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How to Build a PTO Policy for Your Small Business (with Template)

May 2, 2022

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Summer is right around the corner, and there’s probably one thing on all of our minds: vacation.

We may not get the full summer like we did in school, but the months of June through September are the most popular times to travel. Plus, with COVID cases trending downward and countries loosening their restrictions on tourist entry, people want to hit the road. In fact, 72% of people plan to spend more money on travel this year compared to last year.

Your employees are probably thinking about taking some hard-earned time off in the near future, if they haven’t already. And that means that you want to have a clear paid time off (PTO) policy in place.

What is PTO? Why do you need it?

PTO is the blanket term for the time your employees can take off while being paid regular wages. It typically covers vacation hours, sick leave, and personal time.

While most businesses are not federally required to provide PTO, having a generous policy is a great way to retain and recruit employees. For one, 63% of job applicants would turn down offers that don’t include PTO. And only 71% of employees in small businesses have access to paid vacation. That makes SMBs that do offer PTO enticing prospects for job hunters.

Plus, having a PTO policy helps reduce unscheduled absences, and employees who enjoy PTO throughout the year are less stressed, healthier, and more productive.

What to consider when building your PTO policy

Every business has unique needs, and you’ll have to consider your SMB’s goals and roadblocks when building your PTO policy. Here are a few questions you’ll want to think about:

  • Can employee onboarding and training be interrupted or paused? 
  • What’s the minimum number of team members you need available to cover all business operations? 
  • How long could someone be gone before their role’s absence causes problems?
  • Are there times of the year when the business is busier (tourist season, holidays, etc.)?
  • Should PTO be offered all at once or accrued over time?
  • What are my state laws surrounding sick leave, family leave, and payouts on PTO?

Answering these questions can help you determine details like when you can start offering PTO, how much PTO you can comfortably give, and how much time employees can take off at once.

There’s also another insightful resource that can help you build your PTO policy: your employees. Reach out to them in a simple survey or during an all-hands meeting to get their feedback on the topic of PTO. Together, you can build an incredible PTO policy that works for both them and your business.

The big question: how many days should you offer?

This is a question best answered with a little research. According to the Bureau of Labor Statistics, the average amount of PTO in the U.S. is 10 days for private sector workers. Now, this number can vary greatly across industries; for example, people working in leisure and hospitality typically see less PTO than people working in finance.

So your best move here is to take a look at the PTO policies of businesses in your industry, from big to small. You want to stay competitive for job applicants and give your employees enough time to relax and recharge. So doing this research will give you a ballpark idea of how much PTO you should offer.

What about unlimited PTO policies?

You may have heard of unlimited PTO (or unlimited vacation hours). And it works pretty much as its name suggests — employees are allowed to take as much paid time off as they would like, as long as they meet certain criteria set by the individual business.

There are pros and cons to instituting unlimited PTO. Pros: they offer employees a lot of flexibility and freedom in choosing their time off. Plus, they’re easy to manage. Cons: in some cases, workers can abuse this privilege. But often what happens is employees who don’t feel comfortable in their work environments end up not taking much time off at all.

Not sure where to start?

Writing down any policy from scratch can be intimidating, even if you’ve already built it out in your mind. Here’s our solution: a PTO policy template, ready and waiting for you to fill out the minor details. Simple and easy.

👉 Start with this template.

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Article

How to Build a PTO Policy for Your Small Business (with Template)

May 2, 2022

Jump to a section
Share it!
Sign up for our newsletter
You're all signed up! Look out for the next edition of The Manual Weekly coming Wednesday am!
Oops! Something went wrong while submitting the form.

Summer is right around the corner, and there’s probably one thing on all of our minds: vacation.

We may not get the full summer like we did in school, but the months of June through September are the most popular times to travel. Plus, with COVID cases trending downward and countries loosening their restrictions on tourist entry, people want to hit the road. In fact, 72% of people plan to spend more money on travel this year compared to last year.

Your employees are probably thinking about taking some hard-earned time off in the near future, if they haven’t already. And that means that you want to have a clear paid time off (PTO) policy in place.

What is PTO? Why do you need it?

PTO is the blanket term for the time your employees can take off while being paid regular wages. It typically covers vacation hours, sick leave, and personal time.

While most businesses are not federally required to provide PTO, having a generous policy is a great way to retain and recruit employees. For one, 63% of job applicants would turn down offers that don’t include PTO. And only 71% of employees in small businesses have access to paid vacation. That makes SMBs that do offer PTO enticing prospects for job hunters.

Plus, having a PTO policy helps reduce unscheduled absences, and employees who enjoy PTO throughout the year are less stressed, healthier, and more productive.

What to consider when building your PTO policy

Every business has unique needs, and you’ll have to consider your SMB’s goals and roadblocks when building your PTO policy. Here are a few questions you’ll want to think about:

  • Can employee onboarding and training be interrupted or paused? 
  • What’s the minimum number of team members you need available to cover all business operations? 
  • How long could someone be gone before their role’s absence causes problems?
  • Are there times of the year when the business is busier (tourist season, holidays, etc.)?
  • Should PTO be offered all at once or accrued over time?
  • What are my state laws surrounding sick leave, family leave, and payouts on PTO?

Answering these questions can help you determine details like when you can start offering PTO, how much PTO you can comfortably give, and how much time employees can take off at once.

There’s also another insightful resource that can help you build your PTO policy: your employees. Reach out to them in a simple survey or during an all-hands meeting to get their feedback on the topic of PTO. Together, you can build an incredible PTO policy that works for both them and your business.

The big question: how many days should you offer?

This is a question best answered with a little research. According to the Bureau of Labor Statistics, the average amount of PTO in the U.S. is 10 days for private sector workers. Now, this number can vary greatly across industries; for example, people working in leisure and hospitality typically see less PTO than people working in finance.

So your best move here is to take a look at the PTO policies of businesses in your industry, from big to small. You want to stay competitive for job applicants and give your employees enough time to relax and recharge. So doing this research will give you a ballpark idea of how much PTO you should offer.

What about unlimited PTO policies?

You may have heard of unlimited PTO (or unlimited vacation hours). And it works pretty much as its name suggests — employees are allowed to take as much paid time off as they would like, as long as they meet certain criteria set by the individual business.

There are pros and cons to instituting unlimited PTO. Pros: they offer employees a lot of flexibility and freedom in choosing their time off. Plus, they’re easy to manage. Cons: in some cases, workers can abuse this privilege. But often what happens is employees who don’t feel comfortable in their work environments end up not taking much time off at all.

Not sure where to start?

Writing down any policy from scratch can be intimidating, even if you’ve already built it out in your mind. Here’s our solution: a PTO policy template, ready and waiting for you to fill out the minor details. Simple and easy.

👉 Start with this template.

Article

How to Build a PTO Policy for Your Small Business (with Template)

May 2, 2022

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