Paid time off tracking

Including paid time off (PTO) as part of employee compensation can be a powerful recruitment and retention tactic. In fact, the ADP Research Institute found that 39% of employees would be satisfied with additional time off if their employer could not provide salary increases or bonuses.¹

Yet, while employee work-life balance is important, managing PTO can be overwhelming without the right tools. Employers could find themselves spending significant time monitoring accruals and responding to employee requests. Before rolling out a PTO policy, it may be worthwhile to explore accrual tracking solutions.

What is PTO tracking software?

Employee time off tracking is an add-on feature to many time and attendance solutions that simplifies PTO administration. It provides up-to-the-minute balances of each employee’s vacation time, personal time, sick time, and other leave benefits. Calculations are performed automatically according to the PTO policy specified by the employer.

How does a PTO tracker work?

Keeping track of PTO is simple using software solutions. Workflows generally proceed as follows:

1. The time off tracking software automatically records PTO as employees accrue it according to the employer’s policy.
2. Employees submit a request for vacation time, sick time, personal days, etc.
3. Managers receive notifications to approve or reject the request.
4. The PTO tracker automatically subtracts approved absences from the accrual balance.

Why use PTO tracking software

A PTO tracker can help improve workforce efficiency, leave policy enforcement and communication. In some cases, the software can also be tailored to fit specific business needs.

Improve efficiency

Many employee PTO tracking solutions are web-based, meaning workers can view their current balances and request PTO from anywhere, anytime. This type of self-service helps ensure that HR managers are no longer burdened by day-to-day record keeping and the constant flow of PTO inquiries.

Improve PTO policy enforcement

Employers can require employees to request PTO in advance or report it after the fact.² Either way, PTO tracking software can help enforce rules governing how much time can be taken and in what increments. If employees try to log more PTO than permitted, the system automatically notifies them and their supervisors.

Improve communication with workflow notifications

A time off tracker can automatically send notifications, reminders and alerts based on parameters defined by the employer. For example, a supervisor may receive an alert about excessive employee leave, or employees may be notified about a “use-it-or-lose-it” PTO balance.

Tailor the system to meet individual needs

Depending on their software provider, employers may be able to create PTO categories or profiles with their own rules for how time is accrued. There can be a sick day profile for exempt employees and another for nonexempt employees, or profiles for union and non-union vacation days, etc.

PTO tracking features

Time and attendance software with a PTO accrual add-on may support the following powerful features:

• Real-time leave balances and notifications – Helps simplify PTO liability reporting and enables managers to grant or deny leave requests based on real-time information
• Web-based self-service – Frees HR departments for more strategic initiatives and helps improve employee productivity
• Automatic calculation, tracking and record keeping – Helps increase accuracy and reduce PTO disputes
• Workflow notification – Helps improve productivity by enabling employers to be more proactive in detecting and preventing PTO abuse
• Configurable accrual profiles – Enables employers to tailor the system to their needs and easily update profiles as those needs change

How PTO tracking improves productivity

An employee PTO tracker automates many routine tasks related to time off management, saving valuable resources. To take productivity to the next level, however, employers should look for solutions with self-service features and artificial intelligence (AI).

Employee self-service

Fielding employee requests for PTO balances can drain HR resources that would be better spent elsewhere. Self-service alleviates this burden by giving employees the ability to perform the following tasks independently:

• Check accrual balances via a web-based dashboard or mobile device
• Project future balances, including pending time off
• Submit time off requests and check approval status

PTO approval with AI

AI-equipped PTO trackers analyze accrual balances and shift requirements based upon information provided by the employer, e.g., minimum staffing levels for a certain skill, and recommend when managers should approve or reject PTO requests. Alternatively, managers can allow the system to automatically approve or deny requests based on the employer’s pre-set criteria. This feature enables employees to receive immediate responses, which helps accommodate same-day requests and emergency situations.

The downsides of manual PTO tracking

Tracking time off and maintaining adequate staffing levels can be challenging using manual approaches. Some of the drawbacks include the following:

• Manually calculating accrued PTO is prone to human error
• Workflows, i.e., employee requests and manager approvals, are slow
• A lack of self-service tools places a heavy administrative burden on HR

Additionally, when time and attendance is not integrated with PTO accruals, managers may inadvertently schedule employees who are unavailable and cause a staff shortage.

Frequently asked questions about paid time off trackers

What is paid time off?

PTO is leave time that employees can use for vacation, illness, personal or other reasons. Many employers offer this perk because it helps them boost morale and attract and retain talent. PTO can also help reduce unscheduled absences and improve productivity.

How do I set up my PTO tracker?

Time and attendance software providers typically work with clients to configure the solution to their specific PTO policies. For instance, the system might track PTO differently based on an employee’s role or location if such information is supplied by the employer.

What is the difference between PTO and vacation?

Vacation days are intended for just that – vacation. PTO, in contrast, allows employees to use their accrued time for any reason they choose. This approach makes PTO easier to track, though there are some compliance risks and drawbacks. For instance, bundling time off could have a financial impact in states that require PTO to be paid out upon separation of employment. Employers should consult their HR partner or legal counsel before creating time off policies.

Should a business use PTO management software?

Employers who offer PTO benefits and want to save time and resources should invest in a software solution. Such systems automatically calculate accrued time and provide up-to-the-minute balances so employers can make better decisions when fielding requests for time off. Employee time off trackers can also improve productivity, leave policy enforcement and communication between managers and direct reports.

¹ADP Research Institute People at Work 2023

² If employers design a PTO policy to comply with applicable paid family leave or paid sick leave laws, their self-imposed PTO usage requirements may be limited. Employers should consult their HR partner or legal counsel to help understand these limitations.

This guide is intended to be used as a starting point in analyzing vacation tracking software and is not a comprehensive resource of requirements. It offers practical information concerning the subject matter and is provided with the understanding that ADP is not rendering legal or tax guidance or other professional services. Please consult with your legal counsel.