Drafting an Unlimited Paid Time Off Policy

Posted 11/02/2016

The introduction of Ashtons Legal’s PTO policy was widely reported and led to several enquiries about the content required in such a policy.The policy started off on a trial basis but has now been adopted permanently.Here are some of the key considerations for putting together such a policy:

• What leave is covered? Set out the booking arrangements and make it clear if certain types of leave are dealt with under a different policy, so that any unpaid leave (e.g compassionate leave) or leave paid differently (e.g. sickness absence) is dealt with properly.
• Minimum entitlement. Employees have a legal right to a minimum holiday entitlement in the UK. Employers should ensure the health and safety of their staff by making sure the minimum entitlement is taken.Employers should make it clear if normal shut down periods will come out of staff’s minimum entitlement.
• Carry over: Employers may wish to prohibit carry over of holiday into the next holiday year, except where the law permits.For example, carry over may be permitted where an employee is unable to take their holiday due to long-term sickness absence.
• What will an employer pay staff when they leave their employment?Typically, staff would receive a payment for any holiday they had accrued but not used and staff would be expected to repay any holiday they had taken over their accrued entitlement.With no limit on holiday above the minimum entitlement, such calculations are not possible.Employers will need to decide whether to work on the basis of the minimum entitlement for this purpose only, or perhaps use a notional holiday allowance. Employers may want to dispense with the right to clawback overpayments of holiday.
• Clearly communicate the policy.Staff will need to understand how this works in practice and that it is not an attempt to stop them taking holiday.Those who will be authorising holiday requests need to be trained to ensure that there is consistency in their approach and that staff are taking holiday which will not leave teams short of support, as far as that is possible.
• Monitor leave taken.Monitor requests to ensure staff are taking their minimum entitlement.Employers should also be speaking to any staff taking unusual patterns of leave or excessive periods of leave.A member of staff taking every other Friday off should be spoken to about why that is and if a contractual change to their working hours is needed.After the introduction of a PTO policy, a member of staff may have become more comfortable taking time off to deal with a disability, which the employer would not otherwise have known about.This will require the employer to look at its obligations under the Equality Act 2010.Employers should also consider if patterns of absence demonstrate that the role is not being performed properly or that the contracted hours for the role are no longer in line with the time needed for the work to be completed.