According to research by Nielsen Consumer Research, 54% of surveyed employees in the US don’t take vacation time because they prefer to save their PTO for an emergency, and 34% of employees never take vacations with their family. This leads to many hours of PTO being left unused, resulting in hidden costs including higher rates of absenteeism and resignations. It also has an impact on employee happiness and wellbeing. An increasing number of employers are now attempting to address this issue by switching to unlimited or flexible time off policies.
In today’s post, we will break down what flex time off is, and how a flexible PTO policy could potentially improve your business.
What Is Flexible Time Off?
First things first, what is flex time off?
There are many types of time off requests. Depending on a company’s policies, employees can request sick leave, PTO, personal time off, parental leave, bereavement leave, or a floating holiday, amongst other types of leave. One of the most recent types of leave being offered by increasing numbers of employers is flexible time off, also known as flex time off.
Flexible time off is a time-off policy that enables employees to take time off at their choosing. In most cases, the time that employees take off under this policy does not have to be earned or accrued. Instead, employees are given the flexibility to plan their time off as they see fit. This differs from more traditional policies where employees are allotted a certain number of hours of paid time off for each pay period. Employees can use flex time off for vacations, sick leave, appointments, or family emergencies, amongst other reasons. Basically, for any reason that would otherwise cause them to be absent from work.
Flexible time off is currently being implemented in a number of companies. It is becoming particularly popular in more progressive companies that promote employee satisfaction and those that measure performance by output rather than hours worked.
What Is Flexible PTO?
Ok, we’ve discussed flexible time off, but what is flex PTO, and what does flexible PTO mean? Is it the same thing?
Put simply, yes. The only difference between flexible time off and flex PTO is that the latter is specifically considered paid time off, whereas payment for the former depends on a company’s internal policies (obviously taking into account requirements of paid sick leave laws, etc.). Some companies choose to allot a certain number of flex PTO days, and others leave it up to employees to manage responsibly. However, this obviously requires a degree of trust between employers and employees.
One of the defining features of flexible paid time off is that PTO requests are usually combined with sick leave and vacation time. This gives employees greater flexibility to choose the type of time off they need at any given time. It also shows employees that you trust them to manage their own time and productivity and be responsible enough to meet their goals regardless of the specific days or hours that they work.
How Does Flex Time Off Work?
In most organizations, flexible time off is managed in the same way as any other time-off request. Employees still have to request approval from their manager, so it requires a degree of planning. Employees are by no means free to turn up as and when they desire with no prior warning. What’s more, some employers limit how much flex PTO employees can take in a specific period. This helps prevent employees from taking too much time off all at once.
This means that if you decide to implement a flexible time off policy in your company, you still need to make sure you track who is working, and when. The best way to do this is by using PTO tracking software, such as Factorial’s time off tracker, and a PTO calculator. This helps you monitor individual and team schedules so that you always know who is on vacation, who is on sick leave, and who is working remotely.
Flexible PTO vs. Unlimited PTO
Although flex time off and unlimited PTO vacation policies are often considered to be the same thing, there is an important distinction that you need to be aware of. And it relates, as you may have guessed, to the limits you put on the time off an employee can take. Whereas unlimited PTO is 100% unrestricted (i.e. employees can take as much or as little time off as they desire), flexible PTO is not inherently unlimited. Some employers choose to offer unlimited flexible time off, but others cap the amount of flex time off that employees can request. The policy style you choose will depend on your own internal guidelines and preferences.
You might be wondering why anyone would choose to offer unlimited PTO. Surely that would result in employees always taking holidays and the company being understaffed. In fact, you might be surprised to find out that unlimited flex PTO tends to result in fewer days being taken off. This is because employees do not feel ‘entitled’ to take a set number of days off in each pay period. Instead, they use their time off when they really need it. It’s all about knowing that they can take time off when they need to, not feeling that they should for the sake of it.
Flexible Time Off Pros and Cons
As with everything in life, flexible time off comes with its advantages and its disadvantages. It’s up to you as an employer to weigh up the pros and cons and decide which PTO policy works best for your organization.
With that in mind, let’s take a look at some of the advantages and disadvantages of implementing a flex time off policy.
Advantages of Flexible Time Off
Flex time off enables you to:
- Reward productive employees by granting them more time off.
- Accommodate an increasingly diverse workforce. For example, not everyone celebrates the same religious holidays.
- Nurture a more loyal and engaged workforce as employees feel valued and trusted.
- Attract and retain top employees.
- Promote employee autonomy and self-determination.
- Reduce administrative burdens related to tracking PTO. It also eliminates the requirement to pay out owed PTO if and when an employee leaves your company, as there is no specific accrual system in place.
- Support the health and wellbeing of employees by encouraging a healthy work-life balance
- Eliminate PTO backlogs, where employees realize at the end of the year that they have to ‘use it or lose it’. This results in everyone requesting time off at the same time, which can lead to staff shortages.
Disadvantages of Flexible Time Off
The disadvantages of a flexible time off policy include:
- Could potentially be open to abuse. It’s important to have a culture of trust and responsibility before you implement a flex time off policy. If you don’t trust your employees, then they could potentially abuse your policy by taking too much time off. Make sure your employees know that they are still responsible for hitting their performance goals and expectations.
- May conflict with other leave policies. Make sure you align your flexible PTO policy with any other policies and benefits you may have.
- Potential for employee burnout. If employees don’t feel they can request time off, it could lead to an overworked and stressed workforce. It’s important to be clear about your expectations so that you consistently apply your flexible PTO policy.
- Flexible time-off policies can be difficult to manage if you don’t have established methods for tracking time off. This can lead to issues such as compliance with FMLA mandated leave requirements. The best way to avoid this is to use time tracking software to manage all your time off requests.
Flexible Time off Policy Example
If you decide to implement flexible PTO, make sure you are as clear and transparent as possible. This means establishing and communicating clear guidelines with a flexible PTO policy. Your policy should explain everything relating to flexible time off. This includes when employees can use their flex time off, and what the procedure is for requesting flexible PTO.
You also need to consider the following when you draft your flex time off policy:
- Personal Days. Will you classify personal time off requests as flex time off, or traditional sick or vacation days?
- Holidays. How will you manage national holidays? Will you include it as flexible PTO? What about the process for requesting floating holidays?
- Extended leaves of absence. If you offer extended time off, how will you manage requests? Will you include it in your flexible time off policy? What about bereavement or extended time off for mental or physical health issues?
We can’t stress enough how important it is to be clear about your guidelines. You also need to make sure you implement your policy consistently at every level of your company. If your employees don’t understand how your policy works, then it could do your company more harm than good.
For example, employees might feel guilty about taking time off if they don’t feel ‘entitled’ to it. This can have a detrimental effect on employee satisfaction and wellbeing. And this is counterproductive as employee wellbeing is the foundation of a flexible time off policy, after all.