Employee Paid Time Off – Everything an HR Manager Needs to Know

All HR managers will be familiar with paid time off (PTO) requests. Growing in popularity, offering this is becoming a crucial factor in clinching new hires. Everyone loves the freedom to take leave of absence, without having to worry about their salary at the end of the month. This post will cover all you need to know about paid time off policies and more. 

Software to Manage Paid Time off


Definition: What is Paid Time off?

A basic PTO definition states that this is a benefit program that permits employees to take time off work for a specific number of days and still receive payment. Generally speaking, these absences include vacations, illnesses, or personal circumstances. European workers are typically guaranteed between 20 and 30 days off per year. However, the USA has no such rule. There are no paid time off laws for paid holidays, vacation days, or paid sick days. Instead, businesses in the US create their own PTO accrual policies. A leave of absence policy may include includes: 

Medical leave 

If an employee is sick, or they’re caring for a family member who’s sick, they may need an intermittent leave of absence. This leave also covers doctor’s appointments or hospital stays.  

Bereavement leave

This can be used when an employee’s immediate family member passes away and is known as bereavement leave.

Annual leave

This time off work is granted to employees to be used for whatever the employee wishes. This can include religious holidays, birthdays, anniversaries, or emergencies.

Parental leave 

This includes any time a person needs to take off to care for children. This could be paternity, or maternity leave paid time off vacation, as well as adoption leave. 

Vacation requests

Vacation PTO is one of the most common types of leave. It is the time an employee spends away on a trip or vacation. 

California Paid Time Off Policy 

Although there are no federal laws concerning policy for PTO, some states have their own regulations restricting its accrual and usage. California is one example. Paid time off in California is regulated so that businesses can limit the number of hours accrued to 48. After this point, workers must use some of the hours they’ve accrued before they start accruing again. Furthermore, California permits companies to limit PTO usage to 40 hours per year. Any remaining time is rolled over to the next working year.

Average Paid Time off in USA

So how much PTO is normal? Countries like France, Germany, Spain and the UK see a total of more than 30 days holiday PTO per year. However, the average in the USA for workers is 10 vacation days per year, depending on the company policy, with sick and personal days on top of that. Yet, these are not guaranteed to be paid. In this sense, the US is the only advanced economy not to guarantee its workers PTO. 

*Find out which states have the most paid time off USA standards.

Although this is gaining momentum as a key factor to include in company policy, the amount of time that Americans are taking off work is not increasing. Due to rising levels of work-related pressure, employees are less likely to take time off work, even if they are entitled to PTO. What’s more, a large proportion of workers have said that they often work during this time off. Yet, this is not good news for companies. Time off allows people to disconnect from work and recharge. As a result, their productivity levels increase, which is undoubtedly good for a company’s long-term growth. 

How Does Paid Time off Work? – Using a Paid time off Tracker

Due to the varying nature of work, a company’s workforce could include salary, part-time and hourly workers. Therefore, it is crucial to know how to calculate paid time off benefits for each. We’ve included a breakdown of the differences for each type of employee below. 

Paid time off for hourly employees 

Normally, paid time off policies are based on an accrual of time. In this sense, it is calculated depending on the number of hours the hourly employee works. For example, if a worker accrues one hour of PTO for every 40 hours worked, this means that after working 50 weeks, they will have accumulated 50 hours of PTO, which would be 6.25 paid days off work. A paid time off accrual rate calculator will help any HR manager in working out hourly employee time off.

Paid time off salary employees 

For fixed salary employees, most companies offer a predetermined amount of PTO which includes absences for vacations, as well as sick leave and other personal requests. This is becoming far more common in the US and helps attract new hires to a company. A paid time off calculator can help you work out any additional PTO employees can accrue on top of their fixed amount.  

Paid time off for part time employees 

If you’re offering a set amount of PTO to your salary employees, it seems logical that you would simply halve this for part-time workers.

If you’re unsure of how to include this into your policy, check out a PTO template for ideas. 

time off requests

Paid Time Off Laws, Policies, and Best Practices

A PTO sample policy is a good starting point for ensuring you are staying compliant with the paid time off laws. But of course, there are some best practices which should be taken into account before you begin. 

Requesting time off 

To make management easier, you may want to consider using a paid time off requests form when managing various types of time off requests. This form allows an individual to ask formally for scheduled absence from work. Whether it’s a paid time off policy for small businesses or large organizations, using this form will ensure that HR can keep track of when time off is taken and help with record-keeping. 

Set company holidays for paid time off requests

A good practice for any policy would be to establish a set list of company paid time off  pto holidays when the office will be closed. These could include federal holidays like Christmas Day or Independence Day. 

Time limitations 

One thing to make clear would be to set time boundaries on accrued PTO. Will there be a PTO expiry date or will it roll over to be used during the following year? This must be included in the policy. 

PTO vs vacation 

Whereas vacation leave refers only to paid time off for vacation, PTO in general covers any paid time away from work. Some companies even offer unlimited PTO! So, what absences will you include in your policy? Will you offer paid medical leave and bereavement time off as well as vacations? These are crucial factors that you need to decide before moving forward. 

Paid time off policy examples are available to help any HR manager or employer when developing their policy

Paid Time Off California Tracking

Another best practice that can be included in company policy is to track PTO. Paid time off California Tracking can help HR managers keep on top of the number of hours employees are accruing, as well as when they are taking time off and what the reasons for it are. Typically, PTO software comes with a simple PTO tracking tool that can be used for this purpose. Ultimately, this software is an automated leave management system that is aimed at helping employees make leave requests and helping managers approve and manage them. 

A time off tracker provides HR departments with a request form template and excel template for which to input and store information. This can ease HR managers with the approval of paid leave requests. Furthermore, these can also be used to track the employee accrual rate and keep a log of the employee paid time off plans. Using this software is a much more streamlined and efficient way of managing PTO. It not only saves time and costs but also increases productivity as employees will be able to take time off safely in the knowledge that it has been approved.

Managing Paid Time off is simple with Factorial’s time-off software.

Written by Charlotte Stace

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