Mandatory Paid Time Off: How Does Your Company Policy Stack Up?

Mandatory Paid Time Off: How Does Your Company Policy Stack Up?

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Creating a leave or paid time off (PTO) policy for your organization can seem like a relatively straightforward task, yet has the potential to become a complex and frustrating process. Striking the right balance between giving employees enough time away from work, while minimizing declines to overall workplace productivity, can be daunting for any administrator or business owner. How many vacation, holiday and/or sick days should each individual receive? Should employees be provided just the legal amount of PTO, or should a company create a generous package to be competitive and attract/retain employees?

To create a framework for your company’s policy, it will be helpful to understand what your country’s legal PTO standards are and the policies your competitors are offering.


While it comes as no surprise that labour laws differ from country to country, you may be surprised to know that mandatory time off laws can vary drastically, depending on your nationality. So how does your country stack up? According to a study by the Center for Economic and Policy Research, Austrians and Portuguese citizens get plenty of R&R thanks to 35 days off (13 statutory holidays and a minimum of 22 paid vacation) annually. By comparison, Canadians and Japanese workers are guaranteed less than half of the paid time off enjoyed by their counterparts in other developed countries, with only 10 days of guaranteed vacation time. And the United States, with no minimums in place, is the only industrialized nation without any federal paid leave law. As an American, vacation time or sick leave you receive is purely at the individual company’s discretion.

Center for Economic and Policy Research


So when beginning to put together a corporate time off policy, you could very well opt for the legal minimum. But paid time off can become a bargaining chip when wooing top talent in a competitive hiring market. In recent years, more and more progressive companies (typically tech start-ups) have opted to instate an “Unlimited Time Off” policy. Employees of organizations such as Netflix, Hubspot, and more recently, The Virgin Group, are entitled to take as many vacation and sick days off as needed. While this wide-open policy may seem like a threat to overall productivity, these organizations are finding that their employees generally act responsibly, and, quite the opposite of abusing the system, often end up taking even less time off than employees in organizations with a more fixed policy. In fact, at Hubspot, COO J.D. Sherman refers to the vacation policy as "two weeks to infinity,” to explicitly communicate that employees are expected to take at least two weeks off per year.


Whether you opt for the standard legal amount or an unlimited PTO package, separate reserves for sick days, vacation, jury duty, etc or a catch-all PTO bank, you’ll want to use a system that can effectively manage and maintain this policy for you. Using a cloud-based timesheets system with integrated time off/time accrual capabilities will have several benefits for you and your organization. With so many benefits to having all of your company’s timesheets, time off requests and accrued time off living in one easy-to-use interface, we’ll need to write a whole new blog post (stay tuned!). In the meantime, a free demo can help you visualize how the Timesheets/Time Off systems work and answer any lingering questions on how they integrate with your existing ERP.

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