Flexible paid time off – overcoming PTO challenges

Flexible time off can be a magnet for talented candidates, as well as a way to avoid burnout and reduce employee churn. On the other hand, though, the policy itself can lead to even more stress and confusion. So, how to implement it in a way that is beneficial to the company?

The right to the paid day off is taken for granted in most developed countries. In the European Union, every member country has a right to decide about the minimal number of days the employee can take. The numbers vary from the maximum amount of 30 days in Sweden to 20 days in countries like Poland or Greece.

The number of approximately 20 paid days off is common throughout developed countries at all, including states like Argentina (up to 20 days), Brazil (up to 30 days), or South Africa (up to 25 days).

There is a limit of ten days in Canada (with a notable exception to Saskatchewan province, with 15 paid days off. Japanese employees enjoy ten days off, while people from Mexico have approximately six days off.

The United States is the only developed country with no paid leave days guaranteed.

What are the costs of overworked employees?

There are multiple benefits of taking the time off, from unplugging from the daily work and getting back with a distance, to recovering and spending time with the family. That’s why giving the employees the time to recover and actually paying them for not working for some time is beneficial for the company.

The productivity drop resulting from being overworked is a fact. According to the Psychology Today – published study, unused vacation time costs US companies up to $224 billion a year – shrinking productivity and lack of creativity can be drowning. Moreover, the overworked employee is going to take leave days in due time – due to job exhaustion or sickness. In the long term, working too hard is not paying off.

So how much time is the best number for days off? The best answer is “it depends”. And when it comes not to the theory and pointless sentences with no real impact on reality, the best option is to offer flexible time off.

What is a flexible time off (or FTO time off)?

The flexible time off is the practice, where there are multiple types and options of taking the day off the work and still getting paid. It is common to use a flexible time off and unlimited vacation interchangeably – and it can be correct occasionally. But on the other hand, it is not exactly the truth, at least not always.

The unlimited time off is truly unlimited – there is no upper limit of leave days the employee can take.

But putting a limit on paid days the employee can take is not making it automatically inflexible. The core concept is to make them available, convenient, and useful for the organization, contrary to strict and limiting policies seen in multiple organizations.

The first type of flexibility comes not only from the number of days, but also from giving the employee multiple types of free days to take.

What are the types of off days in the flexible time off?

Depending on the jurisdiction and the legal framework the company operates in, there can be multiple types of free days. Some of them are mandatory in some countries, while others are completely up to the goodwill of the company owner. Paid time off policy requires clarity to ensure compliance and fairness across different contracts.

Personal leave days – the most unspecified and adjustable type of leave day. Usually, all days besides these below fall in this category. It can be either a free day to attend some child’s school event, have some personal time for family, or treat a hangover. Time-off policies must account for the wide range of reasons employees can take time away from work.
Grieving – a day granted when someone from a close family dies and the employee has to attend the funeral. Although rarely taken, this type of leave can be a game-changer when needed. Time off for holidays or unplanned life events like grieving should be clearly addressed in the policy.
Vacation days – a period of time that enables the employee to rest and recharge. It is typically the top-of-mind type of paid leave one has in mind. Flexible time off is typically built around the idea that vacation time should be easy to request and plan. It allows team members to take time as required without micromanagement.
Paid sick leave – another type of vacation that is common in most developed countries, yet not-that-obvious in the US. The situation takes place when the employee gets sick and the employer grants him or her additional days off, often for a slightly lower wage. The policies can be granted as an employee benefit, as a social security benefit, or as a mixture of both. Paid time off that employees rely on should cover both physical and mental recovery.
Absences – other types of days off that, contrary to the personal leave day or other form described above, are notified post factum, not in advance. Employers must still approve time off requests to ensure business continuity while respecting employee needs.
Parental leave – this type of leave is usually a part of a social security system. It is a time granted for a parent who wishes to take care of a little child. The length of time depends on the legal framework in the country. Time off policy requires employees to understand their rights and limits based on their contract and role.
Incomplete leave – sometimes it is not necessary to take a whole day off. Four hours or two can be sufficient, and the ability to take only a few work hours (and clock in for a part of a day) is the first step toward flexible work time. This helps employees maintain control of their time while still fulfilling job responsibilities.

While some types of leave days are up to the employer, some types are forced by the social security system or the law. On the other hand, though, there can be multiple types of contracts in one legal system that entitle the employee to take more or fewer days off or types of leave. Employers may offer unlimited time off to attract talent, but must weigh the pros and cons of unlimited policies. Some companies debate unlimited PTO or flexible options—each with its cons of unlimited PTO, like policy abuse or unclear usage expectations.

With multiple types of leave days and the number of each of them, the company can find it challenging not to change the flexibility of leave management into chaos. But that’s not impossible though, at least if the company obeys the rules.

How to manage challenges with flexible time off?

What can be considered a haven for an employee, can be easily turned into hell by the improper management and lack of transparent culture. To make the flex time off work for the company, it is crucial to:

Know what is acceptable (and what’s not)

To get the best of the flexible days off, the employee needs to take a day off – trite but true. While the time off can be technically unlimited or there can be a huge amount of multiple leave days to take, there are a myriad of factors that influence the daily work in the company.

The top of mind example – a workaholic or single and career-oriented manager can set a pressing example for the team. The tension can be even greater when there are employees with families and kids in the team, who need to take leave days more often and due to numerous unpredictable circumstances like a child’s sickness.

Furthermore, while leave days can be unlimited or there can be many of them, the company expects the work to be done. Thus, taking leave days just before the deadline or in the middle of the life-or-death type of project can be unacceptable.

In the end, the company can have flexible days off with no employee brave enough to take advantage of it.

Solution:

First and foremost, the company’s management needs to give an example and take days off, not work themselves to death. So if the owner skips a day or two and the world does not fall apart, it is a clear signal for the rest of the company.

But every so regularly this signal is not strong enough. In that case, an additional incentive can be required. In Evernote, a company offers a $1000 boon for every employee who takes at least a week off. The workaholism-loving world of high-tech companies encourages the employees to take days off can be the only way for them to actually do that.

On the other hand, though, there should be a good guideline that shows the encouraged and forbidden practices – more can be found below.

Communicate

Ensuring the smooth flow of the information is critical in delivering a flexible time off policy. There is no problem with taking the day off – but there is a problem with doing so in an unexpected and noncommunicative way.

In other words: while there can be unlimited vacation days, there is no day to take without notifying it previously. Managers need to know who and when will be absent, and project managers need to know the skills and workforce they have access to.

Finally – it is rather an exception when the day off is taken without prior notice. Usually, vacations are planned, there is a calendar of upcoming events and there are many ways to plan the off days up. The situation where there is a sudden and unexpected need to take a day off is relatively rare.

Solution:

The key is in software. There are many time-off programs (with Calamari being one of them) that enable the team to plan the days off with delivering the complete and reliable calendar to the managerial team. Moreover, the calendar delivered by Calamari enables the manager to decide whether to accept or decline the day off requested by the team member.

Another important feature is to deliver integrations between the popular tools (like Slack, GSuite, or Office 365) and the off day management software. Reducing the uncertainty and the number of surprises in the vacation calendar is the first and the most significant step toward delivering real flexibility in the day off management.

Understand the expectations (from both sides)

Finally, it is challenging to deliver a flexible day off policy when both sides, the employer and the employee, don’t fully understand what they expect of each other. This applies to the policy toward the free days, the work effects to deliver and the general company culture.

Solution:

The best way is to set clear rules, write them down, and stick to them. Furthermore, it is essential to collect feedback from the team and update the rules occasionally to deliver better results, and reduce what is considered ineffective.

Setting rules and following them is crucial in building a transparent and trusting culture in the company, where employees feel safe enough to share their concerns and contribute toward a common goal.

Summary

A flexible day off policy is a great benefit for employees, but in the end, even greater benefits can be gained by the company. Having a loyal, relaxed, and effective employee is the key element of building a competitive advantage – machines are available everywhere, but an experienced and flexible mind is unique and necessary for creating value.

FAQ – Flexible Time Off Policies

1. What is a flexible time off policy (FTO policy)?

A flexible time off policy allows employees to take paid time off (PTO) without being restricted by a fixed number of days. Unlike traditional PTO that accrues over time, flexible PTO provides more freedom for employees to take time off as needed, often based on mutual agreement with their managers.

2. Is flexible time off the same as unlimited PTO?

Not exactly. While unlimited PTO policies offer unlimited time off without a cap, flexible time off may still involve some structure or approval process. The main difference lies in how time off is managed—flexible policies offer autonomy, whereas unlimited PTO offers volume.