What is PTO? Creating a paid time off policy in the UK

Time off from work is important for everyone – promoting a healthy work-life balance, good mental and physical wellbeing, and even improving your quality of work.

To achieve this, it’s important to have a good PTO policy in place for your employees. Keep reading to learn more about how to implement a PTO policy and even if offering unlimited paid time off is a good idea.

What does PTO mean?

PTO, or paid time off, is the time your employee is legally entitled to take off from work and still receive pay. This can include annual leave (sometimes known as statutory leave or holiday pay), sick pay, and maternity leave.

Paid annual leave is a statutory right for all employees. Full-time employees in the UK are entitled to a minimum of 28 days of paid annual leave.

If you have part-time employees, their PTO allowance will be worked out on a pro-rata basis by multiplying the number of days they work in a week by 5.6. For example, an employee who works three days a week will be entitled to 16.8 days of paid holiday.

While some aspects of paid time off are standardised, other parts can differ depending on your business. This can include things like offering bank holidays as a part of your PTO allowance.

Read our guide to learn more about annual leave entitlement for small businesses.

However, it’s important to note that annual leave isn’t the only kind of PTO you can offer in your business. In fact, many companies nowadays are using competitive paid time off policies to attract top talent and improve staff wellbeing.

Keep reading to find out about the other ways your employees are entitled to payment when they’re taking time away from work.

How does PTO work? Types of paid time off

As well as annual leave, you can also offer other types of paid time off. There are many reasons your staff may need to take time away from work. Below are just some of the ways you can provide PTO in your business.

Maternity leave

Maternity leave is another form of PTO you can offer. While Statutory Maternity Leave can be taken up to 52 weeks, Statutory Maternity Pay can be paid for up to 39 weeks.

Employees receive:

• 90 per cent of their average weekly earnings before tax during the first six weeks
• 90 per cent of their earnings or £172.48 (whichever is lower) for the remaining 33 weeks

Tax and National Insurance deductions still apply to Statutory Maternity Pay.

While the above is the statutory amount to be paid, you can offer more than this as part of a company maternity scheme.

Remember that everyone must take at least two weeks of leave after birth (four weeks if they’re a factory worker). You can find more information on creating a maternity policy here.

Paternity leave

You can also offer paternity leave for those whose partners are giving birth or who are adopting. Paternity leave can be taken for one or two weeks. However, you can choose to offer longer paternity leave in your business as an employee perk.

The statutory rate for paternity pay is £172.48 or 90 per cent of your average weekly earnings – whichever is lower. As with maternity pay, tax and National Insurance are deducted.

Paid time off for antenatal care

Employees are also legally entitled to paid time for any pregnancy or antenatal care. This can include scans, health checks, or classes – as long as the appointments are on the advice of a doctor, nurse, or midwife and are considered a reasonable request.

Other types of PTO

Statutory Sick Pay is also considered a form of PTO. Keep up to date with the current SSP rate in our guide.

Sometimes, the unfortunate can happen and your employee may need to step away from their responsibilities at work for a while. This is known as compassionate leave or bereavement leave. And while there’s no legal requirement to pay either, offering PTO in these situations can be a good way to show your employees you care, while supporting wellbeing in the workplace.

Find out more about the rules surrounding compassionate leave in our guide.

What is unlimited PTO?

A new trend in workplaces, unlimited PTO (or UTPO) means exactly what you think it does: instead of offering the standard 28 days of statutory annual leave, you allow your employees to take an unlimited amount of paid leave.

While unlimited PTO was initially meant to encourage a healthy work-life balance, it has come under criticism for perhaps causing more stress to employees. With the prospect of unlimited leave available, many companies found that their employees were taking fewer holidays – feeling guilty about the time they were taking off.

A viral LinkedIn post from the founder and CEO of UNKNOWN, a creative recruitment company based in London, found that none of their employees took more than 21 days off – less than the UK minimum of paid annual leave.

The company then decided to reevaluate its PTO policy and now offers a standard 32 days of paid time off to all employees.

How does unlimited PTO work?

Despite the name, unlimited paid time off doesn’t actually mean you get to take off an unlimited number of days. Instead, unlimited PTO is actually all about managing your own workload and wellbeing effectively – and taking the appropriate time off as needed.

Employees will request their time off in the usual way and agree with their manager what is acceptable. As long as your time off doesn’t affect your ability to complete your work, you can, in theory, take an ‘unlimited’ amount.

How to make a PTO policy

When setting up your company’s own PTO policy, the most important thing is transparency. Here are some things you can think about when setting up your own:

• will there be a standard set of days for everyone or will it grow depending on how long your employee has worked for you?
• will you use a competitive PTO policy as part of your recruitment process?
• is your PTO policy clearly stated in your staff handbook?
• will you allow employees to carry over unused PTO into the next year?
• will your PTO policy run from January to December or from April to April?
• how will you track employee PTO: manually or through specialised software?

What is a PTO request?

A PTO request is how your employees request paid time off. It’s important that you track your PTO properly to avoid too many people being off at the same time – or to make sure your staff are using their full allowance of PTO.

Many companies choose to track PTO requests through specialised HR software. These software packages let you and your employees easily request and accept time of requests. It also allows you to visualise these requests and make sure you have no scheduling issues.

Using a PTO software can also have advantages for your staff, as they can easily track how much PTO they have left.

However, it’s possible to manage any PTO requests manually through an Excel spreadsheet or in a notebook. Whilst this is a good free option, it doesn’t provide the transparency of PTO software and makes it easier for mistakes to happen.

When choosing how to manage PTO requests from your employees, you’ll have to think about what works best for your business.

Does your business offer unlimited paid time off for employees? Let us know if you’ve seen any benefits in the comments below.

More HR guides for small businesses

• An employer’s guide to unpaid leave
• Tips for developing a recruitment process at your business
• When is it OK to use garden leave? A small business guide
• How much employers’ liability insurance do I need?

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