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 towards 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 what’s fair.
Managing all of this across multiple time zones and cultures, while also dealing with various legal systems, can quickly overwhelm human resources teams that don’t have specific experience in crafting a global PTO policy. This guide is designed to help you gain a better understanding of what it takes to create and manage a fair (and legal) policy for your distributed team.
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.
Developing a Comprehensive PTO Policy
To start the process of designing a PTO policy, you should 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 that you’re required to offer will depend on the country, so be thorough when creating the initial list.
The majority of countries have mandated PTO requirements, so you’ll need to offer the amount required by the laws of each specific country, at a minimum. Other countries, again, like the U.S., don’t have mandatory PTO laws, so you’ll need to create specific policies for any employees in the U.S. or any other country without specific PTO regulations.
Once you’ve sorted out these details, create clear and easy-to-understand guidelines for each country, and add it to the employee handbook. Include information about:
- How to submit time off requests
- The approval process, including who can approve a PTO request
- Where employees can view the amount of time off available, including holidays
- PTO rollover, accrual, unused PTO carryover, and payout policies
Communication and Transparency
It’s important to be very clear when you communicate your PTO policies to your employees. Try to avoid HR speak as much as possible, because if policies aren’t clearly spelled out you could potentially run into issues.
For example, some team members might think they have more time off available than they actually do, while others might avoid taking time off because they’re not clear about the policies. You could also encounter problems regarding a lack of awareness regarding the public holidays in each country. For example, if a team in one country creates deadlines or schedules meetings for days when it’s a national holiday for their teammates, it can create pressure on those employees to work that day. Clear communication on team PTO schedules can help avoid these types of problems.
If your policies change for whatever reason, you should inform your employees as soon as possible. People build their plans around your policies and changes can potentially affect someone’s ability to take a vacation or take time off when they’re sick — something you want to avoid at all costs.
Create a Coverage Schedule
A key component of a successful 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 normally 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’re all going to be off at the same time for national holidays. If this happens to fall during month-end or quarterly reporting, you might have a hard time meeting certain 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.
Unlimited PTO for International Teams
Offering unlimited paid time off may sound like the ideal choice when creating global leave policies, since it 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 eliminate these issues by creating a blanket policy which 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 powerful attraction and retention tool. It will help attract top talent, since this perk is a top consideration for many when evaluating a potential employer’s benefits package. It will also serve to retain employees who don’t want to return to the days of limited days off.
- 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.
- It builds trust. Employees appreciate knowing that they can take time off when they want, and that their employer trusts them not to abuse the system.
- It can attract high-level talent who value their work-life balance.
- 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, end up taking 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.
PTO Compliance and Legal Considerations
We’ve touched on this a bit already, but when you have a global workforce you need to ensure compliance with the legal requirements for PTO in each country. Even if you have an unlimited PTO policy, you still need to have specific guidelines in place for each country where you have employees.
This can be somewhat straightforward, such as the fact that the U.S. has no legal mandates for PTO or that 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 a great 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 contracts in countries where your business does not have a physical presence.
Conclusion
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 Employer of Record to manage international employees 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 180+ countries and can help ensure that no important details are missed. Book your demo today to learn how we can help.
