10 Factors to Consider When Building Your Company’s Paid Leave Plan
employee on paid leave

10 Factors to Consider When Building Your Company's Paid Leave Plan

Vacation programs are among the most basic benefits offered by employers: 97 percent of employers offer some kind of paid vacation policy.(1) But finding the right leave policy – one that will help you retain and attract talent, and contribute to a positive work-life balance for your employee – can be tricky. To help you close in on the perfect plan for your company, we’ve pulled together an overview of current leave offerings, plus the factors you should consider when building your plan.

Traditional Paid Leave System

The majority of U.S. companies (53%) still use a traditional paid leave system. Traditional systems typically allocate leave time into two or three categories: vacation time, sick time, and personal days.

PTO Bank Program

In the last decade, many companies have shifted from the traditional system to a PTO bank, which offers a pool of paid days for employees to use at their discretion.

paid time off programs graph

Source: World at Work, Paid Time Off Programs and Practices, June 2016

Some industries are a better fit for certain types of PTO plans. For example, the PTO bank is used by 79 percent of Healthcare and Social Assistance organizations because of its flexibility for workers with long shifts.(2)

Legal Requirements

Paid time off plans vary widely by country. The U.S. has no statutory requirement that employers offer paid vacation or sick leave. To learn about regulations in your state, look up the Department of Labor’s Wage and Hour Division office for your state.

Competitive Research

When forming or reconsidering your paid leave program, be sure to consider industry norms. Research vacation benefits offerings and employee benefits ratings and reviews on Glassdoor for your employment competitors.

[Related: 10 Ways To Create An Attractive PTO Policy]

Define Your Policy

A written vacation policy that is managed well is essential for supporting employees to take vacations. Use this checklist to make sure you have all your bases covered:

  1. Will vacation and sick days be allotted in separate buckets?
  2. Will both full- and part-time employees receive paid vacation and holidays?
  3. Will PTO be earned per pay period: monthly, quarterly, or annually?
  4. How will unexpected events such as emergencies, bereavement, and jury duty be considered?
  5. How will employees be compensated during weather closures and/or natural disasters?
  6. How will paid holidays be considered for those employees who are required to work on holidays? Related: 7 Ways to Manage Employee Holiday Time Off
  7. Will yearly PTO allotments increase with tenure? At what intervals?
  8. Will unused PTO roll over from one year to the next? At what point will it expire?
  9. Will employees be able to add unused vacation funds to 401(k), HCSA or receive payment for it?
  10. Will employees receive a paid sabbatical after a specific amount of tenure?

Whether you’re dreaming of the beach, the mountains, foreign lands, or just spending extra time with the family, remember: your employees are too. Creating a competitive vacation policy and encouraging your employees to use it in a transparent way will help reduce burnout and encourage productivity.(3)  In addition, you can use Glassdoor to inform your vacation policy decisions and communicate your PTO plan to candidates interested in working for you. For everything you need to know to design a vacation policy that draws top talent while keeping current employees energized, engaged and happy, download our comprehensive eBook, Effectively Managing Employee Time Off.

(1)  SHRM, 2016 Employee Benefits, June 2016

(2) World at Work, Paid Time Off Programs and Practices, June 2016

(3) Inc.com, 4 Scientific Reasons Vacations are Good for Your Health, June 2016