In theory, paid time off (PTO) is pretty straightforward. You have a policy for the number of days people are entitled to take off, and everyone follows it.
However, as your team expands globally, things become more complex. Different countries have different attitudes (and laws) around time off.
Some are more supportive of a healthy work-life balance and have legally mandated PTO policies employers must follow. Other countries have fewer requirements, or let employers decide how much PTO to offer.
Managing a PTO policy across multiple time zones and cultures, while also adhering to different legal requirements, can quickly overwhelm human resources teams that don’t have specific experience in crafting a global PTO policy.
Understanding the Needs of a Global Team
PTO starts getting complicated when you work with a global team. You can’t necessarily have a blanket policy that covers everyone, because employee benefit needs are going to be different — both culturally and legally.
At the highest level, each country has different cultural and public holidays that need to be acknowledged and respected. You’ll need to make a comprehensive list of all mandatory holidays (both religious and public) for each country and ensure that they’re listed clearly, so everyone knows when employees from specific areas won’t be available.
On top of that is the fact that there are different legal requirements for PTO in each country, and they can vary quite a bit depending on where in the world your employees are located. This includes policies regarding sick days, parental leave, vacation days, and even bereavement time.
For example, in France, employees are entitled to a minimum of 25 days of PTO annually, including up to 90 days of sick leave. In Germany, employees are entitled to 20 days of PTO, with unlimited sick leave.
In the United States, however, there is no formal mandate for PTO or sick leave. It’s up to the employer to determine what PTO looks like for their employees, and that includes vacation policies as well.
The result is that employees in some countries feel more comfortable taking time off than others, so it's important to craft a policy that makes your global team feel as though they have equal opportunity for taking time off.
Incorporating cultural nuances and local norms into your policy is also essential to craft a PTO policy that’s both compliant and culturally sensitive.
For example, extended vacations are customary and expected in Scandinavian countries. However, in the U.S., employees are often hesitant to take extended time off because of workplace culture.
The result is that employees in some countries feel more comfortable taking time off than others, so it's important to craft a policy that makes your global team feel they have equal opportunity for taking time off.
Developing a Comprehensive PTO Policy
To start designing a PTO policy, first examine what you want it to look like on a global scale. Do you want to stick to the legal minimums, or do you want something that creates a more equal playing field?
Ideally, you want to create a company culture that places a high value on employee well-being and where everybody feels comfortable taking the time off they need to both relax and maintain their health.
First, create a list of all the types of PTO that you’ll be offering to employees. This includes policies regarding types of leave like:
- Vacation time
- Sick leave
- Parental leave, both maternity and paternity leave
- Personal days
- Mental health days
- Bereavement leave
- Public holidays
- Religious holidays
The specific types of PTO you must offer will depend on the country, so be thorough when creating the initial list.
Most countries have mandatory PTO laws, so at a minimum, you’ll need to provide the amount required by each country’s regulations to stay compliant.
You’ll need to create specific policies for countries, like the U.S., that don’t have laws governing PTO.
Key Parts of a PTO Policy
A PTO policy should clearly outline the rules, processes, and expectations surrounding time away from work. The foundation of an effective PTO policy includes the following elements:
- Eligibility: Define who’s entitled to PTO (full-time, part-time, temporary employees, etc.) and when eligibility begins.
- Accrual method: Explain how PTO is earned — whether through hours worked, length of service, or provided upfront annually.
- Types of leave covered: Clarify whether the policy covers vacation, personal time, sick days, or if there is a single PTO bank.
- Request procedures: Detail how employees should request time off, how much notice is required, and the approval process.
- Carryover and expiration: Specify if unused PTO can roll over into the next year or if it must be used within a specific timeframe.
- Payout policy: Indicate whether unused PTO is paid out upon termination and under what conditions.
- Blackout dates or restrictions: Include any periods when PTO may be limited due to business needs.
- Coordination with other leave: Explain how PTO interacts with leaves such as FMLA, parental leave, or holidays.
- Manager and HR responsibilities: Define who oversees policy enforcement and handling exceptions or disputes.
How to Communicate Your Global PTO Policy
Effectively communicating your PTO policy ensures employees understand their benefits, feel empowered to take time off, and follow the correct procedures. Clear, consistent communication also helps prevent confusion, inequities, and mismanagement of time off.
Here are some tips to ensure your global PTO policy is clear and transparent:
- Include PTO details in the employee handbook: Ensure the policy is clear and regularly updated.
- Discuss PTO during onboarding: Introduce the policy to new hires as part of the onboarding process to set expectations early.
- Use plain, jargon-free language: Avoid corporate speak and explain how PTO accrues, how to request it, and any limitations in clear, simple terms.
- Hold informational sessions or Q&As: Provide opportunities for employees to ask questions and get clarifications on the PTO policy.
- Train managers on the policy: Ensure supervisors understand the details in order to support their teams.
- Highlight updates or changes: Notify employees promptly when the PTO policy changes and explain how they’ll be impacted.
- Make the policy easy to find: In addition to the employee handbook, keep the PTO policy accessible in commonly used platforms like the HR portal or internal wiki.
- Provide real-life examples: Use sample scenarios (e.g., requesting a half-day or taking extended leave) to demonstrate how the policy applies.
- Keep employees informed of their PTO balance: Provide regular updates or ensure workers have access to accurate data about their leave balance via your PTO-tracking tool.
- Encourage a culture of PTO use: Reinforce the importance of taking time off through leadership modeling and regular reminders to reduce stigma or fear of using PTO.
Create a Coverage Schedule
A key component of a successful global PTO policy is ensuring that work still gets done when people are out of the office.
You can do this by encouraging cross-training so that employees with similar skill sets can cover any urgent tasks that would usually be handled by an employee out on PTO.
Similarly, having geographically distributed teams can help prevent bottlenecks. For example, if your entire accounting department is located in one country, they will all be off simultaneously for national holidays. If this falls during month-end or quarterly reporting, you might have difficulty meeting specific deadlines.
Try to keep scheduled PTO and holidays in mind when planning around important deadlines. You can’t prevent last-minute requests, unexpected absences, or sick days, but you can create a schedule that’s as optimized as possible to keep things moving.
As always, clear communication around workload expectations goes a long way, both for the company and for employees. The more everyone communicates, the less likely productivity will be affected when someone takes PTO.
Should You Provide Unlimited PTO for International Teams?
Offering unlimited paid time off is a common perk in the tech world and levels the playing field by giving everyone the same amount of time off, but it may not work for every business.
Before implementing an unlimited PTO policy, consider the pros and cons.
Pros
- It creates a better balance for your team. If employees in some countries have a lot more PTO than others due to country-specific laws, it can create resentment for employees who don’t have the same policies governing their PTO. You can eliminate these issues by creating a blanket policy that gives everyone unlimited time off.
- Tracking and managing time off becomes easier because, well, you don’t need to track it.
- Unlimited PTO is a strong draw for attracting and keeping top talent. It appeals to candidates who prioritize flexibility when weighing job offers and it helps retain employees who value the freedom to take time off without worrying about a cap.
- Employees don’t need to worry about running out of time off if they’re sick or need a day off for their mental health. They can put their health and well-being first by taking the time they need and returning to work rested and ready to be productive.
- It builds trust. Employees appreciate knowing they can take time off when they want, and their employer trusts them not to abuse the system.
- Employees are more productive because they take the time off they need to avoid burnout.
Cons
- Some people may abuse the system.
- Others could worry they're taking too much time off and, as a result, take less time off. This can happen as a result of cultural differences surrounding PTO. For example, Europeans may feel more comfortable taking time off than their American counterparts.
- It can be confusing. While it may seem obvious, not everybody understands how unlimited PTO works, and they may hesitate to request time off because of that.
How to Address Equity in Unlimited PTO Policies
Unlimited PTO can inadvertently lead to disparities, with some employees taking minimal time off and others taking quite a bit.
Here are a few ideas to help you mitigate this:
- Implement a minimum required PTO to ensure all employees take adequate rest.
- Regularly review PTO usage across regions to identify PTO disparities based on role, department, seniority, or demographics.
- Encourage all employees to take time off regularly and make it clear that taking PTO is supported at all levels of the organization.
- Equip managers to recognize burnout and encourage time off equitably.
- Consider doing an annual company-wide shutdown to promote collective rest periods for all your staff.
- Acknowledge that not all roles allow for the same PTO flexibility and find solutions to offer comparable rest opportunities, such as providing shift coverage or mental health days.
- Audit for potential bias by checking that taking more or less PTO does not influence evaluations or advancement opportunities unfairly.
PTO Compliance and Legal Considerations
We’ve touched on this a bit already, but when you have a global workforce you must ensure compliance with the legal requirements for PTO in each country.
Even if you have an unlimited PTO policy, you still need specific guidelines for each country where you have employees.
This can be somewhat straightforward. For example, the U.S. has no legal mandates for PTO and Switzerland has a minimum of 20 days annual leave (plus regulations around sick and parental leaves).
But sometimes, it’s not as simple as it might initially seem. Canada is an excellent example of this. There are federal guidelines around PTO; however, the specifics can sometimes be up to the province the employee lives in. Public holidays can vary, as can the number of sick days someone is entitled to.
Because of the complicated nature of PTO and the importance of staying compliant with local labor laws, it’s best to work with an expert when expanding your hiring into a new country.
Working with an Employer of Record (EOR) can help reduce the amount of work on your end, while ensuring you stay compliant with all laws and regulations in countries where your business doesn’t have a physical presence.
Manage Your Global PTO Policy with Ease
Defining a PTO policy for a single country can be a challenge in and of itself. When that policy needs to apply to employees around the world, it quickly becomes a lot more complex.
Partnering with an EOR like RemoFirst to manage employee vacations compliantly reduces the chances of a PTO error because you’re working with experts who know the specific laws for each country.
If you’re expanding and want to make sure your employees are getting the PTO they’re entitled to, let’s talk. We have experience in 185+ countries and can help ensure that no important details are missed.
Book a demo to learn how we can help.
