Leave policies play a bigger role in your business than many owners realize. The right approach helps you attract great employees, keep them longer, and build a positive company culture.
At the same time, it can feel challenging to strike the right balance. You want to offer flexibility and time off your employees appreciate, but you also need to make sure day-to-day operations don’t fall apart when people are out.
Whether you're implementing your first formal PTO policy or reviewing an existing one that isn't working, this guide walks you through how to design leave policies that work for both your team and your business. You’ll come away with a clear PTO plan you can apply right away.
Why Leave Policies Are Important
Your leave policy sends a message about what kind of company you are. A thoughtful, well-structured time off policy helps you:
- Improve employee retention
- Reduce burnout and increase productivity
- Attract top talent in competitive job markets
- Demonstrate trust and respect for your team
However, when these policies are outdated or poorly structured, they can create gaps in coverage, lead to frustration among staff, and result in unnecessary costs.
What Makes Leave Policies Both Generous and Practical?
Before we dive into specific strategies, let's define what we mean by generous and practical employee leave policies.
Generous leave policies give employees meaningful time away from work without making it hard to use. These often include:
- Enough paid time off to cover rest, personal needs, and emergencies
- Clear categories for vacation, sick, and personal days
- Additional benefits like paid parental leave or sabbaticals
- Flexibility in how and when employees schedule their time away
Practical leave policies keep your business running smoothly while employees take time off. They account for:
- Coverage and staffing during busy times
- Clear guidelines for unexpected absences
- Seasonal or project-based restrictions when needed
- Budget constraints and sustainability over time
How to Evaluate and Improve Your PTO Policies
When developing or revising your leave policies, start by asking a few key questions:
Review what you currently have:
- How much PTO are you currently offering employees?
- Are your policies consistent with industry standards?
- Do you have clear procedures for unexpected absences?
- Are expectations written clearly and applied consistently?
Look at business impact:
- Can the business keep operating effectively when employees take time off?
- Are there critical periods or times of year when everyone or certain teams need to be on deck (blackout periods)?
- Do client service or deadlines suffer when people are out?
Check in with your employees:
- What feedback have you received about your current time off policy?
- Are employees using their available PTO? If not, why?
- Are there changes that could improve employee morale or retention?
A Real-World Example of Finding the Right Balance With PTO
At Whirks, we’ve experimented with different leave approaches over the years. We tried unlimited PTO, but most employees didn’t feel comfortable using it. We also tested a strict policy that tracked every minute away, which hurt morale.
We’ve since landed on a “professional 40” approach, which balances flexibility with accountability. Employees can flex up to two hours in a week without using PTO, as long as their responsibilities are covered and they make up that time. Anything beyond that comes out of their standard accrual for half days and full days.
This setup gives employees more control while still keeping schedules predictable. It communicates our expectation that full-time employees work a professional 40-hour week while giving them control over how they achieve that goal each week.
Best Practices for Employee Leave Policies
Start with Industry Benchmarks
Research what competitors and similar businesses offer. Your PTO policy should be competitive enough to attract talent while remaining sustainable for your business.
Establish Clear Blackout Periods
Identify critical business periods when time off isn't feasible. For service businesses, this might be tax season, busy times of year that fluctuate with seasonal and outdoor factors, or peak sales periods. Communicate these blackout periods during onboarding so expectations are clear from day one.
Create Flexibility Within Structure
Consider hybrid approaches like:
- Flexible daily scheduling within standard PTO frameworks
- "Mental health days" or personal time separate from sick leave
- Remote work options that reduce the need for traditional time off
Plan for Coverage and Communication
Ensure your leave policies include:
- Adequate notice requirements for planned time off
- Emergency absence procedures
- Coverage protocols for client-facing roles
- Clear approval processes
When deciding how much time off to offer, leaning slightly toward more generous leave policies tends to pay off. The benefits of happy, rested employees typically outweigh the costs of additional time off. The key is to pair that generosity with clear expectations and consistency.
Common Leave Policy Mistakes to Avoid
- Inconsistent Application: Having a policy in writing but not enforcing it consistently
- Unclear Guidelines: Leaving guidelines vague or open to interpretation
- No Regular Review: Letting years go by without reviewing or updating policies
- One-Size-Fits-All: Applying the same rules to every department without considering their unique needs
Take the Next Step Toward a Better Leave Policy
Your leave policy shapes how employees experience your workplace and how your culture comes across. Reviewing and improving it shows your commitment to both your team’s well-being and your company’s long-term health.
Start by gathering feedback from your team, compare it with what similar businesses offer, identify where your current policy falls short, and make thoughtful adjustments. With a clear, balanced approach, you can create a policy that supports your people, strengthens your business, and helps your company stand out as a place where employees want to stay and grow.
For a deeper look at the most common PTO options and how to decide what’s best for your team, check out our guide: What is the Best PTO Policy to Offer Your Employees?
