What does PTO mean, and how does it affect payroll? The answer is something that every business owner and People Ops professional needs to understand. PTO, or paid time off, refers to hours or days an employee can use to cover time away from work for planned vacations, medical appointments, sick days, and more. As the name indicates, it’s a benefit that results in the employee being paid even though they’re not working. There’s no distinction between vacation days, sick days, and personal days. Instead, any time off—regardless of the reason—fits into this category. Here’s what you need to know about implementing a PTO policy and accounting for it.
It’s one thing to provide each employee with a certain amount of PTO, but doing so means you also need to understand the impact this has on your organization and payroll process. Before calculating the impact of PTO on payroll, you must first define how employees receive paid time off. There are three options:
In addition to PTO, there are other types of time off companies offer. Some are required by law, such as leave taken under the Family and Medical Leave Act. Others, like jury duty and bereavement, are voluntarily provided by employers and may be counted separately from PTO. No matter how you arrange these benefits, you must create a system that accounts for them to ensure adequate coverage.
It’s easy to believe that too much paid time off will harm an employee’s performance and the company as a whole. While this may be true in some cases, there’s a fine line. Employees sometimes need an extended break to rest, recharge, and come back energized and ready to reach their peak performance.
PTO doesn’t have to affect your company’s bottom line. With the right processes in place, everything can continue to run smoothly in an employees’ absence. Some of the best ways to prepare include:
As a People Ops professional, you can take steps to make your time-off process easier for everyone, including:
Implementing the right PTO processes upfront will save you time, money, and headaches down the road.
There’s no room for error when managing employees’ time off. One slip-up can impact a team and an employee’s plans and morale. Fortunately, there’s plenty of help available.
At Oyster, our global employment platform allows you to efficiently manage payroll for your entire team. Pay team members, manage paid time off, and maintain compliance no matter where your employees are located.
Other features include:
Are you ready to take full advantage of these features? Register for an account today. It won’t be long before you have everything you need to manage the ins and outs of PTO, and all other aspects of payroll.
Oyster is a global employment platform designed to enable visionary HR leaders to find, engage, pay, manage, develop, and take care of a thriving distributed workforce. Oyster lets growing companies give valued international team members the experience they deserve, without the usual headaches and expense.
Oyster enables hiring anywhere in the world—with reliable, compliant payroll, and great local benefits and perks.