What is PTO?

Paid time off, or PTO, is a company benefit that appeals to many employees because it gives them the chance to relax and unwind while getting paid. While it may seem counterintuitive, the benefits for your business are significant. According to the Harvard Business Review, workers who took fewer than 10 vacation days per year were over 30% less likely to get a raise than those who took more than 10 days.

People who don’t take vacations are more prone to burnout, depression, sleep disturbances and sick leave. As such, having a sensible, well-thought-through PTO policy in place is essential.

PTO laws

As an employer, it’s crucial that you’re well-versed on the local and state laws surrounding leave. Nine states currently offer paid family and medical leave, including Washington, Rhode Island, Oregon, New York, New Jersey, Massachusetts, Connecticut, Colorado and California.

Despite there not being any federal or state laws governing whether companies should give employees paid vacation time, as of May 2019, more than 75% of employers offered it as a perk of employment. While this might seem like a move in the right direction, not all employees take advantage of vacation time.

Why wouldn’t people use paid time off?

Paid vacation is a relatively new concept, dating back a little more than 100 years. In that time, Europe and many other wealthy countries have implemented regulations that stipulate employers must give employees a certain amount of PTO each year. In the U.S., productivity culture reigns supreme.

Some of the reasons Americans don’t use paid vacation days include:

• They fear returning to a huge pile of work
• Someone who takes fewer vacation days might seem like a better worker
• Commitment to their job role
• Company culture doesn’t encourage vacation days
• Employees struggle to disconnect

What about unlimited vacation?

Unlimited vacation looks great in job ads, and it’s become something of a buzzword. In most cases, it doesn’t actually mean employees can take as much time off as they please, but it offers additional freedom for employers and employees alike. Tech startups and other modern businesses find unlimited vacation to be a particularly attractive prospect to potential candidates, but that doesn’t make it ideal.

According to the Society for Human Resource Management, the underuse of unlimited vacation is often the biggest issue with the policy. An undefined, unlimited policy creates too much uncertainty and can often push employees further into the anti-vacation mentality.

According to HBR, the answer is scheduled, carefully managed mandatory vacation.

What is forced vacation?

Forced or mandatory vacation might not sound appealing, but a tightly run policy can make it the perfect PTO solution. Under this premise, you give employees a set number of paid days off and incorporate managing vacation into your payroll process.

By making one decision-maker accountable for ensuring workers are taking time off in a manner that supports the business, PTO becomes a simple administrative task. To make it work efficiently, you need to be smart about the way you describe and sell required PTO to your team and carefully plan employee vacation times well in advance.

The best course of action is to create a water-tight policy and work closely with HR, managers and employees to schedule leave as efficiently as possible. Aim to fill holiday calendars at the beginning of the financial year, and focus on managing and updating them on an ongoing basis. Communicating your policy clearly to the team and making it easy for them to fill out their work calendars can help you get the most out of it.

Benefits of required PTO

Required PTO ensures that employees take a minimum amount of time off per year to improve productivity, prevent burnout and maintain quality standards. For instance, the company might set a minimum number of days per year or stipulate that every employee take five consecutive days off each year.

The key benefits of mandatory vacation are:

• When employees take time off to unwind and recharge each year, they come back refreshed and invigorated with a new perspective.
• You can easily see whether an individual employee is carrying too much or too little of the work burden.
• Cross-training employees can upskill the workforce. When people are able to cover each other’s jobs, overall productivity improves.
• Long-haul drivers, flight attendants and pilots have strict laws governing how many hours they can work in a row due to burnout. Implementing a required PTO policy can foster a safer workplace.
• Employees are more attracted to potential employer’s job ads when they include benefits, such as PTO.
• Mandatory vacation requires diligent planning on an ongoing basis. Being locked into the finer details of your business helps managers and executives make better-informed decisions.

Drawbacks of required PTO

For some businesses, such as nursing, retail, hospitality and startups, mandatory vacation can create more problems than it solves if managed incorrectly. In these cases, it might be advisable to create blackout periods during busy times when people aren’t permitted to take leave.

Some of the potential drawbacks of forced vacation include:

• One person taking an entire week off might not be viable for a small business or new startup.
• Managers require training and additional time and resources to stay on top of the vacation calendar.
• If senior figures in the company don’t take time off, it can affect the entire workforce and invalidate the policy.
• You’ll need to be compliant with the FLSA when it comes to unused PTO and leaves.

How to design a PTO policy

To ease employee’s worries that vacation requests might make them look disinterested or undedicated, lay out an unambiguous policy and lead by example.

Ensure all employees have a copy of the policy and include key information, such as who is entitled to PTO, how much they’re entitled to, how it accumulates and whether it carries over from year to year.

These helpful tips can help you create an efficient mandatory vacation policy:

• Use the probationary period to assess dedication and don’t allow time off during this initial period.
• Be clear about how much notice is required for time off.
• Be transparent about any periods or occasions where PTO won’t be authorized.
• Assess and update your policy on a regular basis.
• Be 100% consistent when enforcing your policy.

Forced vacation is a great benefit for employees, provided you manage it meticulously and outline a clear policy. Rather than dictating exactly when employees take time off, set parameters and outline boundaries around PTO, and allocate an individual manager to be accountable for the calendar. While it might not work for every business, it’s a step toward a fairer, more productive workforce with a better work-life balance.