Paid time off (PTO) tracking

Including paid time off (PTO) as part of employee compensation can be a robust recruitment and retention incentive. ADP Research 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 essential, managing PTO can be overwhelming without the right tools. Employers could spend significant time monitoring accruals and responding to employee requests. Before rolling out a PTO policy, explore accrual tracking solutions.

What is PTO time tracking?

Paid time off tracking is an add-on feature to many time and attendance solutions that track when employees take vacation, personal, sick, or other paid leave benefits. With a PTO tool, calculations are performed automatically according to the employer's PTO policy. 

How does PTO tracking software work?

Keeping track of PTO is simple with 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 time-off, such as vacation time, sick time, or personal time
3. Managers receive notifications to approve or reject the request.
4. The PTO tracker automatically subtracts approved absences from the accrual balance.

Why is it important to track employee time off?

Tracking employee time off may help improve workforce efficiency, staff management, and communication. Sometimes, the software can also be tailored to fit specific business needs.

Helps improve efficiency

Keeping track of employee time offon web-based tracking software means workers can view their up-to-date balances and request PTO from anywhere, anytime. This self-service helps ensure that payroll practitioners are not burdened by day-to-day record keeping and the constant flow of PTO inquiries.

Helps improve staff management

Employers can require employees to request PTO in advance or report it after the fact. Either way, a PTO tracking system 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. Accurate policy enforcement allows employers to make scheduling decisions, helping improve staffing plans.

Helps improve communication using workflow notifications

A time-off tracker can automatically send notifications, reminders, and alerts based on employer-defined parameters. 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.

Helps prevent payroll errors

Time and attendance solutions can accurately reflect paid time off on employee timesheets, simplifying payroll processes. Time-off policies can be configured during implementation to help the employer simplify legislative compliance.

What are the features of PTO tracking software?

Time and attendance software with a PTO accrual add-on can support:

• 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 misuse
• Configurable accrual profiles–by being configurable, the system can be quickly tailored by employers to adapt to legislative changes regarding PTO 

How to choose the best PTO tracker

To choose the best PTO tracker for your needs, remember the following factors to ensure the tool fits the company's needs.

• Features and functionality – leave types supported, custom policies, approval workflows, integration with payroll software, mobile access, notifications
• Ease of use for staff – onboarding process, opportunity to scale with a growing company
• Security and compliance needs – labour laws, employee data security, role-based controls
• Pricing – hidden costs, trials and demos
• Integration with existing tools – payroll, HR
• Reporting and analytics – forecasting, trend analysis
• Level of support from provider – training, onboarding assistance, help center
• Accessibility and remote work support – cloud-based, accommodation of international teams, time zones, public holidays
• Customization and flexibility – customizing policies to fit company culture, personalization preferences 
• Feedback and reputation – known bugs, reviews of the software from third parties

FAQs

What is PTO?

Paid time off (PTO) is time that employees can take off work while being paid by their employer. It can be used for vacation, sick days, personal or other reasons. Many employers offer this perk because it helps them boost morale, attract and retain talent, and improve staff management.

What are the types of PTO policies?

PTO policies differ based on company size, culture, and compliance needs. They each may have different accrual methods, usage conditions and eligibility criteria.

• Accrued policies:Time-off is earned over time based on the amount of time an employee has worked
• Unlimited policies:Employees can take as much paid time off as needed, if their work responsibilities are managed
• Lump-sum policies: Employees have a set number of days they are allowed to take off
• Sick leave:A number of days that can be used for illness
• Personal days:Time off for personal matters not covered by sick leave or vacation
• Floating holidays:Additional days that employees can take off at their discretion, often used for cultural or religious observances
• Parental leave:Time off for new parents to care for their newborn or newly adopted children 
• Bereavement leave:Time off for employees to grieve the loss of a loved one 

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 and legislative requirements. For instance, if the employer supplies such information, the system might track PTO differently based on an employee's role or location.

Should a small business use PTO tracking 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.

ADP’s time and attendance solutions help simplify PTO tracking by automating accruals, approvals and balances,  helping reduce manual errors and administrative burden. With seamless payroll integration, employers can manage time-off requests while paying their employees accurately. Learn more about managing employee time with ease.

¹ADP Research, People at Work 2023: A Global Workforce View, 2023