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How to Create a Time-Off Policy for Small Businesses

Time off from work is a powerful part of your business’s benefits package. It can help you recruit new employees and retain your current employees. In fact, 62% of American workers say it’s extremely important that their job offers paid time off (PTO) for vacation or minor illnesses—even more important than employer-sponsored retirement programs. Whether their time off is paid or unpaid, employees deserve a written policy that makes it clear when they can take time away from work without jeopardizing their employment. Creating a time off policy for your small business helps set expectations and ensure your employees maintain a work-life balance.

What Should a Time Off Policy Include?

A time off policy should include:

This may feel like a lot to think about. But answering a few simple questions now will help you define a clear policy and make it easier going forward—for both you and your employees.

Let’s take a closer look at each part of your time off policy.

Who Is Eligible for Time Off

First, consider which of your employees are eligible for time off:

How Time Off Is Allocated

Next, define how your employees get time off:

How Employees Can Take Time Off

Now that your employees know they have time off, let’s help them use it. Minimize confusion and any potential disagreements with a clear policy and procedure for requesting time off:

What Happens to Unused Time Off

Let’s say you’ve hired some hard-working employees who didn’t use all of their earned time off. Uh oh, now what?

Scenarios like these are common: 46% of U.S. workers don’t use all of their PTO. So be sure to explain what happens to unused PTO in your policy:

Types of Time Off

Like you, your employees have many demands on their time outside of work. They may be raising kids or caring for their aging parents. They have doctor’s appointments and vacation plans.

Your time off policy can specify approved reasons for PTO, including:

* Subject to mandatory requirements under New York State and federal laws

How to Manage a Time Off Policy

Once you’ve created your time off policy, make sure it’s manageable for your company. Put a measuring system in place to track employee eligibility and time taken.

For some small businesses, a simple spreadsheet with embedded calculations is all that’s needed. For more complex businesses, an app like Clockify can make it easier to track time off and attendance.

Need Help Managing PTO for Your Small Business?

Employ-Ease helps Rochester small business owners like you create time-off policies and set up systems to track PTO. Another way we make it Easy to Employ!

To discuss your payroll and benefits needs, schedule a free, one-on-one conversation with Employ-Ease owner Lisa Kretzer.

This post has been updated from the original article published on April 20, 2022.

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