Paid time off (PTO)

What is PTO?

Paid time off (PTO) is when employees continue to receive financial compensation from your company while they are currently (and temporarily) not working. This lasts for a pre-determined period and can be agreed upon for several different reasons. These include vacations, sick leave, sabbaticals, etc.

PTO is different from other periods of absence that employees may participate in, like maternity leave, unpaid leave, furlough, etc. National and local governments may mandate a certain amount of PTO employees must receive per year. In the United States, the federal government does not mandate a certain amount of PTO, whereas in the United Kingdom employees are entitled to 5.6 weeks of PTO per year.

What are the types of PTO?

Predicted PTO

Predicted PTO is the most common form of this concept. It covers events like employee vacation and is linked to trackable hours by the HR department. This ensures that staff members receive their PTO in a balanced and organized process to ensure the company doesn’t experience problems caused by their absence.

Unpredicted PTO

This type could also be described as discretionary PTO as it is usually only granted with the manager’s permission as it is not planned or systematic. Unpredicted PTO covers issues like sick leave or personal time off to attend to a familial issue.

What are the advantages of PTO?

Employees need time off now and again to be able to function at peak performance, otherwise they may become vulnerable to stress and burnout. Some of the other benefits of introducing a PTO policy include;

• Using a PTO system that oversees time off ensures there’s a minimum amount of personnel disruption

• Employees consistently appreciate increased flexibility at the workplace

• An established PTO policy is considerably attractive to potential recruits

• Being able to access pre-agreed time off reinforces job security and satisfaction

What are the disadvantages of PTO?

No system is without its flaws and while offering a PTO system to your employees can be beneficial there are some drawbacks you should consider;

• Employees are more likely to use sick days for less serious conditions

• Your company will likely experience more absences than before

• If an employee leaves the company still has to honor owed days off

How can I manage my company’s PTO?

There are several factors you should consider when finding a tool for your HR department to manage PTO. The tool you choose needs to be able to track absences automatically, provide easy access to time off requests, and provide a clear overview of all employees marked currently out of the office or planning to be so.

PeopleHR, our flagship platform for automated HR management, provides these features and more. It’s an ideal choice for introducing a PTO system at your company or optimizing the policies you already have in place. If you want to find out more about utilizing a system that makes your day-to-day activity simpler than ever before, and take more than a day off from the tedious paperwork, then send us a message.