Properly handling paid time off (PTO) accruals is often a challenge. In order to mange PTO properly and avoid conflict with employees, businesses need to keep the following two things in mind.
Managing PTO can be stressful for a company. Aside from ensuring proper time and labor management solutions are in place, managers should consider the following things.
It’s critical to have a written policy at your company detailing how vacation and paid time off are accrued.
Say you offer paid vacation, paid sick leave, paid time off or paid holidays, and you have no formal policy in place. Legally, you have an implied policy, based on your history of awarding paid benefits in the past — and any verbal or written agreements with individual employees.
So if you make a deal with a new employee to get two weeks more annual vacation time than other staff members, that additional time could become part of your “policy” in a lawsuit.
A court could decide how much you owe employees.
It’s critical to have someone try to translate those words into actual calculations and then test them.
It is amazing how many times we have taken a company’s written paid time off policy and translated it into calculations and gotten the response “But that’s not how we actually do it”.
Your time-off benefit policy should be written in clear language that is easily understood by the typical employee. In some cases, even companies with written policies have been forced to grant employees more benefits than they intended.
That’s because their policies had vague or confusing formulas for determining how employees earned and accrued paid time off.
Paid time off is inherently a calculation. Writing something in words that clearly indicates the proper calculation is extremely difficult. Asking a qualified payroll provider like PayNorthwest to turn your words into calculations and then checking them will make sure that your intent and your results line up.
While the above strategies will certainly make PTO management easier, a modern time and labor system complete with features such as accruals and leave management can go a long way.
To learn more about how PayNW is already helping countless businesses manage PTO and other types of leave, contact us today.