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How to Manage Paid Time Off for Your Workforce

Paid time off is often difficult to manage. With a lack of federal laws & guidelines, employers are often left to figure it out themselves. We break down different types of PTO, how you can handle it, and what your employees expect!

Did you know?

The USA is one of SEVEN countries in the world to have no federal laws around paid time off. While most countries worldwide have a legal minimum amount of paid days off, the USA does not.

At present, no federal laws require employers to give employees paid vacation days. However, most employees will consider paid time off as an important factor when applying for jobs. If you want to attract and retain top talent, it’s in your best interest to offer PTO and manage it well. While you may have free reign to handle your PTO however you wish, keeping your employees happy is also important. Happy employees mean happy customers, so providing a healthy work-life balance through paid time off is not to be ignored.

Paid time off comes in many different categories, here are the most common:

Sick leave

sick leave for employees

Similar to the lack of laws surrounding general paid time off, there are no federal requirements around paid sick leave. It is at the company’s discretion whether they chose to pay employees for sick time or not. Sick leave is often an area of contention for employers. Some sick leave will last one day, while other periods of sick leave can last months. Some employers have a strict policy around sick leave pay, while others will handle it on a case-by-case basis. To add to the confusion, if you have more than 50 employees, you are subject to the Family and Medical Leave Act (FMLA). This act requires you to provide unpaid time off for medical reasons. It’s also worth noting that some states have other requirements you must abide by. Be sure to know those that are applicable to you.


Vacation leave is the most commonly discussed type of paid time off. Typically, this will be worked into the contract of salaried employees, but for hourly employees, it can differ. A lot of hourly employees will build up vacation pay as they work. Perhaps accruing 1 day of vacation leave per month, or after a certain amount of hours worked depending on the company policy.

National holidays

While it depends on the industry, most workers will be given paid time off for national holidays. However, it should be noted that there are also no federal laws around this in the U.S. It is a company’s own decision to pay their employees for National Holidays or not. Generally, workers who work National Holidays receive a premium, or time off in-lieu.

Bereavement leave

Again, while there are no laws surrounding bereavement leave, most companies will allow employees to take time off for the death of a family member. Again, it is at their discretion whether they pay employees for this time or not.

As you can see, due to the lack of laws and guidelines around it, handling PTO can be difficult. While you want to keep the business running smoothly at all times, paid time off is important to your employees. So, let’s take a look at how you can effectively manage paid time off in the best interest of both your business and your employees!

Create & Enforce a Paid Time Off Policy

When it comes to making any changes in an organization, the starting point is always the current state of affairs. Review your existing employee handbook and HR policies to see what you are currently providing to employees in terms of paid time off. Make decisions around the amount of paid time off you want to provide to employees in all of the categories mentioned above. Use clear, concise language to avoid confusion. Also, try to answer any questions employees might have before they even have to ask them.

Creating the policy is one thing, but communicating any changes or updates around the policy to employees is another. If possible, you should even involve your employees in the development of the policy. If they feel like they have a say in how things operate, they will likely be much happier with the outcome. Of course, this won’t always be possible, but either way, keeping your employees in the loop is crucial.

We recommend using a centralized platform of communication to store, distribute and update your PTO policy, so that all employees have easy access to the information. Having a formal document around paid time off will alleviate questions and even help encourage your staff to use their paid time off effectively and care for their own wellbeing.

Streamline the Process

Once you have your policy in place, the next step is developing the process around employees actually making use of it. There are lots of important things to consider around paid time off processes. First, decide on how much notice you will require from employees requesting to take paid time off. This will differ depending on your industry, workforce, and other internal factors. Although you might want 30 days’ notice, remember that not all staff plans will be made a month in advance. Try to find a nice balance that allows you and your business to be fully prepared, while also giving your employees some level of flexibility.

Decide how you want to receive paid time off applications, will it be digitally? On paper? It is always recommended to have a paper trail in order to keep a record of vacation pay/balances etc. If you already have centralized employee scheduling software, it can likely handle some of the heavy lifting for you. Determine who will handle paid time off requests, and ensure that employees know who to talk to. Depending on the size of your workforce, you might also want to decide how many employees can be on leave at any given time, and maybe even specify the sequence/priority that time off will be delegated in.

Unlimited Paid Time Off Policies

In recent years, a growing number of businesses have begun offering unlimited paid time off to employees. But how are these policies viable? Similar to what we covered above around policy creation, unlimited paid time off policies rely completely on the wording and processes that surround them. Typically, an unlimited paid time off policy “allows employees to take as much free time as they want as long as it does not interfere with their ability to complete their work.” Crucially here though, an unlimited paid time off policy does not mean that employees can turn up as and when they want – they should still follow an application process in order to ensure the smooth running of the business operations.

Although they won’t work for everyone, unlimited PTO policies do have their advantages. Typically, employers will see improved time management from employees, a boost in productivity, improved employee morale and of course, it is a great way to attract and retain quality talent.

Paid time off is an important function of workforce management and always will be. Employers that do not offer PTO, or who make it difficult for employees to find balance will suffer in the long run as morale drops and turnover increases. If your business does not have a fair, accessible paid time off policy, now is the time to create one.