What is paid time off (PTO)?

Words written in sand: Take some time off.

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Paid time off, or PTO, is one of the most important scheduling concepts you’ll ever learn. The term is often used interchangeably with personal time off, which shares the same acronym, but they do differ slightly. Personal time off is just one form of paid time off.

If you manage a company in the restaurant or grocery industry, you’ll have to carefully consider paid time off when planning employee schedules. Understanding what PTO is and how it works in various situations can help ensure that all your employees’ needs are being met.

In the hospitality industry especially, it’s vital to give employees adequate time off. Otherwise, you risk running an inefficient, costly business.

What is paid time off (PTO)?

The words PTO PAID TIME OFF in all caps, surrounded by letter tiles.

As the name implies, paid time off is when an employee does not have to go to work but still receives their normal pay. PTO is available to most full-time employees, and companies generally provide a set amount of PTO for each employee per year.

PTO helps to ensure employees have an appropriate work-life balance. By allowing time off work without losing money, companies ensure their employees are mentally, physically, and emotionally healthy.

A robust leave policy, along with a clearly-defined attendance policy, can help you create a more positive workplace environment and improve overall productivity.

PTO is a general umbrella term that refers to all sorts of paid time off. Some companies may further divide paid leave into various categories, such as vacation days, sick days, and unofficial holidays.

Let’s take a look at these:

Vacation days

Vacation days are PTO that employees use when they plan on taking a break for fun. People may use their vacation leave to go on holidays, visit family, or attend special events.

Some people will also use vacation days for any other time they need a break. Employees can take this type of time off without having to provide any reason; however, they usually have to request it in advance.

Sick leave

Sick leave is PTO that employees can take on short notice for very specific reasons. To use sick leave, an employee usually needs to be ill, injured, or the only caretaker for an ill or injured family member.

If a company offers sick leave, they may require employees to provide some sort of proof. This may be a note from a doctor or a bill from the hospital.

Official holidays

If you run a business that closes on holidays, like Memorial Day or Christmas, you might want to give employees PTO for these days. This type of leave gives employees a holiday break without making them lose pay.

If you do ask employees to come to work on federal holidays, you may want to consider paying them an overtime rate or some form of holiday pay. It may not be required, but it will help you ensure you have adequate staff on those days – as well as keep your employees happy.

Several matchsticks in a row, one of which is completely burnt out.
Time off is essential for preventing burnout. PTO helps ensure employees are happy and productive.

Other types of paid leave

Depending on your employment policy and your local laws, you might need to offer employees other types of paid time off.

For example, some companies offer bereavement leave, which is PTO that applies when an employee loses a loved one.

You may also want to consider maternity and paternity leave, which provide PTO for parents right after they welcome a new child. Other potential reasons for time off include jury duty, voting, and military leave.

Your guide to creating a good PTO policy

There are all sorts of ways to address PTO in the workplace. First of all, you have to decide if you want to split paid leave into categories like vacation leave and sick leave.

More and more companies are actually skipping this step. Some grocery industry giants like Walmart just provide general PTO and allow employees to use it at their own discretion. This gives employees more flexibility, but it also means they tend to end up taking more time off since they can use what formerly would have been reserved for sick leave as vacation.

Who should receive paid time off, and how much?

Next, you have to think about who gets PTO. Almost all companies provide some form of paid leave to full-time workers. However, when you have a lot of hourly workers at a small grocery store or cafe, you might not have many full-time employees.

In some cases, it can be beneficial to give even part-time workers a small amount of PTO, simply because it boosts morale.

A woman of color relaxing at home with a laptop in her lap and one arm stretching.

You also need to think about any local or state requirements, which may mandate a certain amount of leave during emergencies like COVID-19.

It is also important to consider how many hours of PTO employees get and how they gain them. The amount of paid leave can vary depending on factors like state law and your type of business.

For grocery stores, a common arrangement is two weeks of paid time off a year. However, you may want to allow employees to accrue more PTO as they work at your company.

For example, employees might gain one hour of PTO for every four days of full-time labor.

What should you do with unused paid leave?

Finally, you have to think about what happens to PTO hours if they’re not used. Some businesses just have unused leave vanish at the end of the year, but others may let employees roll over extra PTO to the next year or pay period.

Many companies, like Kroger, pay unused vacation time as a lump sum payment when an employee leaves the company.

How to properly manage paid time off

Handling paid time off yourself can be a little overwhelming, especially if you have more than a handful of employees. It requires you to keep track of each employee’s individual PTO and adjust their amount of available leave as they accrue more or use it up.

If you’re handling payroll for your business, it’s important to make accurate pay stubs for each employee to save you time and reduce the chances of errors.

A time off request form printed out, a pen laying on top.
It’s possible to track time off requests and PTO using pencil and paper methods, but it’s not very efficient.

Even if you’re a relatively small store, it can be easy to get confused or stressed out by having to track paid time off yourself. Therefore, many business owners prefer to work with software that manages PTO for them.

A good labor management system can make allocating PTO almost effortless. It can also prevent your management team from scheduling too much paid leave during your busiest times of year.

Track PTO the easy way

At TimeForge, we provide highly configurable PTO tracking that works the way you need it to. You can assign different leave policies to various positions, and our software will automatically calculate holiday pay and PTO.

With our seamlessly integrated employee communication tools, it is also easy for workers to request time off or provide doctor’s notes for sick days. TimeForge also provides a variety of other helpful tools for the modern-day business owner, such as:

With our predictive sales analysis, we can help you schedule exactly the right amount of staff for busy times and slow times. We also integrate with POS, human resources, and payroll software, so you can handle every part of your company in one place.

Intrigued? We offer a no-risk free trial; give us a try and see why we’re consistently rated 5/5 stars.

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