At one point, there was only one type of vacation policy: two weeks of paid or unpaid vacation a year.
However, employees and employers have many different options now, including unlimited time off, sabbaticals, extended vacation policies, and FTO. Which one you should choose for your own company or employees depends on a range of things, including your budget, the size of your team, and your business goals.
In this guide, I break down what FTO is, when it works best, and how to use it to get the best results.
What is FTO?
Flexible Time Off, or FTO, is a type of vacation policy that gives employees flexibility when choosing the time they take off.
For example, a typical vacation policy might give employees 10 paid vacation days per year that must be formally requested, added to a calendar, and approved by a manager.
With flexible vacation policies, employees can choose when and how much time they take off, and they can take days off for reasons outside vacations or sick days. FTO usually doesn’t require employees to earn or accrue time off, instead giving it to them based on contract or performance.
What’s great about this is that people don’t feel pressured to take time off when they don’t need it or stress about if they can take a day off when there’s an emergency.
This policy actually leads to employees being more productive and generally happier in the workplace and rarely leads to abuse or unreasonable time off. It’s also a more modern way of giving employees time off that focuses on things like mental health and well-being rather than just illness or vacations.
How is FTO Different from Regular PTO or Unlimited PTO?
Technically, PTO and unlimited PTO fall under the umbrella of FTO, but they’re all different things.
FTO simply means any type of time off, paid or unpaid, that is flexible, and it is a very broad term.
PTO refers to any paid time off a company offers but is not necessarily flexible.
Unlimited PTO is a type of flexible time off policy, but it can come with limits such as type of contract or length of employment within a company. It’s also not limited by any specific number of days, while most FTO policies let you choose when and how you spend your days but do give a limit to the number.
Should You Consider Offering FTO?
For many employers, when they first hear about FTO, it sounds like a recipe for disaster.
Won’t employees just abuse it? If you let people choose when to take time off and offer it for reasons like mental health breaks, why wouldn’t everyone stop coming to work?
Luckily, this doesn’t happen, and studies have shown that flexible vacation policies actually lead to less time being taken off.
If you think about standard PTO, an employee might use their 10 vacation days earlier in the year but then have a personal crisis in the fall and must take unpaid time for a week or use sick days. They have still taken three weeks off in total. Except now, they might be out of all kinds of days off with no recourse if they get injured, or their child gets sick.
Consider also that employees have diverse needs related to culture or religion. FTO can remove a lot of stress and resentment employees might feel when having to justify when and why they need time off.
Add that to the fact that employees are generally much happier when they are trusted to make decisions and have the security of knowing that they can take a break when needed. It’s much more productive in the long run.
Plus, having an FTO policy tends to attract better talent and make employees want to stay with a company longer, reducing turnover and the associated costs. And it cuts down on administrative costs because you don’t have to organize and track accrual or annual rollovers for unused vacations.
What Are The Downsides To Adopting FTO At Your Company?
There are some things you want to watch out for when you are implementing an FTO policy.
Although rare, there is potential for abuse. So, having some kind of tracking in place is important to spot patterns of misuse or irresponsibility. It’s also important to track time off because FTO can put you at risk of having too many employees out simultaneously or not having enough warning and no one to take over their workload.
The other big downside is that employees have to decide when they take time off; for some, this pressure can make them less likely to take a vacation. Even though the time off is paid, many employees feel guilty about voluntarily taking time off, so you may find that people are working too much and putting their wellness at risk.
To avoid employee burnout from not taking enough vacation, your company can include a minimum number of days off each employee must take per month, quarter, or year in your written FTO policy. Then, make sure all the managers and team leaders not only remind employees to take time off but also lead by example and take their vacations.
Is FTO Good Or Bad for Employees?
For most employees, FTO is better than regular PTO because it makes it easier to navigate emergencies and takes a lot of stress out of dealing with things like family emergencies or home repairs, making it easier to stay focused at work.
FTO also makes it easier to plan family vacations if both partners are employed and easier to plan time off in a way that maximizes productivity for an individual. And because FTO caters more to diverse teams, employees can celebrate cultural and religious activities far more easily without sacrificing vacation days.
The only downside is that some employees will not take enough time off. This often happens with unlimited PTO because some people find it hard to take time off when it’s not mandatory and can become burned out over time. That’s why business owners and managers need to ensure everyone takes days off or implement a minimum amount of PTO.
4 Tips For Getting The Most Out Of FTO
FTO generally works better than regular PTO, but there are some things you need to consider to ensure that your FTO is successful and makes things easier, not harder, for your team.
For FTO to work properly, you need to set up some kind of tracking to ensure that no one is abusing the policy and that every employee is taking at least a few days off during the year. It’s worth adding a minimum requirement for days that need to be taken off in a year to ensure this is happening.
By tracking who is taking time off and on what dates, you can avoid clashes in time off and schedules, so you don’t lose half the team on the same day or during high-demand work periods. You could also institute a restriction around taking days off within a certain amount of time of major project deadlines.
When you have an FTO policy, even if it is very flexible, you still need to have a written policy you can share with employees and managers. Having an FTO can lead to a little more confusion than a regular PTO because there are fewer guidelines, so make sure you communicate with employees and managers what is considered abuse and what isn’t and the rules for informing managers and team members ahead of time.
Something else you need to consider regarding FTO is how you’ll measure whether employees are still as productive. Many companies claim productivity goes up when FTO is introduced. Still, by setting goals, you can measure whether this is true for you while incentivizing employees to work harder and hit their goals faster.
Set Clear Guidelines
Many employees who don’t take time off won’t because they don’t understand how to use the policy or when it’s appropriate to do so.
By giving clear examples of when and how they should take time off and setting a clear procedure for notifying colleagues and managers about their upcoming time off, you can help everything run smoothly and take some of the anxiety out of PTO for employees.
Tips For Employees Using FTO
If you’re an employee using FTO, you might inadvertently feel guilty when you take time off. Knowing when and how you should take time off and how much notice you need to give can also be confusing.
Here are some tips to make the most of your FTO and avoid making things difficult for your employer or colleagues.
Give As Much Notice As Possible
Sometimes, your FTO may be an emergency that can’t be helped. But if you have a few planned days you need to take off, give as much warning to your team and your manager as possible so they can make a plan to cover your work.
Track Your Days Off
Your employer will probably be tracking your days off, but you should, too, so you can evaluate if you’re taking too much or too little time off. Remember that the average employee gets 10-12 paid days off per year, so taking a lot less could jeopardize your mental and physical health.