Time Off Best Practices

Elaborating on best practices for setting up company time off plans.

TIME OFF CONFIGURATION OPTIONS

You may need to determine if you would like to use time off in HCM, Payroll Timesheets, Namely Time, or a mixture of all three. This page will help you view different options to determine what is best based on your plan rules.

HR and Payroll Timesheets Options

1. Track All PTO in HCM

Utilizing Namely's HCM time off functionality is the preferred option for most clients if all of your employees are salaried. You can you use this option if you have hourly employees, but their PTO hours will need to be entered manually into Payroll or imported via an Excel spreadsheet.

If hourly employees accrue time based on hours worked, this is not currently possible with HCM and another option will be required.

PTO balances will seamlessly flow onto employee pay stubs when tracking PTO in HCM.

2. Track Salaried PTO in Namely HCM — Track Hourly PTO Payroll Timesheets

If you have hourly employees that need to accrue based on hours worked and you use Payroll Timesheets, you have the option to track hourly PTO in Timesheets and salaried PTO in HCM. Salaried managers will request time in HCM, but need to approve time for their hourly reports in Payroll Timesheets. Managers are manually assigned in Payroll Timesheets to approve time. 

Although you can have managers request time in Payroll Timesheets as well, for the best user experience it’s recommended that manager use the HCM system.

PTO Balances will seamlessly flow onto hourly employee pay stubs with this option.

 

HCM and Namely Time Options

1. Track all PTO in Namely Time

If you use Namely Time, you can have all employees track PTO with the portal. If hourly employees need to accrue based on hours worked, this option can accommodate it. Managers are manually assigned within the Namely Time portal. Time that is requested will be exported with the other trackable hours and uploaded into the payroll to pay employees for their time worked as well as PTO. PTO balances do not seamlessly flow onto employee pay stubs with this option. To have balances appear, you would need to import the balances into HCM before you process open the payroll.

2. Track Salaried PTO in Namely HCM — Track Hourly PTO Namely Time

If you have hourly employees that need to accrue based on hours worked and you use Namely Time, you have the option to track hourly PTO in Namely Time and Salaried PTO in HCM. Salaried Managers will request time in HCM, but need to approve time for their hourly reports in Namely Time. Managers are manually assigned in Namely Time to approve time for their direct reports. PTO balances do not seamlessly flow onto employee pay stubs with this option. To have balances appear, you would need to import the balances into HCM before opening each payroll.

 

OTHER BEST PRACTICES

States and Cities with Mandatory Time Off

Vacation is not currently mandated, but many states and cities have specific sick leave requirements. These sick leaves have varying effective dates and terms and conditions.  Please ensure that you research each jurisdiction in which you have employees working and apply the rules accordingly.  The bullet points below should be considered in your research.

  • Negative Time and Payout Upon Term

Various states require payout at term of accrued and unused time
In some states it depends on the handbook/policy and payout may not required
Payout is typically for vacation or paid time off (PTO) only

  • Some states require payout regardless of policy

  • Some states  may require payout if it is in a proven written policy only

  • Some states do not have a regulation, but could possibly require payout based on case law (which means they should be paid out)

Why Vacation/Sick vs. PTO vs. Unlimited PTO

A case for Vacation/Sick

  • Companies may prefer to separate vacation and sick, since sick time is typically not payable at termination

  • Vacation and sick is a more traditional plan

  • Many states and cities have mandated sick time, easy to show compliance with policy if broken out

A case for PTO

  • Employees tend to prefer PTO, especially if they are rarely sick (i.e. “more vacation time”)

  • PTO allows for more freedom and potentially more “planned” absences versus “unplanned” absences

  • PTO would be payable at termination, if required by state

A case for unlimited PTO

  • No accruals on the books (no financial liability for company because there is not payout at termination because there is no accrual)

  • Unlimited PTO allows for more freedom and potentially more “planned” absences versus “unplanned” absences

  • Perception of taking as much time off as you need, employees need not worry about not having enough time (reality is employees typically end up taking less time)

  • If considering an unlimited time off policy, it is a best practice to consult with an attorney 

Caps

Companies may choose to implement a cap to the amount of hours/days an employee can accrue, especially in states that do not allow a use it or lose it feature.
In CA a reasonable cap is considered 1.5x the annual accrual.

Example:

  • Employee earns 10 days of vacation per year.

  • Therefore a reasonable cap would be 15 days.

  • Policy would say: Year 0-2 earn 10 days, cap of 15 days.

  • If an employee doesn’t use all their vacation, they can roll over time into the new year. Employee will not have more than 15 days time – accruals will stop and only restart once balance is lower than 15 days.

 

Editing Time Off Requests

If user has the ability to edit their own time off requests via Field Group Bundles (e.g. in Basic Edit Self): The user can edit any requests in the past, present, or future for themselves. Requests that were previously approved will not require an additional approval, even if the time off plan setup requires them initially. A notification will be sent to the user’s manager that the request was edited, but no additional approval will be needed.

If user does NOT have the ability to edit their own time off requests in Field Group Bundles:The user will not be able to edit their time off requests that have already lapsed (the dates are in the past). The user WILL be able to edit time off requests that are in the future. Any future dated request that has already been approved and is subsequently edited will be reverted back to a pending state, and require a new approval (this assumes the plan is setup to require approvals on time off requests). A notification will be sent to the user’s manager to approve again.

If the user has Manage Time Off ability granted via their role: The user will be able to modify a past/present/future time off request and update the status of the request at their own discretion.