July 22, 2021
What is an Unlimited PTO Policy, and is it Right for Your Business?
You may have heard that companies like Netflix, LinkedIn, and Oracle are providing unlimited paid time off fo...
Harvard Business Review reports that vacation time and flexible work hours are right at the top of the list when it comes to the most desirable benefits for job seekers.
The only benefit more valued is better healthcare.
So if you want to attract and retain top talent, your company needs to offer a competitive, 21st-century employee time off program.
And one vital component of a time-off program is the types of leave you provide for your team members.
In this article, we’ll discuss the different types of leave to consider for your business. We’ll also discuss a few things to keep in mind when deciding which leave types make the most sense for your employees.
Here is a list of the most prevalent leave types for employees, but all of them might not apply to you depending on the type of business you operate, if your employees work remotely, etc. (more on that below).
Vacation time or annual leave is paid time off for your employees for any reason they wish.
It could be that they take time off to spend with their friends and family, or because they’re feeling unwell or burned out, and they need some time to recharge and rejuvenate.
Typically this is paid time off, meaning your staff is still making regular wages even if they’re not available for work. Your time off policy would state how many paid vacation days each of your employees gets each year.
There are no minimum vacation days for employees required by law in the United States. But other jurisdictions, like the European Union, mandate that employers provide a minimum number of paid vacation days.
So, be sure to check your locality (or any others where you have employees) to find out if there are minimum paid time off requirements.
This one is relatively simple. Public holidays are big holidays where all public sector employees, and some private, get the day off.
Some examples of public holidays in the United States are the big ones like Labor Day, Memorial Day, etc.
Of course, there are the big holidays like Thanksgiving and Christmas day when virtually everyone, except some essential service employees, gets the day off.
But as a private company, you’re not legally required to remain closed on public holidays (also known as federal holidays) in the USA.
But if you have an international team, or you’re based outside the USA, the rules might be different.
Once again, be sure to check local regulations about public holidays to make sure you remain compliant with labor regulations.
As the name suggests, your employees will take sick leave days to recover from an illness or injury.
In the U.S. you’re not legally required to provide paid sick days. But your employees might use some of their paid vacation time to recover from illness or injury.
Many companies do, however, provide unpaid sick days. And if sick leave isn’t used by an employee, then it can be carried over to the next year.
If your company is subject to the Family and Medical Leave Act (FMLA), then you might have to provide 12 weeks of unpaid leave for specific medical conditions.
You’re only subject to FMLA if you meet ALL of the following criteria.
If subjected to FMLA, then you’ll have to provide up to 12 weeks of unpaid leave to eligible employees for the following, among other requirements.
Check out the U.S. Labor Department website for full details on FMLA.
Maternity leave is the time that a new mother will take off from work to bond with her new baby and rejuvenate after pregnancy.
The leave period can start before giving birth or after, depending on the individual.
Unless your company is subject to FMLA (see above), you’re not required by law to provide maternity leave in the U.S.
But it is an extremely important time for people with new families. You can expect that your employees who are planning to have a family would want maternity leave as a benefit.
The typical length of maternity leave in the U.S. is between 6 weeks to 3 months. It can be paid or unpaid depending on your time-off policy.
It’s not just new mothers that need to look after and bond with the new baby. It’s the new father as well.
Having the father available to look after the newborn can also help the mother recover quicker after pregnancy.
Like maternity leave, paternity leave is becoming increasingly common and popular in the workplace across the U.S.
The loss of a loved one can happen to anyone, and it can be an extremely difficult time for all of us.
Bereavement leave is the time your staff would take off from work to mourn and deal with grief in such a situation. The typical bereavement leave length is around a week.
If you’re in charge of HR, you need to plan for these unfortunate situations and have contingency plans in place for unexpected absences.
Time off in lieu or compensatory leave is when you provide time off for an employee that has worked overtime, instead of paying them more for their time.
Along with more vacation days, flexible work hours also rank among the top when it comes to desirable benefits for job seekers.
So, if you offer time off in lieu (TOIL), it could be another perk you can mention during the recruitment process to attract the best employees.
TOIL is rapidly gaining popularity in the workplace as a solution for managing overtime.
Personal leave is kind of a catch-all type of leave that can include several other leave types already mentioned above.
If you have a small team, and feel like it doesn’t make sense to categorize many different leave types, you can include many of them under personal leave.
Here are some examples.
You can also provide personal leave to team members that are pregnant but don’t meet the criteria for FMLA.
Unpaid Time Off (UTO) can cover any types of leave that are not covered by your time-off policy.
There could be several miscellaneous situations in your employee’s lives that are not covered by your leave types, such as attending graduation, the funeral of a friend, or time off needed to move houses, just to name a few.
You could also offer UTO as an addition to paid time off. For example, if an employee’s paid leave days don’t cover their entire vacation, but you want to grant them additional days, you can provide the additional days under unpaid time off.
If you’re not sold on what leave types you should make available for your employees, here are a few things to consider.
The goal of your leave policy should be to promote employee satisfaction and wellness, while at the same time optimizing for maximum productivity and efficiency.
Think about your team members and what types of leave would make the most sense for them.
What do you think would fit ideally with where they are in their lives? What would delight them to the point that they are super motivated to go above and beyond for you at work?
Offering a generous vacation day plan and/or personal days for your team will go a long way towards building a positive workplace filled with happy and motivated employees.
Another goal of your vacation benefits is to attract and retain the best people in your industry.
And if your time off policy is lagging far behind your direct competitors, you can expect them to recruit the best people. That means they provide better service or create better products, and outperform you in revenue, market share, etc.
To avoid such a scenario, look into what your competitors are providing as far as vacation days, and model your time off policies to stay competitive.
As mentioned previously, different localities, states, or countries might have varying laws on the minimum number of leave days and leave types.
Make a list of each city, state, and country where you have employees, and learn the local labor laws in each of those jurisdictions.
Understanding local labor laws will help you to avoid potentially costly legal issues, unexpected absences, and it will allow you to better plan and manage the employee leave calendar.
The types of leave days available to your employees are a vital aspect of your company’s time-off policy.
If you don’t already have a time off policy in place, or you’re not sure that it is ideal for attracting and retaining top talent, do some research into what your most successful competitors are doing when it comes to vacation days.
And once you’ve decided on the types of leave available for your team members, consider looking into a leave tracking system to maintain adequate staffing, and a balanced workload for your staff all year long.