Tips On How To Structure Your PTO Policy

Developing a PTO policy for a company is not as easy as some may think.

Benefits are a huge part of attracting, hiring, and retaining good employees. And with the ever-changing business dynamic, employers are expected to provide a standard time off allowance in order to stay competitive within their market.

What most employees and new hires don’t realize is how much thought and time goes in to creating the ultimate PTO policy so employees have sufficient time off to get a break from work and tend to personal needs.

How employees accrue time and whether to include floating holidays and sick time are just a couple of the considerations when structuring your company’s PTO policy.

Below are some useful questions to consider when creating your PTO Policy

1. What can you realistically offer?

When considering your vacation policy you have to determine what’s best from a cost standpoint to your company and for your staff.

2.  How will these changes affect current employees?

Determining who is eligible based on hire date or employee type (such as part time employees) is an important piece of developing your PTO policy. Employers will also need to establish when an employee may begin to accrue time. Also, many companies have a 90-180 day waiting period before the employee is eligible to take time off.

3.  How will employees accrue paid time off?

There are a few methods to consider when structuring the accrual method of your PTO policy. For example:

  • Calendar year vs. anniversary date
  • Granted vs. accrued
  • Tiered vs. flat

Employers will also need to consider what becomes of accrued but unused days when the calendar year ends and/or when an employee leaves the company.  Are they carried over? Is there an accrual cap? Are the days paid out, either by employer choice or as required by state law?

Answering these questions can help you begin to design your PTO policy.

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