Voluntary time off (VTO) refers to unpaid leave that employees can choose to take, allowing them to step away from work temporarily while maintaining their job status and access to benefits. Unlike paid time off (PTO), VTO doesn’t subtract from accrued vacation or sick time. Employers often use it as a tool to manage labor costs and adjust staffing levels.
Understanding VTO and Its Evolving Role
As workplace leave policies continue to grow more complex, especially with changing state and local regulations, many companies are expanding their benefits to include both paid and unpaid options. Voluntary time off fits into this evolving landscape by giving employees greater flexibility and helping employers adapt to fluctuating operational needs.
VTO is a discretionary benefit offered by the employer, and employees decide whether or not to take it. This makes it different from legally mandated unpaid leave, such as time off under the Family and Medical Leave Act (FMLA).
While VTO can help employees manage personal commitments, it also allows businesses to cut unnecessary labor expenses during periods of reduced demand. In some cases, employers simply add VTO to their benefits offerings as a way to boost overall employee satisfaction and retention.
For example, employers may allocate a set number of VTO hours each year to eligible full-time team members, allowing them to take unpaid leave for personal or family reasons without penalty.
VTO vs. Volunteer Time Off: What’s the Difference?
Although both are abbreviated as VTO, these two policies serve different purposes.
- Voluntary time off is unpaid leave employees choose to take for personal reasons.
- Volunteer time off, on the other hand, is paid leave offered to support employee participation in charitable or community activities.
Companies focused on corporate social responsibility may provide paid time off for volunteering, often one or two days annually, to encourage employee involvement in nonprofit efforts.
Why Offer Voluntary Time Off in a Small Business?
There are several benefits for employers who implement VTO:
- Reduces excess staffing costs: VTO can help scale labor costs when demand is low. Be aware, however, of state laws that may require “reporting time” pay if employees are sent home after showing up.
- Helps avoid layoffs: Rather than resorting to layoffs, employers may ask workers to voluntarily take unpaid time off during financial downturns.
- Preserves job security and benefits: Employees who take VTO generally remain active employees, keeping their benefits intact.
- Boosts morale: Employees often appreciate the flexibility, which can strengthen trust and loyalty.
Challenges of Offering VTO
While VTO has its upsides, there are also potential drawbacks:
- Perceived job insecurity: If VTO is used too often or for long periods, employees may fear their jobs are at risk.
- Pressure to comply: Employers must ensure VTO is truly optional and not coerced. Voluntary time off should always be the employee’s choice.
- Unequal application: Without a clear structure, VTO policies can lead to dissatisfaction if some employees feel others are being favored.
How to Create a Voluntary Time Off Policy
Because VTO isn’t legally required, employers have flexibility in how they design and apply the program, but consistency and transparency are key.
Here are four best practices for building a strong VTO policy:
- Consult legal counsel: This ensures the policy aligns with labor laws and doesn’t unintentionally create risk.
- Clarify the rules: Outline eligibility, the number of VTO hours available, and how employees can request time off.
- Develop a helpful FAQ: Address common questions to support understanding and reinforce fairness.
- Use HR tech to streamline VTO: Platforms like Beyond help simplify the tracking and management of VTO by integrating leave policies directly into payroll and HR systems.