Paid Time Off Program Features

Friday, October 15, 2010

What are some of the typical features found in many PTO programs?

PTO programs usually contain a fixed number of hours or days, which the employee may use for either vacation or sick time.  In most cases, the employer is not concerned with the purpose of the time off only that the employee obtains prior approval for the time off from their manager.  In other programs, organizationally observed holidays are also included in the PTO bank.  Occasionally organizations will require the employee to use PTO time for bereavement and jury duty.  This could have a negative effect if the employee lacks PTO time to cover missed time, forcing the employee to go without pay for that day.  But then the employee is supposed to “manage” their time.    The determining factor as to what time is to be included in the PTO bank is a function of the needs, culture, and competitors of the organization.

Is there a single PTO program for all employees? Executives, managers, professionals, production, maintenance, full time, part time or casual.  A PTO program that works well for hourly production workers may not work well for executives.  A PTO program for full time employees may not be suitable for part time or casual employees.  A PTO program that works well in the corporate office, may not work well in shipping if there are fluctuating or seasonal workloads.

PTO program policies need to be clearly written to ensure that management and employees alike understand the features and when and how the time can be requested and used.  If need be, the organization may need to stipulate a minimum number of days of advance notice for time off requests.  Except for emergencies, it would be reasonable to require 24, 48 or 72 hours of advance notice.  Even in cases of planned medical and dental appointments, it would be reasonable to require 24, 48 or 72 hours of advance notice.

PTO policies need to indicate how PTO time is used.  Can it be combined with an organizational holiday?  Are there periods during the year that PTO cannot be used except in the case of an emergency? Can multiple employees within the same department be off at the same time?  When competing PTO requests are received by a manager, how are the requested approved or denied?  Does seniority play a role in deciding who and when PTO is granted?  Can PTO be sold or bought?  Can PTO be loaned to another employee who has run out of time?  Are there restrictions on using PTO in conjunction with overtime?  At what rate is PTO paid for employees on shift differentials?  How is PTO paid for an employee who works 3, 10 or 12-hour shifts in a workweek?  Is PTO considered covered compensation for pension and retirement plan accruals and matching?  What happens to earned PTO when the employee terminates?

How much time will the employee accrue?  Will it be based on service?  How are re-hired employees to be treated?  Is there a waiting period prior to PTO being earned for a new hire?  Is there a waiting period before a new hired employee can use their PTO?  Is there a minimum and maximum amount of PTO that can be requested at any given time?

As will any employee compensation and benefits program, early and sustained communications is essential to providing for a smooth transition from a traditional paid time program to a PTO arrangement.  Employees should receive an initial accounting of their current PTO balance and how their old time off balances were converted.  The simplest approach is to post it to the employee’s check or deposit advice stub each pay period.  If employees are provided with an annual statement of their benefits, it should be posted on that report.