PTO – Guide for Paid Time Off & Statutory Eligibility

Paid time off is exactly what it sounds like: time away from work. During this time, an employee can do whatever they want and will still receive pay.
  • Author: Siva
  • Last updated: April 5, 2022
  • 10 Minutes
PTO - Paid Time Off Policy by Papershift

Rest and relaxation are essential for the health, happiness, and productivity of all workers. The weekend helps you and your employees recharge your batteries, but what happens when two days just isn’t enough? Over time, limited amounts of leave can take its toll. This is where paid time off comes in.

What Is PTO – Paid Time Off?

Paid time off is exactly what it sounds like: time away from work. During this time, an employee can do whatever they want and will still receive pay. This is in contrast to unpaid time off, which is time away from work during which the employee will receive no pay.

How Does Paid Time Off Work?

Underpaid time off, employers allot a specific number of days for employees to use, in most cases, at their discretion. Any time off taken in this manner will allow the employee to receive pay. Employees are free to use the paid time off as they like, such as visiting the doctor, attending their children’s school meetings, or even recovering from an illness.

Are There Different Types of Paid Time Off?

Yes, there are. Most businesses divide paid time off into three categories – sanctioned leave, statutory leave, and unforeseen absence. Let’s have a look at the categories in more detail:

Sanctioned Leave

Sanctioned leave, also known as holiday leave, is time given to an employee so they can take an extended break from work. The number of days the employer will give an employee and how they are made available will change from workplace to workplace. There is, however, a statutory minimum amount of leave an employer must give to their workers (more on this later).

Unforeseen Absence

Unforeseen absence is generally given to an employee in the event of sickness or emergency. It is important to note, however, that an employer is only obliged by law to pay statutory sick pay to an employee absent because of sickness. This can be far less than they would earn if they had attended work and currently comes in at £96.35 per week.

Statutory Leave

Statutory leave is an unforeseen absence from work that is governed by law. This can include time off for jury service or to work as a magistrate. It can also include things like maternity and paternity time. In many cases, the government will pay the individual for their time instead of the employer.

How Much Pay Will I Receive for Paid Time Off?

Traditionally, employers offer different types of leave to employees for different purposes and the amount of pay will vary for each. Here are the most common categories:

Holiday days

These are often used to take a vacation. Employees taking holiday leave should expect the same level of pay as they would have received if they had worked.

Personal days

Many employers in the modern world offer what they call personal days to employers. They often give these as appreciation for exemplary service and are available for employees to do whatever they wish with them. Employees taking personal days should receive the same level of pay as if they were at work.

Sick days

Sick days are unforeseen absences taken because of sickness. The law legally binds employers to pay employees statutory sick pay (which may be less than standard pay and is currently £96.35 per week as a minimum) in these situations. Many businesses will have a sickness policy that will dictate how much they will pay an individual for sick absences. Some may pay standard rates.

Maternity leave 

This type of leave is given to expecting mothers to cover the birth and first few months of their child. Legally, an employee will qualify for Statutory Maternity Pay if they have been in the same job for at least 26 weeks by the end of the 15th week before the baby is due. They must also earn at least £120 per week. An individual will receive maternity pay for 39 weeks. An employee may legally receive £151.97 or 90% of the average weekly earnings (whichever is lower) for the first six weeks. They will then get a flat rate of £151.97 per week. Some businesses may have a maternity leave policy that pays more than this.

Paternity leave

This type of leave is the equivalent of maternity leave but for fathers. New dads can take either one or two weeks of paternity leave. The statutory weekly rate of Paternity Pay is £151.97, or 90% of your average weekly earnings (whichever is lower). Some businesses may have a paternity leave policy that pays more than this.

Jury service

Many employers will pay an employee their normal salary when they are on Jury Service. Some, however, won’t. If they don’t, the employee will need to take a Certificate of Loss of Earnings or Benefit form to the court. The court will then compensate them for their time. The standard jury service rate starts at £32.47 per day if you are at court for four hours or fewer, and then £64.95 per day if you are at court longer. If you need to serve for over 10 days, you’ll get a higher rate. Some employers will ask that their staff claim the money from the court and then top up their pay to cover any shortfall.

What is the Difference Between Paid Time Off and Other Types of Leave?

The simple answer is that the employee gets paid. The law and employers categorise other types of leave as unpaid. These may include:

  • Time off to look after a child.
  • Time off for bereavement. Often employers will pay staff for a reasonable amount of time off when employees experience the bereavement of a close member of their family.
  • Time off for medical or dental appointments.
  • Time off for holidays outside of the normal leave entitlement (employers will rarely allow this except in exceptional circumstances).

While these categories may be important to the employee, they have no legal right to receive pay for them.

Why Do Employers Provide Paid Time Off?

It can be expensive for any business to offer paid time off. Despite this, the advantages of offering paid time off far surpass the costs involved. Employee morale is not something to sniff at and providing too little leave is a sure-fire way to see it plummet.

There’s also the legal aspect to consider. The Working Time Directive 1998 sets out the statutory agreements for the minimum number of days leave an employee can expect from their employers.

Advantages of Paid Time Off

There are many advantages to paid time off for both employers and employees. These include:

Improved Staff Morale

Paid time off allows employees to feel that the organization they work for values them. They can feel more empowered and in control as they are allowed to take leave when they want. It can also give them a more positive outlook towards their work, and they are more likely to be focused on their job.

Higher Productivity Rates

By offering paid time off, employees don’t have to worry about the financial implications of taking leave. They will be less distracted and less stressed when working. This can result in increased productivity. When you combine this with the morale boost that comes with paid time off, performance rates can soar.

Reduced Unplanned Absences

Since employees have the option of taking paid time off when needed, there is less risk of them taking unscheduled absences. It’s no surprise that companies who offer better than average annual leave entitlement have fewer sick absences throughout the year. This is because employees can easily schedule appointments and plan out personal work ahead of time without the temptation to call in sick.

Improved Employee Retention Rates

In a recent survey, most employees spoke about valuing vacation days more than pay rises. Paid leave makes employees happier, which means they are less likely to quit their jobs. Turnover costs for an employee are usually far higher than the costs of providing paid leave. This makes paid time offer a financially sensible decision for all businesses.

Easier to Attract Talent

Offering a good level of paid time off is an effective tactic for attracting better talent. For many, the level of paid time off given by a company is the one of the biggest factors when deciding to change jobs.

Spotting Theft and Fraud

For some businesses, the leave they offer is a great tool for spotting employee theft and fraud. Many banks insist their employees take at least one block of 2 weeks off each calendar year for this very purpose. They can then compare the timing of criminal activity against staff rotas to eliminate employees from suspicion.

What Does the Law Say About Paid Time Off?

There are many laws, rules, and regulations that govern paid time off. They tend to change based on the type of leave taken. Let’s break down each type and discuss their legal ramifications.

Annual Leave

Most workers have an entitlement to a minimum of 5.6 weeks’ paid holiday a year, as set out in the Working Time Regulations 1998. Employees can give more than this at their discretion. See our article on holiday pay for more details of how employers work this out.

Time Off for Public Duties

If you’re an employee and you need to take time off work because you perform a public duty, for example magistrate or local councilor, your employer must allow you to take a reasonable amount of time off work. The government set this out in the Time Off for Public Duties Order 2018. The law, however, does not specify how long a reasonable amount is.

Time Off for Jury Service

There is no legal requirement for your employer to give you time off for jury service, but they could be fined for contempt of court if they refuse. Your employer doesn’t have to pay you for the time that you take off unless your employment contract says so. But even if they don’t, you will still be able to claim money back from the court to make up for financial losses.

Time Off to Have a Baby or Look After Your Newborn Child

If you’re a new parent or you’re expecting a baby, you have extra rights at work. This is set out in the Employment Rights Act 1996. The law states that you or your partner could be entitled to:

  • Maternity leave and pay.
  • Paternity leave and pay.
  • Shared parental leave and pay.
  • Adoption leave and pay.

For details of how much maternity and paternity pay is, see the How Much Pay Will I Receive for Paid Time Off? section above.

Time Off Because of Sickness

Employees can take time off work if they’re ill and receive pay while they are away from work. If the absence is for longer than seven days, they will need to give their employer proof in the form of a sick note provided by a doctor.

Sick leave is one of the more complicated paid leaves in terms of the law and is governed by a variety of rules, including:

  • The Equality Act
  • The Employment Rights Act
  • The Health and Safety at Work Act

While there is no limit to the amount of sick leave an employee can claim under the law, most businesses impose limitations in staff policies. For details of how much statutory sick pay is, see the How Much Pay Will I Receive for Paid Time Off? section above.

What if My Employer Refuses to Give Me Paid Time Off?

If an employer refuses to give you paid time off for any of the reasons given above, then they could be breaking the law. Our first tip, if this is the case, is to have an informal conversation with them. If this doesn’t work, raise a grievance with your employer. If you still get nowhere, then you could try talking to the Citizens Advice Bureau or a solicitor who will help take the matter further.

In Conclusion

Paid time off is one of the most important things workers look for in employment. And staying the right side of the many laws that govern it can be tricky. We hope that with a little help from this guide you find things easier in the future.

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Written by Siva

I write & describe the value & benefits delivered by Paperhift's rota planning, staff time tracking, and employee payroll management software. Especially useful for Shift Planners, Rota Managers, Team Admins, and HR Teams :-)