Offering paid time off

Offering paid time off

Jan 01, 2008

Q. How do I implement a paid time off policy at my practice?

If you're experiencing a problem with employees using a lot of sick time, consultant Jan Miller says a paid time off (PTO) policy will make it go away. The basic idea: Rather than providing sick days and vacation time, you offer a set number of days of paid leave per year. It's up to each employee to decide how to use them. Miller, a consultant with Veterinary Best Practice in Hillsboro, Ore., offers these tips to implementing a successful policy:

Be consistent. Your employee manual should reflect your policy.

Establish a universal definition of PTO. Miller prefers defining a "PTO day" as eight hours.

Determine a use-it-or-lose-it maximum accrual of PTO hours. For example, set a maximum accrual of PTO equal to one year of accumulated PTO time. If you don't, you can get into severe financial trouble if several employees decide to take all their saved-up time at once. You might also want to limit the amount of time an employee can take off at one time.

Jan Miller
"PTO is an accounts payable liability," Miller says. "It is a debt you owe to the team member. If you let employees 'save' their vacation time, you risk a large financial payout later should the employee quit."

To determine the number of days an employee will receive, just add the number of paid vacation days and sick days you currently provide. If that number varies by length of employment, do this for each tenure bracket. For example, an employee with zero to five years' tenure would have a different total than an employee who has five to 10 years' tenure.

Let's say everyone at your practice gets 10 days of paid vacation each year, plus four paid sick days. At eight hours per day, this totals 112 hours of PTO per year. Divide 112 hours by 12 months to arrive at a monthly PTO accrual of 9.33 hours per month.

Every time an employee takes a vacation or sick day, you'll reduce the accrued time off by those hours. Miller advises that you only let employees take time they've accrued, and that you not grant unpaid leave instead.

Some payroll services can manage this tracking process. If you don't use a payroll service, set up a spreadsheet so you can keep track yourself.

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