What is VTO (Voluntary Time Off)?
VTO (Voluntary Time Off) is a workplace policy that allows employees to take unpaid time off when business demand is low. Unlike traditional paid time off (PTO), VTO is optional and initiated by the employer, giving businesses more flexibility in managing labor costs while allowing employees time off without penalty.
How does voluntary time off work?
Employers offer VTO when:
- There is lower-than-expected business demand.
- The company wants to avoid unnecessary labor costs.
- Employees wish to take additional time off without using PTO.
Employees can accept or decline the offer, but VTO must be voluntary. Employers cannot require employees to take unpaid leave unless it complies with wage and hour laws.
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Why offer VTO in your workplace?
For employers, VTO:
- Reduces labor costs without layoffs.
- Helps manage fluctuating workloads in industries with seasonal demand.
- Boosts employee morale by giving workers flexibility when they want time off.
For employees, VTO:
- Provides work-life balance without using PTO.
- Allows employees to take a break during slow periods.
- Prevents burnout by offering additional time off when needed.
What to consider when implementing a VTO policy
To make your VTO policy work effectively, consider:
- Communicating VTO opportunities to employees.
- Ensuring fairness in offering VTO across teams.
- Following labor laws—non-exempt employees must be paid for any required work time.
- Using scheduling tools like Homebase to manage team availability.
VTO and its impact on payroll
- For non-exempt employees, since VTO is unpaid, it doesn’t affect payroll calculations. However, employers must track hours correctly.
- For exempt employees, if they take VTO, their full salary must still be paid unless it’s for an entire week of absence without work.
- Reducing worked hours may also affect employer payroll tax contributions and employee benefits eligibility.
Many businesses find that payroll tools can help with tracking VTO requests and usage so they can automatically stay compliant with labor laws and keep payroll runs accurate.
How Homebase helps manage VTO
Managing VTO manually can be challenging, but Homebase simplifies the process by:
- Automating employee scheduling to track VTO requests.
- Ensuring payroll compliance when employees take unpaid leave.
- Providing workforce insights to optimize labor costs.
- Tracking employee hours to maintain accurate payroll records.
Sign up for Homebase today to streamline scheduling, payroll, and VTO management.