VTO meaning: What is voluntary time off?

VTO meaning: Understanding what voluntary time off is

Voluntary time off (VTO) is unpaid leave that allows employees to balance their work-life demands without losing their employment status. Unlike paid time off, VTO does not affect an employee’s available paid vacation or sick days. Employers often offer VTO to decrease staffing costs and protect against overstaffing.

More about voluntary time off and its purpose

The landscape of “employee leave” is continuously evolving, with states and local governments increasingly enacting both paid and unpaid leave laws. Consequently, many employers are expanding beyond core paid time off benefits to attract and retain talent, offering both paid and unpaid time off.

Employers provide unpaid time off for various reasons, and voluntary time off may be one of them. In a VTO arrangement, the employer chooses to offer the unpaid time off and the employee opts to take it. This is in contrast to mandatory unpaid time off, such as leave under the Family and Medical Leave Act (FMLA).

VTO often serves two purposes: it helps employees balance their work and personal obligations plus allows employers to reduce staffing costs. For example, in overstaffing situations, employers might ask the extra employees to take VTO.

However, these two purposes aren’t always mutually inclusive. Employers may choose to offer voluntary time off simply to enhance their overall leave package. Here, the employer typically allocates a specific number of VTO hours annually to eligible full-time employees for personal or family needs.

Is voluntary time off the same as volunteer time off?

Although they are both abbreviated as VTO, voluntary time off and volunteer time off are not the same thing.

Voluntary time off refers to unpaid leave granted to employees, often as a means to promote work-life balance and reduce staffing costs.

In contrast, volunteer time off is paid leave provided for employees to volunteer with non-profit organizations or community groups, typically limited to one or two days annually. In many cases, companies that are committed to corporate social responsibility offer volunteer time off to encourage employees to give back to their communities. We go into more detail and have tips on creating a policy in our guide to volunteer time off.

VTO Meaning: Advantages of offering voluntary time off in a small business

• Reduces the cost of overstaffing: If you have more employees than you need for a shift, you can request that they take VTO. But depending on your state’s laws, you may need to pay them “reporting time” for showing up.
• Safeguards against layoffs and downsizing: Instead of letting employees go during difficult times, employers can ask employees to take VTO. However, the effectiveness of this strategy may depend on whether employees have enough VTO hours and how long they are expected to go without pay.
• Enables employees to retain their benefits and employment status: Employees can take this time off knowing their jobs are safe and their benefits are intact.
• Increases employee satisfaction: Employees will likely appreciate their employers’ willingness to provide voluntary time off, which may increase their loyalty to the company.

Some disadvantages of offering voluntary time off

• Potential job insecurity: If the employer requires the employee to take a lengthy VTO, the employee may feel like their job isn’t safe.
• Risk of coercion into taking VTO: Employers must be careful not to pressure or compel employees to take voluntary time off. While employees will likely agree if the request is reasonable, the time off should remain voluntary for the employee and their decision.
• Abuse of the VTO program, if not properly implemented: For example, morale may drop if employees feel that the program favors certain employees over others. Employers should take care to implement a program that reduces attendance issues, such as employees taking VTO without first seeking approval.

Creating a voluntary time of policy

Because this benefit is not required by law, employers can be creative when setting up VTO programs. Despite having this freedom, employers should aim for consistent and fair VTO practices. This starts with creating a strong VTO policy

Four tips for developing a VTO policy

• Have your legal team draft the policy. This will help ensure a consistent and fair policy that doesn’t run afoul of employee benefit laws, including those pertaining to discrimination.
• Be clear about the VTO process, such as who is eligible for VTO, how many days employees receive per year, and the steps for requesting VTO.
• Create a VTO FAQ that answers common questions employees may have about the program. At the end of the document, let employees know where to go for more information.
• Integrate the VTO program into your HR and payroll technologies. This will simplify and speed up administration.