regular policy reviews and adjustments to ensure your policy is right for your business.

Flexible time off can have some fantastic benefits, but it’s not for every company.

You might find that your team works better within structure, which is absolutely fine.

You can still provide employees with a positive work-life balance while adhering to a traditional approach to PTO.

Also, whether you go ahead with a flexible leave policy, a traditional PTO policy with clear limits, or anything else, it’s important to set up a clear leave tracking system to manage PTO and provide visibility for everyone in the team.

Use a tool like Flamingo to do this, and make collaboration easier and reduce admin load, without having to reduce your PTO benefits.

Final Thoughts

Flexible time off is more than just a benefit. It’s a strategic way of managing your team that aligns with the priorities of modern professionals.

For HR leaders and small business owners willing to embrace flexible PTO, the potential rewards in employee satisfaction, productivity, and organizational success are substantial.

Try it out for your team today, and see if it makes a difference for the better.

The post Why Flexible Time Off (FTO) Policies are a Game-Changer for Modern Organizations appeared first on ptoaccrualcalculator.com.

It’s not used everywhere, though, so many people won’t be aware of how Time Off In Lieu works, when it’s used, or how it should fit into your leave policy.

Keep reading and we’ll explain all this for you, so you have a complete understanding of Time Off In Lieu and whether it’s right for your business.

What is Time Off In Lieu?

Time off in lieu usually refers to a system where employees are compensated with time off instead of overtime pay for working extra hours. 

Instead of being paid additional wages for overtime, employees earn PTO, often at a rate equivalent to the extra hours worked. This leave can then be taken at a later date (subject to approval by the employer).

Common Uses for Time Off In Lieu

Time Off In Lieu is often an alternative to overtime pay.

Let’s say, for example, an employee is contracted to work 40 hours per week.

One week, they stay and work an extra 4 hours. Instead of being paid for an additional 4 hours, they are compensated with 4 hours of paid time off – in lieu of overtime pay.

Sometimes, TOIL is provided alongside the employee’s regular pay as additional compensation for overtime.

An employee might need to come into work on a Saturday, when they’re contracted to work Monday to Friday.

For their work on Saturday, they receive their regular rate of pay, in addition to Time Off In Lieu.

This is also common for employees who work on a public holiday – they receive additional time off in lieu of the day off they were entitled to for the holiday.

In New Zealand, for example, it’s common practice to receive time and a half (1.5x your regular pay) plus Time Off In Lieu (one additional day of PTO) as compensation for working on a public holiday.

TOIL vs Overtime Pay

TOIL is often provided as an alternative form of compensation to overtime pay.

Unless your company has any specific legal requirements in regards to TOIL or overtime pay, it’s up to you to decide how to handle overtime, and whether to compensate employees financially, or with additional time off (or a mix of both).

The Case for TOIL

The biggest benefit of offering TOIL instead of overtime pay is that it protects against overwork and burnout, and promotes work-life balance.

Each hour of overtime an employee works is one hour less for their personal life, spent on personal pursuits, with friends and family, or just resting and unplugging.

Coupled with a financial incentive to work overtime, employees may end up working too much for their own good, leading to stress and burnout down the road.

The Case for Overtime Pay

Time Off In Lieu may require more administrative work. You need to track the additional leave entitlements, possibly separately from regular PTO, if you have different expiry, rollover and payout rules for TOIL.

And while the idea is to promote employee wellbeing, many employees see TOIL as a less attractive benefit.

Overtime pay is typically realized sooner, and extra dollars in the employee’s bank account feels better than a few extra hours in their PTO balance.

Overtime pay may work better for employers who are strapped for staff. TOIL means you need to plan for the employee’s absence at a later date – and if they’re working overtime, it’s likely the business is already struggling to find enough labor.

Thus it may just be simpler for the business to pay for overtime instead.

Legal Considerations

The most important thing to understand in regards to Time Off In Lieu and overtime pay is what the law entitles employees to in your area.

Some countries or states require employers to provide overtime pay for working more than a certain number of hours in a week or a day. Some have similar laws for employees required to work on weekends or public holidays.

US employees covered by the FLSA (non-exempt employees), for example, must receive overtime pay at least 1.5x their regular pay for any hours worked over 40 hours in a week.

In other areas, such as the UK and Australia, companies may be able to provide TOIL instead of overtime pay.

Make sure you know the rules in your country and/or state, and use this as the starting point for your TOIL/overtime policy.

Here are some official government resources to refer to regarding Time Off In Lieu laws:

• US Department of Labor
• Gov.uk
• Fair Work Ombudsman (Australia)
• Employment New Zealand
• Government of Canada

Rules for Time Off In Lieu

If you choose to provide TOIL in your company, it’s important to create a set of rules for how TOIL is managed.

You should include this information as part of your PTO policy, and ensure it’s all clearly and readily available for employees to view.

Here are some things to cover in your TOIL policy:

How to Earn TOIL

Lay out the situations where TOIL can be earned – for example, for working over your scheduled hours for a day or a week, or for working on a public holiday or weekend.

As part of this, explain who is eligible for TOIL (such as salaried or non-salaried workers, part-time or full-time).

TOIL Accrual Rate

Specify the rate at which TOIL is given.

It’s common to provide TOIL equivalent to 1.5x the hours worked. So if an employee works an extra 8 hours in a week, they would receive 12 hours of TOIL.

Unless the law specifically says anything about TOIL and/or overtime pay, though, the company is free to decide the TOIL accrual rate for themselves.

Special Guidelines for Earning TOIL

Include any additional guidelines that may be necessary regarding how employees earn Time Off In Lieu.

For example, you might want to state that only overtime that has been approved by a manager will be compensated with Time Off In Lieu, to avoid employees taking it upon themselves to work extra hours and game the system.

You may also choose to give employees the choice between TOIL or overtime pay, which should be communicated as part of your overtime policy.

When TOIL Must to Be Used

Often (though not always), companies require TOIL to be used within a certain timeframe, to protect against overwork and burnout.

If so, state this rule in your TOIL policy, and ensure your leave management system tracks these days separately from regular vacation days or PTO.

Rollover/Payout Rules for TOIL

If necessary, state any differences in rollover or payout rules for Time Off In Lieu.

State whether TOIL carries over or expires after a certain time, and what happens to unused TOIL at the end of someone’s employment (whether it’s paid out as cash, or expires if unused).

How to Track TOIL

The final consideration for TOIL is how to track it.

Some companies may track TOIL as a separate leave type, with its own bank, rollover and payout rules.

This takes extra work, though, so consider whether this is necessary.

The alternative is just to include TOIL as additional PTO or vacation days. When someone is given TOIL, it’s not tracked as a standalone leave type, but instead added to their regular PTO balance.

From this point, TOIL just works the same as regular PTO does in your company, with the same rules and regulations for employees to follow.

We recommend this approach – but consider your own company’s situation and what suits you best.

Final Thoughts

Time Off In Lieu is an effective way to compensate employees for going above and beyond their regular working hours.

The biggest advantage of TOIL over purely financial overtime compensation is that it helps employees maintain their work-life balance, giving additional rest and time off to compensate for the extra time spent at work.

However, it’s not always the best approach, and sometimes you’ll find that overtime pay is more sought after and a better motivator in your company.

The post How to Work Time Off In Lieu into Your PTO Policy appeared first on ptoaccrualcalculator.com.

There’s also the question of how to structure your leave policy. You could break your PTO allowance down into different categories, or go with the simpler approach of a consolidated leave plan.

According to the US Bureau of Labor Statistics, 45% of US workers with access to paid leave are on consolidated leave plans. But is this the best approach for your business?

Keep reading and we’ll explain all you need to know about consolidated leave plans.

What Is a Consolidated Leave Plan?

A consolidated leave plan is when there’s no distinction made between different leave types, and employees get their whole leave entitlement provided in a single bank, to use as they wish.

They could use all their days for vacation, or for sick leave. It’s up to them to decide, and the business doesn’t track and limit how much time off an employee can use for each leave type separately.

Example of a Non-Consolidated Leave Plan

Non-consolidated leave plans are slightly more common (in the US, at least).

With this approach, leave is broken down into different categories, with separate limits (and sometimes different rules and guidelines) for each.

As an example, a non-consolidated leave policy might look like this:

• 15 days allowed for vacation
• 10 days sick leave
• 3 personal days

Vacation days might accrue over the course of the year, and roll over from one year to the next, while sick days and personal days are all available at once, and the balance resets at the end of the year.

Example of a Consolidated Leave Plan

A consolidated leave plan might offer the same overall benefits, but without differentiating by category.

For example, the same business as above might simply offer 28 days off per year.

It might accrue over the year, or become available all at the start of the year.

One employee might end up taking 20 days for sick leave, 2 personal days, and only 6 vacation days.

Another might take 25 vacation days, 3 sick days and no personal days.

Their benefits would come out to be the same amount, as all PTO works the same, no matter the reason for taking it.

Benefits of Consolidated Leave Plans

There are some positives to running a consolidated leave plan in your business, as well as some downsides to consider.

Let’s take a look at the benefits first.

Simpler Admin

Consolidated leave plans can be easier to manage. There’s no need to track different leave types, or create separate policies for each leave type, or judge what’s allowed to be used as a sick day, or a personal day, or other types of leave.

Increased Autonomy for Employees

Consolidated leave plans give more freedom and autonomy to employees.

They’re able to use their leave allowance as they wish. If they want to use all their time off to take regular vacations, they can – or they can be more liberal about taking sick days and personal days, if they don’t care as much about taking long vacations.

Encourages Honest Usage

Employees don’t have to lie or “fake” being sick to take time off.

Since there’s no distinction between sick leave and other PTO, “pulling a sickie” isn’t a thing. Increasing honesty and reducing deception may contribute to a better working environment, and a culture of trust in the workplace.

Talent Acquisition & Retention

A consolidated leave plan may work out to be a better incentive for hiring and retention of talent, due to the increased freedom offered to employees, and because it shows up as a bigger number (“28 days of PTO” looks better on a job ad or contract offer).

Encourages Employees to Maintain Better Health

Consolidating all leave into one PTO bank provides a clear incentive for employees to look after their health.

Workers know they’ll have more time off to use for leisure if they need to spend less of it on sick leave.

This may result in them living a healthier lifestyle, which is likely to benefit their performance at work and contribute positively to company culture.

Downsides of Consolidated Leave Plans

There are downsides to consider with consolidated leave plans, which we’ll examine now.

Reduced Sick Leave Usage

Employees may be less willing to use PTO for illness, fearing they’ll have fewer days for vacation or other personal needs. 

This can lead to presenteeism (working while sick), which affects overall productivity and health, and can have negative long-term consequences for the employee.

Potential for Burnout

Some team members may conserve their PTO and avoid taking breaks because they want to save days for emergencies or vacations.

This can lead to increased stress and burnout.

Increased Costs for Employers

In many jurisdictions, any unused PTO is required to be paid out at the end of employment.

This often applies to vacation time, but not sick leave and personal days. However, if all PTO is lumped together into one bank, it’s likely that it all comes under the umbrella of vacation time as the law is concerned.

Additionally, “use it or lose it” laws are more likely to apply. All of this may lead to higher costs for the employer.

Unfairness and Inequity

Consolidated leave plans may feel unfair to some employees, particularly those who get sick more often.

These employees will need to take a higher percentage of their leave allocation for sick leave, and might feel disadvantaged compared to colleagues who can allocate all their time for leisure.

Implementing a Consolidated Leave Plan? Follow These Best Practices

Consolidated leave plans can work if managed well. Effective management is crucial, though, or it can have a negative impact on your employees, and your business.

Here are some best practices to follow for companies considering this approach.

Clearly Communicate Your Policy

Ensure you provide clear and detailed guidelines for employees on how your consolidated PTO bank works, rules for accrual, carryover and payouts for unused time, and any other important details.

Set Reasonable Allotments

Many companies use consolidated leave plans to offer less overall PTO, without giving the appearance as such.

Doing so is short-sighted, and potentially detrimental to company culture and employee wellness.

Ensure your PTO allocation aligns with industry standards, along with any applicable laws, and provides sufficient time for both rest and emergencies.

Actively Encourage Use of Leave

Encourage employees to take time off without fear of judgment or falling behind on work.

Many will feel apprehensive about taking time off, sometimes feeling they need to save up their time off, which can lead them to be overworked and burned out.

Monitor Usage Patterns

Keep track of how employees use their PTO to identify potential issues, such as underutilization of leave, which is quite common as you remove guidelines around PTO.

If you find this is the case, give friendly reminders or encouragement to these team members to take PTO more often.

Consider Providing Supplemental Sick Leave

Some companies supplement PTO banks with a separate policy for extended illnesses or emergencies to address the drawbacks of a unified bank.

This may be a good idea if you want to extend some degree of flexibility for employees, but ensure that team members don’t fully neglect sick leave.

Is a Consolidated Leave Plan Right for Your Business?

A consolidated leave plan, or PTO bank, can simplify PTO management, empower employees, and create a flexible work environment. 

However, there are some downsides and risks to consider.

In the wrong environment, or with ineffective management, the lack of clear guidelines can make employees afraid to take time off, or create resentment and feelings of unfairness in your team.

Consolidated PTO requires a thoughtful approach to ensure fairness, encourage healthy leave-taking behaviors, and mitigate risks like presenteeism or burnout. 

Balancing flexibility with sufficient support mechanisms is key to making this approach effective for both employees and employers.

The post A Full Guide to Consolidated Leave Plans appeared first on ptoaccrualcalculator.com.

But what about negative leave? Sometimes your employees might ask for time off that drops their balance into the negative, and it’s important you know how to handle this.

Keep reading and we’ll explain all you need to know about negative leave.

What Does a Negative Leave Balance Mean?

Negative leave is when an employee’s leave balance drops below zero.

This could be intentional or unintentional. Sometimes, it’s a mistake, such as a technical issue when adjusting an employee’s leave balance, or failing to prevent them from requesting leave they don’t have available.

More often, it’s part of your leave policy – allowing employees to request time off when they don’t have the days in their current balance.

What Happens if a Leave Balance Becomes Negative?

If someone drops into a negative leave balance, they’re effectively “borrowing” leave from the future.

Since it’s a loan, they need to pay that loan back.

As they accrue more PTO, their balance will increase and eventually go back into the positive.

However, if they leave the job before their balance gets back to 0, they will likely have to repay any outstanding negative balance, which is typically taken from their final paycheck.

Do Employers Have to Allow Negative Leave?

There’s no requirement for employers to allow negative leave.

In areas that mandate a certain amount of paid leave for employees, when that balance hits zero, the employee has no entitlement to take any more leave.

It’s totally up to each company to decide how to handle this – and there are pros and cons either way, as we’ll explain next.

Pros and Cons of Negative Leave

There are some good reasons to allow negative leave in your company, as well as a few reasons not to.

Here are the pros and cons, to help you understand which way to go with your company’s PTO policy.

Pros

• It’s great for employees, allowing them the flexibility to take time off when they need it.
• The employee-friendly approach can help increase your recruiting pull, and decrease employee turnover.
• It may reduce absenteeism (aka unapproved absences), if employees know they can dip into negative leave if they need to.
• It can help keep employees happy and healthy, with a positive work-life balance, which benefits productivity and company culture.

Cons

• Negative leave requires more work to manage, to ensure employees pay their balance back.
• Some laws prevent companies from deducting money from an employee’s paycheck, so you may end up losing money if someone leaves their job with a negative balance.
• Allowing more time off may result in lower productivity.

Should You Allow Negative Leave?

In most cases, allowing employees to take negative leave is a good thing.

Things come up in peoples’ lives, such as unforeseen circumstances, emergencies, or short-notice commitments, and as a company, you want to make every effort to accommodate employees during these times.

Increased flexibility helps employees feel better about their work, helps them keep their work and personal lives in balance, and they typically respond by giving more back to the job, and producing at a higher level.

It’s often fairly straightforward to manage, and the positive impact of allowing employees to take an extra one or two days (which they’ll soon earn back anyway) is usually more substantial than the risk it comes with.

Final Thoughts: Making Negative Leave Work For You

If you do allow negative leave, you need to put some thought into managing it, so it doesn’t just become a free-for-all.

First, you’ll probably want to set a limit. Otherwise, employees could go massively into “debt” with their leave balance, which could take years to pay off.

It’s best practice to limit it to around 10, or even lower if you’re concerned about the risk.

Make sure you clearly spell out this limit in your PTO policy, and make it easy for employees to see how much negative leave they’re allowed to take.

You’ll also want to document how negative leave will be reimbursed. You might want to consider allowing employees the option of financially reimbursing the borrowed amount as well.

If your state/national laws don’t allow you to deduct money from employees’ paychecks, then you may not want to allow negative leave – or if you do, set it at a very low limit, to avoid employees from taking a large negative balance just before they quit, at a cost to the business.

Finally, ensure your leave management system is equipped to handle negative leave, so you don’t lose track of who has to pay off their balance.

The post What is Negative Leave, and How Does It Work? appeared first on ptoaccrualcalculator.com.

Fully remote teams have unique challenges to contend with, such as legal and cultural differences, communication challenges, and a lack of visibility.

If you work to overcome these challenges, you can still build a thriving team, while allowing your team members the time off they need to stay happy and healthy and live a fulfilling life. 

Read on and we’ll explain how.

Understanding PTO for Remote Teams

Since remote work is still a fairly new thing, there are fewer clear guidelines about how all the details (such as scheduling, and time off) should work.

It’s particularly cloudy if a team has members across state lines, or even in different countries.

There can be a temptation to think that PTO doesn’t matter as much, which is untrue. And the decentralized, asynchronous nature of most remote workplaces makes it difficult to coordinate PTO, to identify when someone needs PTO, and for team members to fully disconnect from work when they take time off.

Why Remote Workers Need PTO (Like Everyone Else)

PTO doesn’t seem as important with remote employees.

In the office, it’s clear. It’s easier to notice someone’s presence, and it’s easier to notice that they need a day off – whether it’s a vacation or sick leave.

It’s also easy to understand that people need to take time off work to take care of personal commitments, such as childcare.

Remote work comes with more flexibility, so some believe that this flexibility allows team members to balance their work and personal lives without having to take PTO.

But this is not quite true. Work is still work, whether it’s in the office or at home.

Workers still need a break from time to time. If they’re sick, they need to be able to switch off, rest, and take the time they need to fully recover, even if they don’t need to worry about infecting other team members.

They need to be able to go on a family vacation without thinking about work. They need to be able to handle personal matters without having to rush back to their laptop to make up the lost time.

And enough remote teams offer comprehensive PTO packages, that if you feel your company doesn’t need to do the same, you’ll find you lose out on the best talent to jobs who recognize the need for remote workers to take PTO just the same as office-based employees. 

Further Reading: 7 Reasons to Prioritize Paid Time Off

The Biggest Challenges Managing PTO in Global Teams

There’s a laundry list of challenges involved in managing PTO for a remote team, especially teams with employees in different areas of the world.

Let’s run through these challenges now.

Legal Compliance

Different states and countries have different laws regarding PTO. This makes it extremely difficult for remote teams to stay fully compliant with the law.

For example, most US states don’t require any PTO at all. Yet in many European countries, employees are entitled to 4+ weeks of paid time off each year.

It’s all very confusing, and if you offer differing amounts of PTO to employees based in different areas of the world, it not only becomes very complicated to manage, but it can also sow serious discontent in your team.

Cultural Differences

Outside of legal obligations, employees may have very different expectations for how PTO should work.

Many Europeans, for example, are used to taking at least 2+ weeks off over the summer. Employees in some Asian countries will be expecting to take off a week or so for Lunar New Year.

Others may not be used to these customs – including leaders in the company, which can cause discontent.

Local Holidays

Teams also need to juggle the fact that each country, and sometimes state too, has its own local holidays.

Do you force all employees to take the same holidays, and risk upsetting those in other countries who miss out on celebrating local holidays with their friends and family?

Do you let each employee take off their own local holidays, which may feel unfair to those in locations with fewer public holidays? How about individuals with different cultural and religious backgrounds? 

Recognizing Overwork & Burnout

With remote teams, it’s harder to see if someone has been working too hard and is in danger of burning out.

Peoples’ physical, mental and emotional state doesn’t always translate through the keyboard, or even on Zoom. 

Where, in the office, you may have stepped in and suggested they take some time off, it can be difficult to know when to take action in fully remote teams.

Difficulty Switching Off

When remote team members do take time off, it’s often hard for them to fully disconnect.

When you’re used to working at home, and all you need is your laptop, there’s always the temptation to quickly log on and see if someone sent you a message, or an email, or just to see what’s going on.

Even if someone doesn’t log on, their mind might still be partially in “work” mode, because there isn’t that same, clear separation between work and home.

Communication & Coordination

There are unique challenges for remote teams in coordinating absences and ensuring work keeps going without disruption.

For example, it’s not always clear when someone is planning to take time off. In the office, they may have mentioned this in passing to anyone whom it’s relevant. But in a remote team, communication is often more deliberate, and this might be missed, leading to issues coordinating projects and missed deadlines.

Further Reading: How to Manage PTO for Part-Time Employees

How to Create an Effective PTO Policy for Remote Employees

Managing PTO in remote teams is not easy. But with conscious planning, you can create a system that benefits employees and the business alike.

Here are some tips on setting up your PTO policy as a fully remote and/or global team.

Know Your Legal Obligations

The most important thing with any PTO policy is that it’s fully compliant with the law – otherwise you could be hit with a crippling legal bill that might shutter the business.

Get professional legal advice to know what legal jurisdictions you need to comply with, and what you need to provide for each one.

Be Consistent With PTO Policies

It’s possible that you will end up with employees in different locations, with different PTO laws applying to each.

This means you could theoretically be able to provide employees with different amounts of PTO depending on where they live.

However, this is not a good idea. Even if you’re cleared legally, it will end up causing discontent among your team, if some people get significantly more PTO than others.

It’s a better idea to standardize your PTO package for all employees, no matter where they’re located. This will cost you more, but it will save you in the long run by helping you maintain a positive team culture.

Related: Can You Have Different PTO Policies for Different Employees?

Offer Floating Holidays for Public Holidays

Managing the difference between different locations’ public holidays, plus religious holidays observed by different cultures, is another big challenge.

The best way to overcome this in a remote team is to offer a standard amount of “floating holidays” to each employee.

A floating holiday is essentially a public holiday that the employee can choose when to take, rather than being tied to a specific date.

For example, you might give each employee 10 floating holidays to use for national holidays in their location. They can then choose whether they want to take time off for Christmas, Lunar New Year, Eid Mubarak, or any other holiday that’s important to them.

Proactively Encourage PTO Use

The biggest benefit of PTO is not as a hiring and recruiting incentive, but as a tool to keep your team members fresh, healthy and happy.

But they need to actually use their time off. Remote workers are more likely to feel guilty about whether or not they’re working hard enough, and thus tend to neglect their PTO.

You should actively encourage people to take all their time off. Send regular reminders, and follow up with those who have been a long time without taking any PTO, to ensure they’re not overworked and at risk of burning out.

Educate Team Members About the Importance of Switching Off

Similarly, you need to impress on team members that it’s important to fully disconnect when on leave.

If you don’t, many employees will feel they need to check in and do work while on PTO, reducing the benefit they get from their time off.

Make it clear that you don’t expect them to be in contact with the rest of the team when on leave, and that you want them to get a full, disconnected break from work.

Make Your Policy, Guidelines and Leave Calendar Easily Visible

Ensure your leave policy is easy for employees to find and refer to when needed.

HRIS systems or internal documentation managed in Google Drive or Notion are great ways to do this.

Also, make it easy to see upcoming leaves, ideally with a calendar that all members of the team can view, so people can plan ahead for other team members’ absences.

Keep Clear Records

Make sure you have a system in place to keep records any time employees take time off.

Without a centralized office space, it’s easier for things to get missed. Someone takes a day off, reports it to their manager, but the manager forgets to note it down (or thinks it’s not important).

Eventually you have no trail of how many days off people have taken, which causes problems with HR and payroll.

Your system should make it easy to log and track leaves, and help you keep error-proof records in your team.

Tracking PTO as a Remote Team

Your system is vital for effective tracking and management of PTO in remote teams.

Without a system, you’re going to end up with errors and omissions, with inefficiencies and too much time spent managing PTO.

Use a leave management system like Flamingo to keep track of your team’s leave. It integrates seamlessly with Slack, and automatically logs whenever team members take time off.

Keeping track of your team’s time off is vital, no matter how your leave policy is set up.

Not only do you need to know about upcoming leaves that might affect others in the team, but you need to be able to track how much time off each employee has taken, to ensure they’re getting enough time off to stay fresh and healthy.

The biggest mistake remote teams make is not tracking time off, and saying that productivity is all that matters.

That’s true – but you also need to actively push team members who are working themselves too hard for too long, to keep them engaged, healthy and productive long-term.

An effective leave management system helps you do this, without assigning a full-time staff member just to monitor and manage PTO.

Final Thoughts

PTO in remote teams is a poorly understood topic.

That’s understandable, since fully remote, global teams are still quite a new thing. But getting it right is important for your company’s long-term sustainability and success.

From managing legal requirements, to ensuring team members actually take time off, there are multiple issues to juggle, but you can do so with careful planning, consideration, and a bulletproof leave management system to help you.

The post A Full Guide to Managing PTO for Remote Teams appeared first on ptoaccrualcalculator.com.

For businesses, Use It or Lose It can save a lot of money – just ask the city of Jacksonsville, who paid out more than $400,000 to an employee in 2015 in unused PTO.

However, there are questions over whether Use It or Lose It is fair for employees, and by attempting to save money for the business, you may end up driving away your best employees.

Keep reading to learn all you need to know about Use It or Lose It PTO, and whether it’s the right approach for your PTO policy.

What is Use It or Lose It PTO?

“Use It or Lose It” PTO is a policy in which employees must use their allocated PTO within a specific time frame (often a calendar year) or lose it. 

Any unused PTO at the end of the period is forfeited and does not roll over into the next year.

Is Use It or Lose It Legal?

Depending on your company’s location, Use It or Lose It may or may not fly with local labor laws.

Currently, four US states ban Use It or Lose It vacation policies completely:

• California
• Montana
• Colorado
• Nebraska

In each of these states, vacation time is considered to be a form of wages, and once earned, a company cannot take it away – meaning they can’t strip an employee of unused vacation time.

Companies do not have to provide employees with vacation time, however. And in most cases it’s legal to cap or pause PTO accruals when an employee’s unused balance hits a certain amount. You just cannot take away any vacation time an employee has already earned.

In all other US states, it is within the rights of a company to have a Use It or Lose It policy.

Some states require a written policy clearly stating the conditions for PTO to expire, and some – Illinois and North Dakota, for example – require that employees are given a reasonable opportunity to use their vacation time before it is allowed to expire.

Outside the US, laws again vary from country to country, and in some cases from region to region within each country.

Use It or Lose It is actually common practice in many European countries, but the law also states that employees must be allowed to take a certain number of days off (usually within a period of a few months over summer), so it’s less likely there will be any issue with unused PTO.

To get complete and accurate information on what’s allowed in your area, make sure you contact a legal professional.

Is Use It or Lose It Only for Vacation Time?

Use It or Lose It is usually discussed in relation to vacation time – if someone says “Use It or Lose It PTO”, they’re likely referring to a Use It or Lose It vacation policy.

However, it can apply to any type of PTO, and indeed, most other forms of PTO are usually treated as Use It or Lose It.

It’s much more common that sick days, or personal days, or bereavement leave, reset at the end of each year.

Vacation time (aka annual leave) is more likely to be considered an “earned” benefit than something like sick leave or personal leave, which is why there’s more debate over whether employees should have the right to roll over any unused time without losing it.

Pros and Cons of Use It or Lose It

The biggest benefit of Use It or Lose It for the business is the ability to limit financial liability.

As we mentioned in the intro, unused PTO can seriously add up, and companies can be left on the hook for huge payouts when employees take minimal PTO for multiple years in a row.

Compounding this is the fact that, in most cases, vacation pay is paid out at your current pay rate.

This means a worker can stockpile PTO for years, receiving multiple pay increases along the way, and when they eventually take their PTO, it will cost the business more than if they’d regularly taken PTO each year.

However, it’s not all positives. By trying to save money for the company, you can upset your employees.

Many feel that Use It or Lose It is unfair, and it can seriously sting to see your hard-earned vacation time just disappear.

This policy can therefore damage your company culture, cause some of your best workers to leave for better opportunities, and hurt your chances at attracting new, talented employees.

When Use It or Lose It Is Actually Employee-Friendly

Looking at it from another angle, however, Use It or Lose It can actually be beneficial for employees.

It puts a real incentive on employees to take their vacation time, which offers numerous benefits for their mental and physical health.

In contrast, workers in companies with no Use It or Lose It often hoard their PTO, dreaming of one day when they might need to take 165 days off, or thinking about the big payday they’ll get when they leave.

As a result, they’re more likely to be overworked and burn out, because they rarely take time off.

In this sense, Use It or Lose It is a positive, but it requires careful management. 

The company needs to ensure that employees get every opportunity to use their PTO, and careful planning is needed to avoid a mad rush from everyone at the end of the year to use their vacation time before it runs out.

How Do Workers Feel About Use It or Lose It?

If you ask workers, the sentiment around Use It or Lose It is overwhelmingly negative.

Just look at this post on the Work Reform subreddit for an example:

“I don’t understand how it’s legal that a company can have a policy where unused vacation/pto time at the end of the year is just lost. The employee earned that time. They worked for that time. It should be protected just like if you worked for your pay, they can’t just say “well we’re not paying you.” Vacation time earned is time earned and it should be a right that the employee can keep it going into a new year. I understand many companies do let you carry all or some over or cash it out, but many do not, and it’s not right.”

As discussed earlier, this policy can be enacted in good faith, with the worker’s best interests in mind.

However, it’s difficult to convince someone that this is true, and often it isn’t true – it’s just a cost-cutting measure.

If this is the case, the money saved for the business may not be worth what you lose in employee engagement and talent.

Alternatives to Use It or Lose It PTO

Let’s look at a few alternative ways to structure your PTO policy and handle unused PTO.

PTO Rollover

The most direct alternative to Use It or Lose It PTO is to roll over unused PTO into the following year.

This means if someone has a few days left over from their yearly PTO allowance, it will be added on to their allowance for the following year.

If, for example, an employee gets 15 days per year, and only uses 10, the 5 unused days will be rolled over and they will start the following year with 20 days of PTO.

Paying Out Unused PTO

If you want to avoid people stacking up huge amounts of unused PTO, you could give employees a payout for any time off not used at the end of the leave year.

With the same example above, if the employee had 5 days not used, at the end of the year they would get an extra payment of 5 days at their regular working rate, and their allowance for the following year would start back at 15.

This can make a decent compromise, limiting long-term financial liability while ensuring it’s fair for employees.

Accrual Caps

A similar approach to Use It or Lose It is to set an accrual cap or balance cap.

This means there’s a total limit to the number of days an employee can have in their balance at any given time.

Once they hit this limit, they will stop earning PTO until they take some of their earned time off, and their balance once again drops below the limit.

Accrual caps don’t cause employees to lose any benefits they’ve already earned, which generally makes this a more employee-friendly way to prevent employees from hoarding PTO indefinitely.

Unlimited PTO

One more alternative is to have an unlimited PTO policy.

With unlimited PTO, there is no unused PTO, no expiry, no loss of earned PTO, because there’s no actual limit or allowance in the first place.

Employees can essentially take as much time off as they like (within reason of course), removing the need to handle rollover, unused PTO, or paying out large amounts of earned PTO.

Like Use It or Lose It, unlimited PTO can be employee-friendly with the right management and in the right culture, but often doesn’t work out so well in practice. Generally, we’d advise not to do unlimited PTO, unless you’re sure your company culture can support it.

Read more: Unlimited PTO vs Accrued PTO

Final Thoughts: How to Do Use It or Lose It the Right Way

Use It or Lose It is a tricky topic, and can be divisive with employees, as well as employee rights advocates.

It’s not a good feeling to lose a benefit you’ve earned through hard work and toil, and in some parts of the world, it’s also not legal.

If it is legal for you, and you want to put a Use It or Lose It policy in place, you need to manage it well to keep employees happy and preserve company culture.

• Make sure you give employees clear notice of the policy and ample opportunity to use their time off.
• Encourage employees to take time off throughout the year.
• Deny time off requests as rarely as possible (don’t make employees feel like it’s difficult to actually take their time off).
• Give employees a way to easily find out (such as a self-service portal) how much time off they have remaining, so they can work out a plan to take it before it expires.

Use a time off tracker like Flamingo to keep a clear record of how much time off each employee has earned, and has remaining.

If you think it’s too much work to manage all this and keep employees happy (or, of course, if Use It or Lose It is not legal for your business), there are plenty of alternatives that can benefit both the employee and employer.

The post Is Use It or Lose It PTO Right For Your Business? appeared first on ptoaccrualcalculator.com.

But what about when you have a range of employees working a variety of different schedules? How do you figure out PTO for part-time employees? 

It would feel pretty unfair for people working a full-time schedule if someone working half the number of hours had the same amount of PTO available.

Luckily, it shouldn’t be too difficult to get your head around this. There are a couple of simple ways to calculate and manage PTO for part-time employees, to ensure your PTO policy is fair and equal for everyone, while allowing all your team members to get the rest they need to stay healthy and productive.

Defining Part-Time Employees

First, what is a part-time employee?

The real definition of part-time can be vague. The US Department of Labor doesn’t define full-time or part-time, and leaves it up to employers to decide.

The US Bureau of Labor Statistics (BLS) states the following:

• Full-time workers are those who usually work 35 or more hours per week.
• Part-time workers are those who usually work fewer than 35 hours per week.

While the IRS defines full-time as working “at least 30 hours of service per week, or 130 hours of service per month.”

Most other countries have a similar approach to the US, not giving a strict definition for full-time or part-time.

Ultimately, it doesn’t matter too much what your definition of a part-time employee is. For the purpose of this article, let’s just assume that full-time employees work a regular 40 hour week, while part-time is anything less than that.

Do Part-Time Employees Get PTO?

The answer to this depends on a couple of things – firstly, state/local labor laws.

In some places, employers must provide all employees with paid time off, whether they work part-time or full-time.

In most states in the US, this isn’t the case. There’s no federal law that entitles employees to paid time off, and only a small number of states that do so.

If the law doesn’t explicitly state so, a company doesn’t need to provide part-timers with PTO. Their PTO policy might say that only people working a certain number of hours or days per week are entitled to PTO (or other benefits).

Should Part-Time Employees Get PTO?

Though they may not be automatically entitled to the same benefits as full-timers, part-time employees should get access to paid time off as well.

PTO is a highly valued benefit, which plays a big role in attracting and retaining talent (remember that part-timers can still be a key part of a business, as much as full-timers).

And though part-time employees don’t work as many hours for the company, that doesn’t mean they automatically have more free time and thus don’t need the time off. Many part-time employees have busy lives – maybe they study, or work other jobs, or take care of young children.

These people need access to paid time off just like full-time employees do, to avoid burnout and maintain a positive work-life balance.

Learn more: 7 Reasons to Make PTO a Priority In Your Business

How to Calculate PTO for Part-Time Employees

Now let’s take a look at how to calculate PTO for part-time workers.

As we mentioned, it would be a bit unfair to other employees if some employees worked half the time but got the same amount of time off. Luckily, there are a couple of easy ways to get around this.

Option One: Prorated PTO

Let’s say full-time employees get 20 days of PTO per year (made available at the start of each year– aka lump-sum PTO).

To keep it fair and even for all employees, you could prorate the PTO allowance for part-time employees to match how much they work.

This means dividing the regular PTO allowance by the percentage of a full-time schedule that the part-time employee works.

So if an employee works 25 hours per week (let’s assume full-timers work 40 hours), they’re working 62.5% of a full-time schedule (25/40).

Their prorated PTO allowance would thus be 12.5 days per year (62.5% of 20 days).

This is a fairly straightforward way to manage PTO for part-time employees who work the same schedule week in week out.

Option Two: Accrued PTO

The second option is to use an accrued PTO system.

This means employees’ PTO allowance steadily increases relative to their time worked.

There’s no need to create a different PTO policy for part-time employees, because the system already takes into account their differences in working hours or days, and adjusts PTO accordingly.

With accrued PTO, you might say that each employee earns 1 hour of PTO for every 10 hours worked.

If someone works a full-time, 40 hour week, they earn 4 hours of PTO.

If another employee only works 20 hours, they earn 2 hours of PTO.

Each employee’s PTO balance goes up as they work, and at any time they can take PTO from their available balance.

This is the way most teams calculate PTO (the accrual rate, frequency and other details might be different) if they have team members working different schedules, different number of hours, and particularly if part-time employees might have different working hours from week to week.

Managing PTO for Part-Timers

You’ll manage PTO for part-time employees much like you will with full-time employees.

Generally, you don’t want to have too many different rules or procedures based on an employee’s status. Though you can have different PTO policies for different employees, it’s easier and more fair if you keep it as even as possible.

You’ll need to do a little more work, particularly if you run an accrual-based PTO system, to keep part-timers’ PTO balances up to date, relative to their working time.

You can use our free PTO accrual calculators to make calculating accruals much easier. These tools help you figure out accrual rates, hourly accruals based on hours worked, and more, saving you time and reducing errors. 

Alternatively, you can use an app like Flamingo to take care of your leave management needs, including automating PTO accruals and keeping employees’ PTO balances up to date.

Final Thoughts to Consider

In most cases, businesses should offer PTO for their part-time employees as well as full-timers.

The only exceptions might be if the part-time employees are casual staff, who aren’t on fixed schedules and only work intermittently (such as temp workers).

Generally, if they’re permanent employees (meaning each week they have regular hours), they should be able to take time off.

When you’re setting up your PTO policy, make sure you outline any differences between PTO for full-time or part-time employees, as well as clearly defining what constitutes part-time and full-time.

And, to make sure everything runs smoothly while staff are on leave, use a leave tracker like Flamingo to keep track of who’s on and who’s off, keep balances up to date, and ultimately spend less time managing paid time off.

The post How to Calculate (and Manage) PTO for Part-Time Employees appeared first on ptoaccrualcalculator.com.

At this stage, not that much thought needs to go into your PTO system – you could even get away with managing everything in a simple spreadsheet.

But PTO can get complex when your team grows, you add different employees working in different roles, some full-time, some part-time, some getting paid a lot, others not much.

One complex issue that can arise is the question of having different PTO policies for different employees.

A lot of people aren’t sure whether this should be done, or even if it’s legal to do this. And not knowing how to handle this can get you in a lot of hot water.

Keep reading and we’ll explain everything you need to know about having different PTO policies for different employees.

Is It Legal to Have Different PTO Policies for Different Employees?

Yes – in most cases, it is legal to have different PTO policies for different employees.

Though PTO laws differ from location to location, there are little to no places where companies must offer the exact same PTO benefits to everyone in the company.

The one caveat is that your PTO policies cannot be discriminatory, meaning you can’t offer more or less PTO based on protected characteristics, such as race, gender or sexual orientation.

Example Situations

So what are some common situations where you might provide different employees with different PTO policies?

Let’s take a look at a few examples now.

Part-Time vs Full-Time

It’s understandable that part-time employees won’t get as much time off as full-time employees.

If full-time workers get 20 days of PTO per year, for example, a part-time employee who only works 2-3 days per week may receive half the PTO benefits.

Hourly vs Salary Workers

PTO policies are often different for hourly workers and workers who receive a regular salary. One group might receive PTO in days, the other in hours, and one might accrue at the same rate each period while the other earns PTO as a percentage of their working hours.

Probationary Periods

It’s a common thing for employees to only gain access to PTO after a probationary period. For example, they may need to work for six months, or a year, before being allowed to take paid time off, which would mean a new employee has a different PTO policy than someone who has been at the company for longer.

Teams in Different Locations

Remote teams with workers distributed across the globe may sometimes (not always) give workers in different locations different PTO policies, in order to comply with leave laws in each country that often vary greatly.

Seniority

Like with compensation, you often earn more PTO the longer you work for a company.

The average US worker gets 11 days of PTO per year after one year of service time, compared to 20 days of PTO after 20 years of service time.

Job Role

Similarly, some roles may receive a higher PTO entitlement than others, such as an entry-level worker vs a senior manager.

Incentives & Rewards

Sometimes employees receive extra PTO as a reward, like they might do with a monetary bonus. Alternatively, PTO may be given as an incentive, to encourage a new hire to join the company, or to prevent someone from leaving for another job.

Key Considerations When Creating Your PTO Policies

Just because you can offer different benefits for different employees doesn’t necessarily mean you should.

Though you may not be breaking the law, you could cause serious harm to morale if your benefits policy is perceived as unfair.

Just take a look at this Q&A question from a San Francisco-based employee, posted on Avvo.com:

“I just found out that another team in the SF office has five weeks of vacation, not the three that my team (and everyone else) has. They’ve had it all year, and apparently there is some sort of ‘don’t ask don’t tell’ policy going on- because they all knew that they had the most vacation in the company, and nobody spoke up.

I’m mad and so is my team. We feel like we’re less valuable than the other team, and we’re angry by the lack of transparency.”

You can make some people extremely upset if they find out that similar employees working a similar job get a lot more than they do.

With that in mind, here are some things to consider before you decide to give different PTO or vacation policies to different employees.

Ensure Your Policy Doesn’t Discriminate

The first, most important part, is that you don’t offer different amounts of PTO based on discriminatory factors.

There are certain characteristics that cannot be the basis for different PTO, compensation, etc. They may be slightly different from country to country.

In the UK, they are known as protected characteristics, and these characteristics include:

• Age.
• Gender reassignment.
• Being married or in a civil partnership.
• Being pregnant or on maternity leave.
• Disability.
• Race (including color, nationality, ethnic or national origin).
• Religion or belief.
• Sex.
• Sexual orientation.

The US Equal Employment Opportunity Commission (EEOC) protects workers based on similar characteristics.

Not only will discrimination based on any of these factors get your company in legal trouble, it’s a one-way street to creating a toxic work environment.

Each Policy Should Comply With Any Relevant Laws

Along with not breaking laws related to discrimination and protected characteristics, your PTO policies must comply with any other labor laws.

For example, in the US, it would be legal to provide 10 days of PTO per year. But if you have employees in Austria, bound by Austrian law, the law requires them to get a minimum of 25 days of PTO per year.

Offering 10 days off to everyone may mean you violate Austrian labor laws.

If you have employees in different locations, this may mean you have to provide different policies for each location, or just boosting your overall policy to meet the country with the highest minimum PTO allowance.

For complete legal advice, make sure you get in touch with a legal professional before moving forward.

Different, But Fair

Once you ensure everything is legally above board, ensure your PTO policies are fair.

They can be different for each employee, but they should be fair.

Think about the example we showed above. It can create a bad environment and strong feelings of resentment if similar workers have radically different PTO policies.

Types of PTO

Using PTO as an incentive or seniority benefits is typically best for vacation time only (and perhaps less common leave types like sabbatical leave). 

Try to avoid offering different allowances for things like sick leave, parental leave or bereavement leave.

This implies that someone in management deserves more time off to bond with their new child, or that the death of a close family member has a bigger impact, compared to someone lower down in the organization, and this implication can create division and ill feelings in the company.

An exception may be if there’s a probationary period (there’s often a minimum period of time someone needs to work for the company before being able to take parental leave, for example).

Be Transparent

As a general rule, if you feel you need to hide something, it’s probably not a good idea.

You don’t need to disclose everything about each employee’s benefits and compensation, but if you find you’re worried about other employees finding out that a certain employee gets a lot more PTO, you should reconsider your approach.

How comfortable you are with being transparent about offering more PTO to employees based on role, location, seniority, etc is a good barometer for how fair your policy is, and how other employees are likely to feel about it.

Using PTO as an Incentive

PTO can be a great tool to incentivize employees to produce great work.

Instead of arbitrarily offering more PTO to some employees than others, use it as a tool, as something to strive for.

Incentive-based PTO is generally more effective, and much less likely to seem unfair to other employees.

How to Set Up and Track Multiple PTO Policies

Managing a large team where each employee has their own, custom PTO policy can be a massive headache, especially as your business becomes more successful and your team grows.

You need an efficient system to keep track of everything. We recommend Flamingo – this leave tracking app lets you create custom PTO policies for each team (e.g. marketing, sales, different locations) as well as each employee.

You don’t want to try and manually keep track of PTO balances, PTO given as a bonus, PTO carried over from the previous year and other little details. The job will spiral out of control, becoming a full-time job in and of itself, and you’ll inevitably make errors that cause a lot of disruption.

Luckily it’s a lot easier with a leave management system like Flamingo.

That will take care of the administrative side of things. The rest is about making sure your PTO policy is fair, transparent, and adds value to your business and working environment.

If that means it makes sense to give custom leave policies to each employee, then go for it. Just make sure you follow the advice we laid out above.

The post Can You Have Different PTO Policies for Different Employees? appeared first on ptoaccrualcalculator.com.

In studies from the late 2010s and early 2020s, unlimited PTO was found to be one of the highest valued employee benefits, with around 50% of US employees saying they’d prefer unlimited PTO to a higher salary.

In this article we’re going to look at whether or not unlimited PTO is the incredible benefit it’s cracked up to be, and how it compares to a more traditional accrual system of PTO.

We’ll finish up by giving some advice on how to craft your PTO policy in a way that maximizes upside and minimizes downside.

What is Unlimited PTO?

Unlimited PTO is a PTO policy with no set limit.

Instead of allowing employees a fixed quota of days or hours of PTO, they’re free to take time off when they need it (within reason – it’s not like employees are able to take months off at a time).

They’ll still likely need to apply for PTO ahead of time and their request for PTO will need to be approved, but people are not limited to a certain amount of time off.

What is Accrued PTO?

Accrued PTO is a system where employees earn PTO over time, and can only take as much time off as they have accumulated up to that point.

For example, employees might earn 1.5 days per month, or earn one hour of PTO for every 20 hours worked.

Over time, their PTO balance will grow, and when the person wants to take time off, they can apply for leave and the length of time will be deducted from their balance.

Learn more: What is the Average PTO Accrual Rate?

The Problem with Unlimited PTO

When we’re talking about unlimited PTO vs accrued PTO, it’s important to distinguish between unlimited PTO in theory, and unlimited PTO in reality.

As you can see by the studies we quoted earlier, workers love the idea of unlimited PTO. And why wouldn’t you? The idea that you can take time off whenever you need it, and not be limited to a few days off per year, sounds great.

But it typically doesn’t work out like this.

With no limit, there are no clear expectations on how much time off is a reasonable amount. Most people are so afraid that taking a lot of time off will negatively impact their performance that they rarely take time off at all.

Studies back this up, with the average number of vacation days taken in companies with unlimited PTO lower than the average for traditional PTO policies.

It can be a huge source of anxiety for employees, when they want to take time off, but they’re afraid of being seen as abusing their “unlimited” vacation policy.

Unlimited PTO can work, and there are companies that do it right, but you need effort, and just the right culture if it is to work.

Pros and Cons of Unlimited PTO vs Accruals

So now let’s break down the pros and cons.

Let’s look at the arguments for unlimited PTO, as well as a few reasons why traditional accrued PTO policies may work better.

The Case for Unlimited PTO

• Unlimited PTO, in theory, is super-flexible and employee-friendly.
• There can be less management required with unlimited PTO (no balances to track and update each time someone takes time off).
• There’s less financial liability for the business (as there’s no paying out of unused PTO).
• Unlimited PTO can be an enticing tool for hiring and retaining employees.

The Case Against Unlimited PTO (and for Accruals)

• Unlimited PTO can be extremely toxic for employees if not managed correctly.
• It still requires admin work (you’ll want to keep track of how much time off employees take, even though there’s no limit).
• Employees typically take less time off, leading to a higher risk of burnout.
• It may be trickier to comply with labor laws regarding PTO and payout of unused PTO with an unlimited PTO system.
• Accrued PTO is more clear, and easier for employees to quantify their benefits package.

Want an easy way to track how much PTO employees are using (whether you’re doing accrued or unlimited PTO), as well as making PTO requests, approvals and scheduling a breeze? Check out Flamingo, the simple PTO management app. It’s free to try, and saves your team hours of busywork per week.

Accrued vs Unlimited PTO: Which is Best?

There’s a lot of upside to unlimited PTO, and in theory, it sounds great.

Many companies that offer unlimited PTO do it in good faith, too. They don’t mean it as a trap. But unfortunately it rarely works out.

It’s just too vague, and the anxiety for employees over how much is “too much” is a massive downside (even if you always approve time off and never say anything negative about it).

In contrast, when there’s a set limit or quota, employees typically feel much more comfortable about taking time off, as they feel it’s something that they’ve earned, and have a right to take.

That’s why accrued PTO (or lump-sum, which in reality is just accrued PTO where you accrue time off each year) is the better option for most companies.

Alternative Flexible PTO Policies

If you want to offer a flexible PTO policy, yet you’re convinced that unlimited PTO has too many downsides, there are some alternatives to consider.

One option is a mandatory (or minimum) vacation policy. Buffer’s PTO policy is a great example of this. 

Instead of putting an upper limit on PTO, they put a lower limit, requiring employees to take at least three weeks (15 days) of time off per year.

It could be considered a type of unlimited PTO policy too, as employees are free to take more than the minimum (and generally PTO is encouraged, rather than discouraged or limited).

Another option is to go with unlimited PTO, but with a company-wide shutdown or holiday that gives employees no choice but to to take a certain amount of time off.

Ghost, for example, offers unlimited PTO, plus a two week period in December where the company is closed, meaning everyone takes two weeks off at the very least.

You could also set up an accrued PTO system, but allow employees’ balance to go into the negative.

This means, if someone has earned 10 days of PTO, but wants to take three weeks (15 days) off, they can do so. Their balance will drop to -5, and as they earn more time off it will eventually go back into the positive.

Finally, you could simply offer an above-market PTO accrual rate. Offering 25 days of PTO per year (or the equivalent monthly/weekly accrual rate), for example, would allow employees a lot of flexibility to take leave throughout the year, without the vagueness and ambiguity of unlimited PTO.

Final Thoughts

Unlimited PTO has gained a lot of buzz over the last few years, but many people are waking up to the difficulties of maintaining employees’ wellbeing on this type of system.

The initial fear many companies had with unlimited PTO was that people would take too much time off, but the reality is the opposite.

It’s difficult (not impossible, just difficult) to maintain an unlimited PTO system that doesn’t make employees feel guilty or afraid of taking time off.

Accrued or lump-sum PTO is much more clear, and much friendlier to employees (as long as you give enough PTO all up).

But that’s just our advice! Feel free to use whatever works best for you and your team.

The post Unlimited PTO vs Accrued PTO: Differences, Pros and Cons appeared first on ptoaccrualcalculator.com.

But if you’re setting up a new business, or transitioning your team’s PTO policy from lump-sum to accruals, there are some tricky edge cases that you might not know how to handle.

One case to consider is what happens with accruals while someone is on leave – for example, if team members accrue a set amount of PTO each week, what happens when someone goes on a two-week vacation?

Do they continue to accrue leave as normal, or do accrual stop for the time that they’re on leave?

In this article we’re going to help clear things up. Read on to learn more.

Does PTO Still Accrue While You’re On Leave?

Unfortunately, there’s no universal answer to this question.

For many businesses (particularly US-based businesses), there’s no legal guidelines regarding paid time off. And even those locations with paid time off laws may not have specific guidelines on what happens to PTO accruals while an employee is on leave.

The short answer: it depends

The simplest answer to this question is “it depends.”

Different companies may structure their PTO system in different ways. 

In some cases, the law is clear and tells you how it works.

In Australia, for example, the law says the following:

Annual leave accumulates when an employee is on:

• paid leave such as:
  • paid annual leave
  • paid sick and carer’s leave
  • paid family and domestic violence leave
• community service leave including jury duty
• long service leave.

Annual leave doesn’t accumulate when the employee is on:

• unpaid annual leave
• unpaid sick/carer’s leave
• unpaid parental leave.

If the law doesn’t say anything regarding PTO accruals during periods of leave, then the company is open to decide how they want to handle it.

Different ways to approach it

The most common thing you’ll see is that accruals continue to happen when employees are on regular paid leave, but stop during unpaid leave or long-term leaves of absence.

Let’s look at an example.

• Employees in the company earn 3 hours of PTO per week.
• During regular vacation time, sick leave, or other PTO, they continue to accrue PTO normally.
• If an employee goes on a two-week vacation, they’ll still accrue 6 hours of PTO over those two weeks (even though they didn’t work at all).
• If an employee takes three days off (let’s say Tuesday to Thursday) for sick leave, they’ll still earn 3 hours of PTO from that week.
• PTO accruals don’t happen during unpaid time off, or special long-term absences.
• If an employee takes two weeks off unpaid, they don’t earn any PTO during this time.
• Another employee is on military leave, where they’re on leave for six months, without pay, but with their job, seniority, benefits and compensation retained once they return. During this six month period, accruals stop, and restart again once they return to work.

This is a typical approach, but not necessarily the case for every business.

Another way to do it might be to directly link PTO accruals to time worked – for example, employees earn 1 hour of PTO for every 20 hours worked.

In this case, employees won’t earn any PTO while they are on leave, as they haven’t logged any working hours during this time.

Or, employees may earn 4 days of PTO per quarter. It doesn’t take into account working time at all, and whether the employee works each working day during that quarter, or takes a month off in the middle, they still earn 4 days regardless.

Why it matters

Managing accruals while an employee is on leave is a small thing, but it makes a difference.

Employees may only stand to gain or lose a little here and there. However, it’s important to handle it right, as the difference gets a lot bigger as your team grows.

Plus, there’s always the impact on team members’ morale if they realize they haven’t been accruing as much leave as they expected.

That’s why it’s vital to explain what happens in this situation in your PTO policy, and ensure full transparency with how your paid time off system works.

What Would a Typical PTO Policy Look Like?

So how would you communicate this in your PTO policy?

You would add a subsection somewhere in your policy, which would look something like this:

How PTO Accrues

PTO accrues each [week], including while the employee is on any type of paid leave.

If an employee is on an unpaid leave of absence, accruals are temporarily stopped until they resume working. 

Of course, you would replace the content with whatever applies to your business, if you choose to handle it differently.

More on PTO Accruals

PTO accruals can be a difficult area to navigate, especially for small HR teams, or teams trying to juggle HR alongside other (seemingly more pressing) responsibilities.

That’s why we’ve put together a wealth of information to help you fully understand how PTO accruals work.

You can check out our Complete Guide to PTO Accruals for an in-depth primer, and use our free PTO accrual calculator to cut down the time and complexity of manually figuring out accrual rates and balances.

To go a step further and fully automate your PTO accrual system, check out Flamingo – a leave management app that takes care of the small pieces of administrative busywork to do with PTO, such as filing leave requests and updating employees’ PTO policies.

It’s free to try, so go ahead and give it a go and see how it makes managing PTO and complicated accrual policies so much easier.

The post How Do Accruals Work While On Leave? appeared first on ptoaccrualcalculator.com.