How To Create A PTO Policy For Shift Workers
Some say that the Ford Motor Company invented the weekend.
At the very least, they were one of the first U.S. companies to put a five-day workweek into place back in the early 20th century. Maybe it was because they wanted workers to have a few days to enjoy their motor vehicles, to actually take a road trip somewhere.
Whatever the reason, you could say that giving employees time off, including paid time off, has been an evolution of sorts. The Fair Labor Standards Act of 1938 established a 44-hour workweek, and we’ve been tweaking it ever since.
Many employers find paid time off either confusing or unnecessary. We’re going to give you an overview of what paid time off is, how a policy works, and ideas for what would work best for your company.
What is a paid time off (PTO) policy?
A paid time off (PTO) policy is simply written guidance on your rules for paid time off.
You’ll outline what you expect, the details of how your PTO policy will work, and any other information that employees need to know about requesting paid time off. Having a policy frees your employees to actually use the benefit without fear. A 2016 study revealed that 58% of employees felt no support from upper management when they took time off. Without a policy, those same workers might be afraid to exercise their benefits out of fear of reprisal.
However, PTO policies for salaried workers vs. those for hourly workers are going to be significantly different. Generally, hourly workers won’t have unlimited PTO. Part of this has to do with laws relating to overtime pay that hourly workers are entitled to. Salaried workers don’t get overtime, and it’s not unusual for them to have unlimited or extensive PTO.
While there’s no federal law that says you must offer PTO to any of your employees, it’s still a wise idea. Having a written PTO policy makes that idea even better because, as we’ll talk about, that policy helps make sure employees are actually using their time off.
Different types of PTO policies
The type of PTO policy you’ll end up using will be determined by many factors, but there are some things that you can’t skirt around. All policies have to comply with federal laws (like The Family and Medical Leave Act) that apply.
In general, there are three main types of PTO policies:
- Banked: An employee’s PTO is drawn from as they determine whether that’s for sick leave, personal, or vacation. They don’t have to provide a reason.
- Open/Unlimited: There’s no limit on how many days an employee can take as long as their work gets done and the policy isn’t abused. Generally used with salaried employees.
- Accrued: PTO is determined by how long an employee has worked for you in regards to years, or it could be accumulated based on how many hours they work. The accrued type may define both the accrual period as well as the accrual rate. A form of this is often used with hourly workers, where they can build PTO based on a defined time period and how many hours they worked during that time period.
Each of these different types has a different trust level in existence between the employer and employee. Your company culture will play a role in determining what works, as well as the classification of the employee (hourly vs. salary).
How to choose a PTO policy for your business
At the end of the day, the best PTO policy for your business is one that offers employees a chance for work-life balance while giving you control over unscheduled absences.
Here’s what that kind of policy might look like:
- Rewards what you value. Many employers offer PTO based on how long someone has been working for them. The more years you work, the more days you’ll get. Your policy should reward the behavior you want from your employees.
- Shares the benefit. Your policy should be generous and flexible, providing benefits to both employees and you. Employees should feel that you care about them, encouraging them to stick with you and not abuse their benefit.
- Makes the rules clear and easy to understand. A great policy is one that makes it clear what is and isn’t acceptable. You’re protected, and your employees are empowered to use the PTO without fear they’re doing something wrong.
- Provides stability to the schedule. Employee absenteeism is a big concern for management. It’s expensive (leads to overtime for others) and throws off the work schedule. PTO is one of the tools you can use to combat it as long as your policy has requirements that employees inform you of their time-off request in a reasonable time frame.
- Reflects your culture. You know your team. Your policy should reflect them. For example, if you have a lot of Millennial workers, you should know they stick with jobs that offer pay flexibility and benefits. Any PTO policy should reflect employee expectation and culture fit to some degree.
- Allows flexibility. A “use it or lose it” approach to PTO can create stress and frustration among employees, especially if things happen where they were unable to use their PTO and have now lost it. Try creating a policy that allows a bit more wiggle room.
- Injects increased benefits. You might pad your PTO policy with other incentives. Perhaps they can transfer the value of soon-expiring PTO to something else. Incentivize continued education or volunteer work by tying it to PTO options.
- Contains necessary limitations. You may want to define the maximum amount of accrued days, for example.
Employees like PTO. It gives them space to breathe in their life without financial concerns from missing work. And a good PTO policy gives you the ability to reduce absenteeism while retaining employees, your most valuable asset.
It should be said that the most successful PTO policy, one in which employees use their time off at an expected pace and by the book, is a policy that is modeled by management. If you don’t want your employees looking for loopholes, make sure your managers aren’t, either.
Benefits of PTO
There’s a reason offering PTO to employees is considered a benefit. Several reasons, in fact.
- Reduces stress. 55% of American workers didn’t take full advantage of their paid time off. Whether it’s wanting to avoid getting behind in work, feeling pushback from management when they attempt to use time off, or not having the ability to go on vacation, PTO often goes unused. That’s unfortunate, because not taking time off leads to workplace stress. And that has long-term health and retention issues for all involved.
- Establishes a norm. Without an established PTO policy, employees often don’t know what is a “normal” amount of time off. They end up taking less time off than if there was a policy that defined what was expected.
- Shows concern for employees. Providing PTO is a signal to your employees that you value them and their physical and emotional health. It tells your employees that you want them to take time off, and that you don’t expect them to be financially penalized for doing so.
- Increases retention. You’re probably doing quite a bit to retain your employees already, but offering PTO should be part of your toolbox. Hiring and onboarding new employees constantly is a headache for management, and a hit on your bottom line.
- Attracts new talent. 74% of employees who are looking for work say a PTO policy is important in their decision. In times of a labor shortage, offering PTO can make you stand out from everyone else.
PTO is all part of the work-life balance that everyone is striving for today, one where there’s less burnout and employees are refreshed. And, in the long run, that means it benefits you and your customers as well.
Disadvantages of PTO
Depending on your PTO policy, there are disadvantages that can pop up.
- Hoarding time off. Since many policies allow saved days to roll over to the next year, some employees will save up days with the end goal of taking a massive amount of time off all at once. That could create a hardship for your business, to have an employee gone for such a length of time.
- Uneven accumulation. In a related concern, some employees may accumulate PTO differently, depending on how it’s defined and how they’ve used it. Some employees will be good at figuring out how to maximize PTO. That can create some negative attitudes in your team.
- Classification limits time off. Some policies define time off differently, breaking it up as sick, vacation, and personal leave. By doing this, it may result in employees actually having less time off and having them use sick leave for their vacation time.
- Coming in sick. On the other hand, if your policy takes a blanket approach to PTO (the banked type), lumping sick leave and vacation together, you might have employees who come in when they’re sick so they can bank more vacation days.
As an employer, you can’t necessarily get around all of these disadvantages. Just about any PTO policy leaves the door open for something along these lines. It’s good to be aware of these, however, so that you can address it in your policy if you see a problem cropping up in your team.
PTO policy example
Let’s walk through a basic PTO policy for an hourly workforce.
You want to determine how much PTO your employees will have, how it will be accrued, and how it must be used. When it comes to calculating vacation pay for hourly employees, know that those with a year of experience average 11 days of paid vacation. Decide if your full-time hourly employees can earn more PTO than those who are part-time. If you have a lot of employee turnover, you’ll want a lower accrual rate or use of probation periods.
It might look like this:
- PTO is to be used for sick leave, personal time, or vacation.
- PTO is accrued every two weeks.
- All hourly employees earn an hour of PTO for every 20 hours worked. For every two years full-time hourly employees work for the company, they will accrue an hour of PTO for two hours less of work.
- Unused PTO will rollover to the next calendar year. However, employees are limited to five days’ rollover. Any unused PTO beyond that will be lost.
- Employees who leave the company will be reimbursed for unused PTO.
Now that you have the math worked out, you’ll need to make decisions on other things. For example, what are the rules going to be when it comes to requesting time off? How can you manage time off requests fairly?
For our example policy, it might look like this:
- A deadline for requesting time off will be established around holidays. All employees will be informed at the same time.
- Time-off requests must be given no later than a week from the date requested.
- When it comes to time-off requests, first come first serve. Then, seniority.
You’ll want to define outlier elements in your PTO policy:
- Interns, independent contractors, and temporary employees are not eligible for PTO.
- For new hires, there is a probationary period of 90 days before PTO may be requested.
- PTO balances cannot be transferred to other employees.
This is bare bones, but it gives you an idea of what to consider. Put your PTO policy into writing, and make sure your employees have signed off.
Then, don’t forget to plug it into your scheduling software.
When I Work’s Time and Attendance software makes managing all of this a snap, from setting up the system to automatically function based on your PTO policy’s definition of accrual and time tracking. Plus, When I Work schedules around the actual time off requests. Employees can easily request time off. It then makes processing time-off requests easy, giving you admin control to keep those requests within the limits of your PTO policy.
As you can see, even a very basic PTO policy for hourly workers can be tricky to stay on top of. Add it to the time tracking, scheduling, and payroll that you already deal with, and it can be easy to make a mistake with how much PTO an employee has accrued, or miss seeing an employee abusing the system.
When I Work handles all of those concerns beautifully, making it possible to create a PTO policy that both you and your employees will love.