Steps to Setting Up A Successful PTO Program at Work

How To Set-Up A Successful PTO Program

Businesses rely on energized and refreshed employees. Taking some time PTO for a vacation, family issues, or sick time enables workers to attend to their personal needs while taking a break from their typical work schedule.


In the past, lots of companies gave their employees a number of days off for a paid vacation, then some more days for sickness. Some firms even consider a few more days off for personal time. Today, many employers are offering a lump sum for a paid-time-off (PTO) every year to cover all types of absence that may arise. But now, there is a new trend which has been gaining some traction. The unlimited paid time off.

Made famous by Richard Branson, Virgin Founder, the unlimited PTO allows employees take days off as they please without having to give reasons. This policy may sound impressive to offer to staff, but an open-ended time off system isn’t for every business.


Factors to consider about PTO
Factors to consider about PTO

You must consider several factors first before implementing the policy. They include:

Unlimited or Standard

The unlimited policies are simply based on trust. They also follow an idea that the employees will only do what is necessary to get the work done, and so they only take time off from the office when it makes sense to do so. It can be a success as well as a disaster. Note, also, that it doesn’t work for employees on hourly pay.

One company that attempted to start it ended up with staff who took “sales trips” that were actually personal vacations. This was discovered by other employees who called out their colleagues and the unlimited PTO was suspended.

Other companies have recorded success with this policy. How can you determine the best structure for the plan? Here are the steps to follow to design the best time off program.

Flat or tiered

Most U.S. employers offer twelve to fifteen days off, to begin with. If you prefer, you can give your employees that same number of days. However, if you want to reward staff for their service at your firm, you may increase the time off using a tiered system. This way, the longer an employee remains with the company, the more PTO they would receive yearly.

For instance, an employee who’s been with the firm for just a year may receive fifteen days of PTO every year, while the staff with five years may receive twenty days.

Even though it requires more tracking, it’s highly recommended because it encourages loyalty.

Granted or accrued

Granted PTO enables employees to use a given period as much as they want. The risk in it is that the employee may use their time off in March and quit in April without having to pay back.

The accrued PTO system allows you to prorate netted days off. If you pick the accrual method, you also need to decide whether to permit negative accrual or allowing your employees use days that they haven’t earned. Without negative accruals, employees would not be able to leave for long periods of time until the end of the year.

Permitting negative accrual or giving time at the start of the year may be beneficial to a company and its employees as long as they all understand the repayment policy for all non-accrual time.


Paid Time Off Rollover
Paid Time Off Rollover

Rollover or the use-it-or-lose-it policy

You can offset year-end absenteeism linked with accrual-based PTO when you allow employees carry over their time off into the subsequent year. To prevent staff from accruing massive amounts of time away from work over the years, some companies with such rollover programs have a maximum number of hours permitted per employee.

Once the employees have this threshold, they are no longer permitted to accrue more PTO at least until they have used part of what they already have. Some businesses have found that documenting rollover PTO can be a hassle, so they prefer use-it-or-lose-it system.  Whatever the employees do not use by the year’s end is lost, and they begin afresh at the start of the year.

The use-it-or-lose-it is policy is problematic as it can promote absenteeism to avoid losing the privilege. It’s also prohibited in some states, such as California. Consider your state’s laws before you decide which of these systems would be the best for your business.


Think before Deciding on a PTO policy
Think before Deciding on a PTO policy

Also, before deciding…

Before communicating your desired time off policy to your employees and keeping records in the employee handbook, you have to decide on;

How many days’ notice will employees be required to give their managers?

What is the request process going to look like?

How can you keep track of the program after it is implemented?

Will there be full days off or only half-days off?

Place all the rules you are comfortable with in your PTO program. But before any decision is taken finally, take the time to consider the rules to ensure they’ll work appropriately for your business. One way to simplify things is by using sound employee vacation request forms. Sometimes just having a standard process to receive and organize those requests can eliminate staffing issues.


This content is courtesy of Neches FCU, an Equal Employment Opportunity Employer.
Neches FCU is one of the most trusted Texas credit unions. Their attentive team of professionals is ready to service all members every day when the doors to their 9 service centers open. Their core objective of Ultimate Member Satisfaction is the sole focus for every representative, and it shows in their dynamic and enthusiastic work atmosphere, providing a memorable service experience to all members.

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