How to Manage Time-Off for Remote Teams?

Basak Karsu

Basak Karsu

14 min read


How to Manage Time-Off for Remote Teams?

“How much vacation time do employees get?” The answer is that it depends on the company or organization you’re employed by. There isn’t a set amount, because employers are not required to provide vacation leave either with paid or unpaid.

Some employers give vacation time to only full-time employees. Others grant vacation time to all employees. Still, others offer a pro-rated vacation, depending on your work schedule and employment status.

Vacation pay is based upon an agreement between an employer and an employee, either a collective bargaining agreement, company policy, or employment contract. The agreement or company policy will determine how much vacation pay you will get if you are entitled to receive it.

Average Amount of Paid Vacation Days

According to the Bureau of Labor Statistics (BLS), 73 percent of workers in private industry are provided with paid vacation days. More than three-quarters of workers in sales and office jobs (80 percent), production, transportation, and material moving jobs (80 percent), natural resources, construction, and maintenance jobs (79 percent), and management, professional, and related jobs (76 percent) had access to paid vacation time. Just over half of workers in service occupations (55 percent) had access to paid vacation leave.

Vacation time earned by employees varies by the length of time that they have worked with their employer. The BLS reports:

  • Workers with one year of experience average 11 days of paid vacation.
  • Employees with five years of experience average 15 days of vacation.
  • Workers with 10 and 20 years of tenure average 17 and 20 days respectively.

The 2017 Paid Leave in the Workplace survey from the International Foundation of Employee Benefits reports that Paid Time Off (PTO) plans, which would include days off that can be used for a variety of reasons, offer salaried employees 17 days after one year of service, 22 days after five years, 25 days after ten years, and 28 days after 20 years of employment. The survey reports that salary employees receive an average of 12 days of vacation after one year of service, 16 days after five years, 19 days after ten years, and 23 days after 20 years of employment.

The United States lagged behind many other countries in the developed world both in the average vacation time accrued and in the number of vacation days workers actually took according to a survey conducted by Expedia. European countries, Japan, India, Australia, and New Zealand generally averaged 20 – 30 days of paid vacation, while the overall average for the United States was 15 days.

So while the US isn’t reaching European levels, paid vacation time is available. Just how should you use it? You can use your vacation in any way that you want, but some ideas are better than others—for the employee and for the business. Here are ideas about how to use paid vacation time.

Create Customized Time-off Policies with RemoteTeam

Remote Team Inc. offers you to choose the best fitting time off policy for your company. You can either choose from the pre-packaged time off policies or create your own instantly. Employees can easily submit their vacation and sick days for approval, or managers can submit time off on their behalf. It all syncs automatically to calendars and payroll so everything is streamlined to make the processes easier. Employers can review and approve vacation requests, sick leave, personal leave, and more, all in just a few seconds. You can try the time-off app for free. It’s automatically calculated into your payroll with no extra steps. In this global world, we feel it’s important to support local holidays for your team. So now you can create new policies for your employee’s local holidays so they can feel culturally supported within’ your business.

What are the common types of Time-off Policies?

To accommodate the varying needs of different employees, many companies are implementing a generic paid time off program to lump all types of paid leave.

3 types of Time-Off policies

  • Traditional time off policies

Traditional time off policies gives employees an allotted set of paid time off for specific categories, like a vacation, sick days, and personal days. These allotments may be offered as days or hours off under each category and can be replenished each calendar year or on an employee’s work anniversary. Many employers incrementally increase time off for employees who stay with the company over a long period.

Pros of traditional time-off policies:

Accurately measure how much time employees are taking and for what purposes

Retain top talent by offering more PTO for employees with longer tenures

Provides attendance information for resource and workforce planning

Cons of traditional time-off policies:

Hours spent tracking and reporting PTO may be a costly administrative burden

Unused PTO payouts can be costly at the end of each year or when employees resign

May not be attractive to job seekers who value work/life balance and don’t see their time divided into categories like ‘sick’ and ‘vacation’

  • Paid time-off (PTO) 

Similar to traditional time-off policies, PTO banks offer employees an allotted set of paid time off for the year. However, this type of policy group days off into one “bank,” where employees can take time off for any purpose, with no delineation between sick days, vacation days, or personal days. This option is a good choice for organizations that want to cut back on the administrative burden of tracking PTO while still offering employees a set amount of days off.

Many employers now lump together vacation time with personal days and sick time to provide a total number of days of paid time off (PTO) from work. This bank of time typically does not include federal holidays which, depending on the employer’s holiday policy, would be additional days off from work. Employees who experience significant or repeated illnesses or family emergencies requiring time away from work may end up with less (or no) vacation time during those years. On the other hand, healthy workers with no personal issues may be able to take more vacation time.’s 2018 Paid Time Off Study white paper reports that the average PTO reported by surveyed U.S. employees is three weeks. 27 percent of employees have one week or less, or none at all. 3.4 percent of surveyed workers have unlimited paid time off. Government workers have the highest accrued time off, averaging 4.2 weeks. Managers earned 19% more PTO than regular employees.

Pros of PTO banks:

The less administrative burden for HR teams, managers, and employees

Gives employees clarity on the number of days they can take, with flexibility in how to use them

Provides attendance information for resource and workforce planning

Cons of PTO banks:

Unused PTO payouts can be costly at the end of each year or when employees resign

Fewer details to track means less insight into PTO patterns and trends

  • Unlimited paid time-off (PTO) 

A growing employer trend is unlimited PTO. It allows employees to take time as they need time with no set number of allotted days. PTO is a popular benefit. In fact, you may have a hard time attracting qualified workers if you don’t have a vacation policy that incorporates at least some PTO and sick leave in your compensation package. Whether they’re headed to a spring break trip or need a day off for parent-teacher conferences, this option offers employees the flexibility to take time away from their work with minimal administrative burden.

PTO gives the employer some control over unscheduled absences, a serious problem, and cost for many. Employees can schedule time off in advance which assists with work coverage.

In the past, employees may have been untruthful about why they needed to take time off from work because they wanted their manager to think positively of them.

You treat employees as adults who are entitled to use the time off at their discretion without oversight. Managers are not put in the position of having to police their reporting employees’ use of their benefit, paid time off. This trend is especially popular in tech and startup companies that don’t have the HR* infrastructure or bandwidth to manage a tracked and accrued time off policy. **Pros of unlimited PTO:**

Shows employees that they are trusted to take the time they need without strict guidelines

Focuses employee-manager conversations regarding time off on job performance and work output

Lets sick people stay home rather than worry about using a day of PTO

Minimizes paperwork, giving managers and HR teams more time to focus on other business needs

Attractive to job seekers

Cons of unlimited PTO:

Studies show that employees take less time off under an unlimited PTO plan

Team members with longer tenure are not rewarded for their loyalty

Can be unfair or subjective depending on individual manager preferences and likelihood to approve PTO

Limits the ability to do resource planning or track patterns in behavior

Once you switch to unlimited PTO, it can be difficult to switch back to regular vacations without upsetting your employees.

Best time-off advantages you can offer for your remote employees

An ideal time-off policy for your business can offer benefits to employees and businesses alike. Life is unpredictable. That is why, as an employer, offering a flexible time-off policy is a powerful way to attract and retain talent that has their pick of professional destinations. Developing a versatile time off policy allows employees to better balance responsibilities in and out of the office. It also boosts productivity in the workplace: a recent study found that 89 percent of surveyed employees considered paid time off (PTO) to be an important aspect of job satisfaction.

Many employers also find that offering employee benefits with flexible time off policies help give them the upper hand when attracting new talent. Many employees, especially millennials, put aspects like flexible time off and a comfortable work environment over other important benefits like insurance and pay.

1. Be More Flexible and Let Your Employees to Take Time Off Without Drama

If a company wants to attract a quality workforce, it has to provide competitive benefits. A PTO Benefits package is more flexible than traditional time-off plans that include vacation and sick days. This could influence an applicant’s decision to work at that particular organization. When you provide separate sick and vacation days, your human resources department has to spend more time keeping track of every employee’s time. Days off must be validated, and this can use up valuable resources. With this option, no one has to worry about the reason for the absence. The beneficial time off policy for your employees and you as well, allows employees to determine when they need to take a break from work. They don’t have to report a reason for their superiors.

If employees must wait an entire year to get a week of vacation, they’re going to feel burned out by the time their year is up. Performance may dwindle after several months of continued work, and employees may surprise their employer with unexpected absences as the year goes by.

Clinical psychologist Deborah Mulhern shared with ABC news that not only are vacations good now but if you don’t take them, you’ll lose the ability to relax. She said:

“Without time and opportunity to do this, the neural connections that produce feelings of calm and peacefulness become weaker, making it actually more difficult to shift into less-stressed modes,” Mulhern said. “What neuroscience is showing is that we require downtime in order for our bodies to go through the process of restoration. It is only when we are safe from external stresses that our bodies can relax enough to activate restoration.”

2. Help Your Remote Employees to Create a Better Work-Life Balance

Employees with adequate work-life balance spend just as much effort focusing on their self-care, personal growth, relationships, and individual activities as they do concentrate on tasks at work. This can help reduce stress and enhance fulfillment. Although employers aren’t responsible for creating work-life balance for their staff, your ideal policy can encourage employees to seek accomplishment both outside of and within the workplace. When employees feel valued, they tend to stick around longer. You’ll keep your quality employees when you offer them a benefit plan that makes them feel appreciated. Paid time off benefit plan makes employees feel empowered.

3. Reducing Unscheduled Absences Lowers The Cost

Unscheduled absences can cause a company to lose revenue. You may be required to hire a temporary employee to pick up the slack because you were unable to plan for the employee’s absence. Missed deadlines and neglected responsibilities can affect your sales. According to Absenteeism: The Bottom-Line Killer,” a publication of the workforce solution company Circadian, unscheduled absenteeism costs roughly $3,600 per year for each hourly worker and $2,650 each year for salaried employees When you have to scramble to make up for one employee’s lost time, you’re not working as efficiently as you would if you were able to prepare to cover the missed responsibilities. When you offer your employees sick days as part of a benefits package, you never know when they’ll be used. As an employer, this can leave you missing an essential member of the team just when a major project is due. With PTO, employees can schedule every day off if they want to. If employees don’t happen to get sick that year, the employer can plan for the absences more effectively. Scheduled coverage allows for more reliable managing of responsibilities.

4. Less Financial Liability

Paid time off is considered to be a monetary benefit that adds to an employee’s compensation package. Rolling over vacation time from year to year is a financial liability for employers.

With the best PTO policy that you arranged for your company, employees typically can’t roll over as many days from year to year. This results in less vacation time that an employer has to cover as employees move up in seniority.

5. Improve The Multicultural Environment

Your employees may have a variety of cultural backgrounds. Flexibility is the key to working in a multicultural environment; the work environment always demands flexibility on your part, but in a multicultural environment the adaptation becomes all the more important. Good time off policy should allow for diversity because it lets employees take time off for holidays. If cultural celebrations recognized by the company as a whole, employees tend to feel more attached to the company. This can help your remote team to become a diverse workforce.

6. Reward Loyalty and Service

Employees who have worked at the company longer accrue more time off. This encourages employees to remain with the company to take advantage of the reward of time off.

You should provide a more flexible option for rewarding employees. More and more employers are implementing these types of policies to recruit better employees, retain the ones they have and improve efficiency in the workplace.

7. Pay for Unused Vacation Time

Depending on company policy, employees may be required to use their vacation during a specific time period, which is known as “use it or lose it,” or they may be able to carry unused vacation or PTO over to future years.

If the employers allow vacation to be accrued there may be limits to how much time can be carried over, and there may be a deadline for using the carried over vacation days.

Recent surveys indicate that employees are struggling to use their allotted vacation time. Given the demands of their jobs, almost half of workers reported that they didn’t take the time to which they were entitled.

What do Your Employees Want? Don’t feel that you need to make all decisions in a vacuum. As you think about paid time off policy best practices, ask your employees for input. Is there a particular policy that will best serve their interests as well as those of the company? By openly communicating with employees and educating them about the chosen policy, you will position your company to attract and keep the best talent.

Further Reading:

What is Payroll? Introduction to Payroll

Cheapest Places to Live as a Digital Nomad

Best International Payroll Apps For Remote Teams in 2020

What Are W-8 BEN and W-8 BEN-E Forms?

Basak Karsu
Written by Basak Karsu

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