Today’s businesses are moving towards progressive HR practices and employee benefits packages, such as Flexible Time Off.
Flexible time off (or FTO, flexible PTO) means, Instead of strictly limiting employees’ vacation time and other types of leave, you give employees greater freedom around their working schedule, and judge based on results, rather than attendance.
Read on to learn all you need to know about flexible paid time off, including the key pros and cons, and how to make flexible time off policies work for you.
Further Reading: How to create an Employee Leave Policy for your business.
What is Flexible Time Off (FTO)?
Flexible time off, or FTO, can work in a lot of different ways.
It is, by definition, flexible. The idea is to be less strict about how paid time off (PTO) works in your business. Instead, you offer employees freedom to take time off how and when they need, it, as long as they continue to produce results.
One way to implement a flexible time off policy is to remove the limit on how many days of PTO employees can take.
This would also mean that PTO does not need to be earned or accrued first, and is available as and when needed.
Another way flexible PTO polices may work is by combining sick leave and vacation time/annual leave, along with all other types of leave together under one umbrella.
There may or may not be a limit on the total number of paid leave days an employee can take, but either way, it all comes under one category, with no need to separate between different leave types.
Flexible time off may be known by other terms, such as…
Generally, any leave policy that gives employees flexibility and freedom with how they take time off from work can be considered flexible time off.
Unlimited PTO (or unlimited vacation time) is an example of a flexible time off policy.
An unlimited PTO policy works the way it sounds. With such a policy, employees can take as much time off as they need, whether it’s for sick leave, vacation, personal time off, or anything else.
This is within reason, of course. An employee can’t just take two months off, come back for a day, then take another month off. They’re still expected to be present at work and hit their productivity targets.
Click here for a full breakdown of unlimited PTO policies and their pros and cons.
As well as unlimited time off or unlimited vacation, flexible PTO policies might also be referred to as:
- Flex time off
- Flex PTO
- FTO leave
- Flexible vacation
- Flex leave
- Discretionary PTO
- “Use what you need” PTO
Each term could mean something slightly different for each organization, but the core concept of flexible PTO applies throughout.
Related: Key Unlimited PTO Statistics you should know in 2023.
FTO vs PTO: is there any difference?
You might be seeing acronyms such as FTO and PTO, but aren’t sure what it all means. So let’s clear it up.
FTO = flexible time off. As mentioned above, it generally means there’s no hard limit or restrictions around time off.
PTO = paid time off. This is a broad term that refers to any time that an employee is not at work, but is still paid as normal. This can include sick leave, vacation time, and other types of leave. But often people use PTO to mean vacation days or annual leave.
FTO is a policy regarding how your company manages PTO. It’s usually not a specific type of leave (like personal time off or a floating holiday). However, some organizations may use FTO to describe any kind of time off that’s not covered by sick leave or annual leave.
Run a more productive team
Benefits of a Flexible Time Off Policy
Let’s take a look at some of the reasons why flexible PTO works.
Giving employees the freedom and flexibility to choose when they take time off is invariably going to make them happier.
This is a positive for employers and employees alike. Happier employees perform better, and stay in the job longer, reducing the cost of turnover in your company.
You’ll have fewer cases of employee burnout, and will likely see positive effects on an employee’s performance at work when they can take time off regularly.
Learn More: All you need to know about Employee Burnout: signs, causes, and how to prevent it.
A powerful tool for recruiting and retaining talent
With today’s changing employee values and an increasingly diverse workforce, more people are looking for a working environment that offers freedom and autonomy.
This means flexible paid time off can make a great bargaining tool when recruiting new staff, or trying to retain your existing team members.
The best people are likely to be comparing multiple job offers. If the pay and job descriptions are similar, other benefits – such as your time off policy – can make all the difference for their decision.
The same goes with retaining your best employees. You’ll see greater employee commitment, and high-performers will be less likely to jump ship if you’re able to offer an attractive and flexible PTO policy.
Less financial and administrative burden on the business
Flexible PTO is not just flexible for the employee. It’s flexible for the business and its HR/admin staff too.
With a fully flexible PTO system (such as a unlimited time off), you’re not going to have to worry about things like PTO accrual, rollover at the end of the year or pay period, different types of leave, paying out national holidays, and all the minutiae in your leave policy.
You also don’t need to worry about paying out accrued or unused leave when an employee leaves the company, which can add up to a huge financial liability looming over the company.
It’s simpler for the employee, and simpler for those in charge as well.
Contrary to what many people think, flexible time off most often leads to an increase in productivity.
Flexible PTO and unlimited vacation policies incentivize workers to produce faster and more efficiently, knowing that the quicker they reach their productivity targets, the sooner they can take time off.
Employees also don’t feel pressured to take leave before it expires (since they have an unlimited number of vacation days), so a lot of the time you actually see people take less time off with an unlimited vacation policy.
Further Reading: What are the most effective and valuable Employee Benefits for today’s workers?
The Downside of Flexible PTO
Flexible time off policies are not perfect. There are some downsides, and some harm that can come to your business if you’re not careful.
For one, there’s potential for abuse. You need to keep an eye out for employees taking more than their fair share of leave, and causing a loss in productivity.
You also need to monitor employees to ensure they are taking enough leave – strange as that may sound.
Often, when they can take an unlimited amount of vacation days, employees feel guilty whenever they take time off.
In contrast, if the leave policy expressly allows for 10 days of paid time off per year (the average PTO for workers in the US), expectations are much clearer.
This means employers or managers running flexible or unlimited PTO need to actually encourage employees to take time off, and keep watch for team members who work too long without taking a break (checking up on this is easy if you’re using Flamingo’s vacation tracker software).
How to Make FTO Time Off Policies Work
Flexible time off can be a great tool to create a positive and productive workplace. But you need to run your time off policy the right way.
Make sure you set clear expectations with your team. Let them know that leave is available as and when needed, as long as productivity goals are met.
You should also set up a system for tracking leave, so you can identify patterns of abuse, or issues with team members not taking enough time off.
As part of this, make sure you track planned leave on a team-wide vacation calendar, to avoid short-staffing or confusion when people are off work.
And finally, respect the policy. Actually let employees be flexible with their time off, as long as they get the job done. Don’t make people feel guilty for taking leave days, unless it’s a clear case of abuse.
The policy is there to help your people be happy, healthy, and find a productive balance between their work and personal lives.
You want to create a positive attitude around paid time off, and make it clear to employees that you care about their overall wellbeing.
If you choose to implement flexible PTO policy, and do it the right way, and you’ll build a more positive work environment, and a more resilient and successful business in the long term.
FTO is less restrictive, and it does not have to be accrued. There is no limit to how many hours or days of paid time off a person takes as long as they produce expected work results. Some call FTO a progressive HR practice.What are the cons of flexible time off? ›
Disadvantages of Flexible Time Off
If you don't trust your employees, then they could potentially abuse your policy by taking too much time off. Make sure your employees know that they are still responsible for hitting their performance goals and expectations. May conflict with other leave policies.
Giving employees the freedom and flexibility to choose when they take time off is invariably going to make them happier. This is a positive for employers and employees alike. Happier employees perform better, and stay in the job longer, reducing the cost of turnover in your company.What is the difference between PTO and flex PTO? ›
Flexible time off is a form of paid time off, or PTO. It's generally unlimited, a form of PTO that doesn't need to be earned or accrued. You simply get it when you need it. Plenty of corporations don't offer flexible time off.What are the benefits of FTO? ›
Flexible time off allows team members to take time off in a way that fits their life. This reduces stress by eliminating concerns that, for example, they are out of sick days before school re-starts in September. This flexibility can help keep employees healthy and reduce levels of stress and burnoutin the team.What is the difference between FTO and PTO training? ›
FTO is based on Skinner's Behavior Modification approach. This relies on modifying the behavior of the trainee through positive and negative rewards. PTO is based on Bloom's Hierarchy of Learning and adult learning theory.What are the negative effects of unlimited PTO? ›
Harder to track: Employees may not bother to put in formal PTO requests. This can lead to compliance and auditing nightmares if you don't maintain a reliable record of time off requests and approvals. Inefficient tracking of time off can also lead to time theft, which affects 75% of businesses in the U.S. every year.What is the most popular type of PTO? ›
This system may become complex as employees and employers must account for the different types of leave. While traditional leave is the most common leave plan in the U.S., many modern businesses have shifted away from categorized, traditional leave and instead offer an uncategorized PTO policy.
If they're talking specifically about vacation days, then 10-20 days of paid vacation is very good. You'll be getting anywhere between two and four weeks off work per year, all of which is paid – and it doesn't include sickness or holidays! In conclusion, it is normal to receive around 10 vacation days per year.Do employees prefer unlimited PTO? ›
In fact, 72% of employees want unlimited PTO. But at the same time, many employees aren't taking much time off.
Flex's PTO and Vacation policy typically gives 20-30 days off a year with 0% of employees expected to be work free while out of office. Paid Time Off is Flex's 2nd most important benefit besides Healthcare when ranked by employees, with 25% of employees saying it is the most important benefit.What are the disadvantages of offering PTO? ›
- Employees are more likely to consume all of their PTO, whereas they may not have expended all of their sick or personal days in the past.
- Employees tend to save all of their PTO time for vacations and come to work when they are sick, at times causing illness among other employees.
Among workers whose employer offers paid vacation or leave, 46 percent said they typically took less time off than was offered, a recent Pew survey found. Here's why: They don't feel they need to take more time off (52 percent). They worry about falling behind at work (49 percent).Is flexible time off the same as unlimited PTO? ›
Flexible time off (FTO) is a time-off policy that gives employees an unlimited amount of paid time off (PTO) days.Is the FTO fast? ›
The entry-level GS-badged FTO came with a 1.8-liter rev-happy 16 valve engine that made 123hp and could hit 60 mph in 9 seconds, moving up to a 2.0-liter V6 would see power increase to 168hp with the 60mph dash drop to 8.4 seconds.Why vacation is better than PTO? ›
PTO can be planned or unplanned. Vacation is typically scheduled in advance. Sick leave is usually taken on short notice. PTO is easier to track as a single policy usually covers several different types of leaves.