Why companies are looking into Flex PTO and Unlimited PTO policies
As the mindset and preferences of the modern workforce change, many employers are making adjustments to the work schedule and time off benefits offered to employees. Millennials especially value flexibility in the work hours and time off arrangements offered by employers. In our current culture, there is also more focus being placed on the outcome or results of the work produced, rather than the time frame, such as the traditional 9 – 5 workday, or the location where the work is produced, with more companies offering remote work options.
What about traditional policies?
Traditional vacation and sick leave policies can present some issues for employers. For example, with some time off policies, employees can save their time off to cash in when they leave the company. This often results in needing to pay out for unused days if the employee quits, gets let go, or simply doesn’t use all of their allotted time off by the end of the year. As a result, some employers are choosing to look for time off policies with more flexibility and options.
An emerging trend for PTO
An emerging trend is toward more flexible or unlimited PTO policies. There have been success stories of companies rolling out non-traditional PTO benefits, and also some stories of failed attempts at large-scale changes. It’s important to look at the ways the new policies will impact both the company and the individual employees before making any decisions about replacing existing policies. In the end, the success or failure of a new PTO policy often comes down to how well the new policies are planned out based on company culture and then communicated to employees.
Flex PTO policies bundle PTO by combining sick leave and vacation time. This is generally more accommodating for employees and works well for employers. But before choosing to implement this type of policy, consider these key elements of a Flex PTO policy.
Key elements of a Flex PTO policy:
- Works well for a company where work is routinely performed outside the traditional 9 – 5 workday and employees can be trusted to manage their own time in productive ways
- Allows employees to work from where they want, when they want – as long as they are meeting the expectations for work results
- Encourages employees to take a well-deserved break from work and then to come back refreshed and more productive
Unlimited PTO policies are similar to traditional PTO policies, except employees are not given a set number of days off. Employees are permitted to take as many days off as they need for any reason, as long as they are producing the expected work results. This type of policy usually still requires that employees plan the time off with their supervisor, with the exception of unexpected illness or emergencies. The company’s normal workday schedule can also remain the same as with traditional PTO policies.
Key elements of an Unlimited PTO policy:
- Works best in a goal-oriented company culture with a review process to track performance and goals already in place.
- Reduces the rush at the end of the year for employees to use PTO that does not carry over.
- Saves administrative time because HR managers no longer need to track and regulate the use of accrued vacation time for each employee.
Precautions for these policies
There are a few cautionary notes to keep in mind when considering Flex or Unlimited PTO policies. Some jobs within a company require employees in those roles to be present on-location at specific times to perform the jobs sufficiently. This can make remote working arrangements or unlimited vacation time off difficult to offer to all employees across the board and can create a disparity between employees or departments. It is also still necessary to track certain types of time off categories, such as a leave of absence regulated by FMLA laws. Tracking these time off categories can be problematic within a Flex or Unlimited PTO policy structure.
Overall, Flex and Unlimited PTO policies can provide advantages to both the company and the employees – if the right policy is chosen and then properly planned and executed. However, there are some administrative challenges that must be addressed to make it work well for everyone. Investing the time to understand the effect that the changes will have on the workforce is necessary if the company hopes to provide a genuine benefit to employees that will attract top talent and retain key staff members.
Here are some things to consider before making changes to the PTO policies:
- How will the new policy be clearly communicated to all employees?
- Does the new policy comply with all state and federal wage and hour regulations?
- Have the proposed changes been reviewed by an HR professional or an employment attorney?
If you would like to explore the options for flexible work schedules and time off policies, talk with Advanced Payroll Systems. APS offers a fully integrated software system designed and built as a single database solution for Payroll, Time and Labor Management, and HR. One key feature of the APS platform is that it automates the enforcement and tracking of federal, state, and employer specific leave policies and requirements for a variety of qualified leave types, including FMLA. Make sure you have all the facts and have explored all the angles before revising your company’s PTO policies – APS can help.