One of the most important aspects of running a business is managing and approving your employee's time off. This could be a vacation, a sick day, or simply a day off. When it comes to time off each of your employees should know and understand, from the first day of work what the policies are regarding time off. Policies should be clear and accessible to your employee, and they should know exactly how much time off they receive whether it's paid or unpaid, and their current balance. When employees don't have access to this information, it demonstrates that time off is not a priority to the company, and that can hamper employee productivity. With Connecteam's time-off feature, you can create all the policies you need, in a way that is transparent to both your managers and employees.
In this article we will go over:
The Differences Between Policy Types and Policies
A Policy Type: refers to the type of time off you would like to give your employees.
These can be, for example, time off, sick leave, jury duty, parental leave bereavement, and so on. A policy type can be either paid or unpaid. To add a policy type click on 'Add Policy type' in the paid or unpaid sections and then select the policy type or create a policy type.
Policies: are created under a policy type and allow managers to set rules that can be specific to the employees assigned to the policy. For example, Paid time off for full-time employees or Paid time off for part-time employees.
Let's use an example to better understand the differences.
We added a policy type called paid time off. This is the type of time off I'm giving employees. We have however two different policies because there are full-time and hourly employees. Under my paid time off policy, I will create two policies one for my Full-time employees and one for my hourly. Each policy will contain the relevant rules, and be assigned to different users.
💡 Tip: Employees can only be assigned to one policy under a policy type. If we continue with the example above, this means each employee can be assigned to either the Full-time PTO policy OR the Hourly Employee PTO, but not both.
What Policies Can Be Created?
Once you added your policy type it's time to start adding the policies. This can be done by clicking on 'Add policy'. We will show you how to do this step by step below. Before we begin setting our policies however it's important to understand what policies can be set with Connecteam. Although you can set as many policies as you need each policy can be limited and unlimited, regardless of if it's paid or unpaid, or what type it is. If a policy is limited then it can be fixed or hourly.
Let's go over the main differences between these below:
Limited Vs Unlimited Policies
Limited policies are policies where the amount of time off employees accrue each year is limited, and this is the amount of time the user is allowed to take. In limited policies, employees maintain a balance based on the amount of time off they have saved or taken.
Unlimited policies have no restrictions on how much time off employees can take. Employees have no balance and can take as much time off as needed.
Limited Policies: Fixed vs Hourly
When a policy is limited the amount of time an employee accrues (ie. receives) can be either fixed or hourly.
In 'fixed amount' limited policies, employees receive a certain number of hours or days per year. For example, an employee might accrue 150 hours each year.
In 'earned per hour' limited policies, the employee accrues time off based on the number of hours worked. For example for every 15 hours of work, they might accrue 1 hours.
How to Set Time Off Policies
Part 1: Setting the Policy Details
From the Time Off dashboard, go to Paid (or Unpaid) policies.
Click + Add Policy.
Enter the Policy name (example: “Full-Time Employees”).
Choose whether the policy is calculated by Hours or Days.
Decide whether there is a limit on the amount of time off to be allocated, whether users receive unlimited time off days, or whether the limit is managed in another system.
If the time-off allowance is set to Unlimited, continue to steps 8–9 to configure the request settings and assign users to the policy. In this example, I will select the option Yes, there is a limit.
Set the accrual cycle:
Calendar year (January 1)
Custom date
Employee anniversary
Select which work days the policy applies to. Enter the work hours per day.
Example: If your work days are Monday–Friday and work hours are 8 per day, a request from Thursday to Sunday counts as 2 work days (Thursday and Friday), totaling 16 hours.
Part 2: Set the Accrual Settings
Decide whether users earn a fixed amount of hours/days (for example, 20 days per year), or if they are earned per each hour worked (for example, 1 day per 150 hours worked).
Fixed amount
If you choose the Fixed amount option, decide whether the accrual occurs on a weekly, biweekly, monthly etc. basis, or all at once at the beginning of the year.
Next choose the next accrual date, for example, the first of the month.
Define how many leave days users accrue each cycle. In our example, users accrue 1.5 days per month, resulting in a total of 18 days per year.
Finally, decide whether employees should earn additional leave based on their tenure. For example, employees who have been with the company for more than one year may accrue 2 additional days a year.
By looking at the accrual preview, can preview upcoming cycles to see how much will be accrued on certain dates.
Earned per hour
Users earn time off based on hours worked (for example, for every 150 hours worked, users earn 1 day).
Start by defining the accrual cycle. Decide whether the accrual occurs on a weekly, biweekly, monthly etc. basis, or at an immediate threshold (users accrue time off as soon as the hours worked threshold is reached)
Define the cycle period by specifying when each cycle starts and ends. In this example, each cycle runs from the first day of the month through the end of the month.
Set the accrual date and timing, for example, the 15th of the month.
Define how many leave days are accrued based on hours worked, and specify whether paid break time should be included in the accrual calculation. Note that this data is derived from the user's timesheets.
For salaried employees who don't log their hours in the timesheet, you can toggle on the option For salaried employees use standard work hours.
Finally, decide whether employees should earn additional leave based on their tenure. For example, employees who have been with the company for more than one year may accrue 2 days for every 150 hours worked, while employees with less than one year at the company accrue 1 day for every 150 hours worked.
💡 Tip: For hourly employees, hourly accrual requires working hours from Time Clock. If you want to accrue time off by hours, make sure Time Clock is activated and users are clocking in.
Finally, click Next step.
Part 3: Set Limitations
Decide whether to set a yearly accrual limit, to stop employees from accruing time off once they reach the yearly limit.
Set the carryover limit (how many hours/days can transfer to the next year).
Set the negative balance limit, which is the maximum number of days employees can request when they don't have enough balance.
Set the maximum balance limit, which is the maximum number of days an employee can accumulate. Accrual stops when the limit is reached and resumes once the balance falls below it.
Set the Max yearly usage, which is the maximum number of days an employee can use in a single policy year (01/01). Requests that would exceed this limit will be blocked.
Part 4: Define the Request Settings
Choose whether time off requests require admin approval.
Set the minimum notice period required for time-off requests. For example, employees may be required to submit requests at least 7 days before the requested time off.
Set the minimum and/or maximum duration limits for time-off requests. Requests that fall below the minimum or exceed the maximum duration will display a validation message and cannot be submitted until they meet the policy requirements.
Define a waiting period for new employees before they can submit time-off requests. For example, employees may be required to wait 90 days from their start date before requesting time off.
Decide whether to require users to attach a file to requests, such as a doctor's note.
Part 5: Assign the Policy to Users
Select the relevant users from the list.
Use filters to quickly find users based on your criteria.
Click Next step.
Part 6: Set the Assigned Employees' Balance
Each user may have a different balance (due to prior time off, carryover, or policy changes). Set each user’s starting balance so requests deduct correctly.
Enter the balance next to each user.
Click Save.
💡 Tip: Prepare a list of your users’ current balances before you start. This step is typically done once during setup.
Congrats! You have created your first policy!
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Examples of Time Off Policies
Now let's go over a few examples of policies we can have.
Unlimited Policies: Jury Duty
For jury duty, creating an unlimited paid policy for jury duty would be ideal.
We would create an unlimited policy because it is never up to the employee how much jury duty they are called for.
Limited Fixed: Paid Sick Leave
With sick leave, you can create different policies depending on the rules and regulations of the country you live in. Some countries require you to offer employees a certain amount of sick leave, and it's paid, while other countries require none at all. In our case, our employees are entitled to a fixed amount of 250 hours of Paid Sick Leave.
Another place you may use a limited fixed time off is for paid holidays, floating holidays, or bereavement leave if your company offers these.
Limited Hourly: Paid Time Off for Hourly Employees
If I have employees who are hourly workers, they may not work a fixed amount of hours and therefore are not entitled to a fixed amount of time off. Instead, they earn time off based on the number of hours they work. In hour case our employees early 16 hours for 120 hours they work.
Summary
In this article, we went over the different policies and how to create them. We learned about unlimited and limited policies. When using limited policies we learned about fixed and hourly policies and when to use each one. Finally, we went over a few common examples of policies you might be using in your organization and how to set these up.
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