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The Advantages and Disadvantages of a Paid Time Off Policy

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A Paid Time Off (PTO) policy combines vacation, sick, and personal time into a single bank of days that employees can use when they take paid time off from work. A PTO policy creates a pool of days that an employee can use at their discretion.

When an employee needs to take time off from work, the PTO policy allows a certain portion of the time off to count as paid hours. The employee may use PTO at their discretion. Whether they need the time for doctor's appointments, children's school conferences, to pick up Johnny from the bus stop, to wait for the handyman for heating, or to recover from the flu. Time use is no longer the employer's responsibility, which is another step in the direction of treating employees like the adults they are.

Read More... Why You Should Use a PTO Tracker

Protecting the employee and the employer

Employees who may have lied or made up how they use their time in the past now have the right to take PTO at their discretion to support work-life balance and flexibility. This has allowed employers and employees to end the practice of requiring employees to ask their supervisor for permission if they want to be absent from work.

To protect the company's workload and customer service, require that employees request PTO with at least two days' notice unless the employee is truly ill, which is often unpredictable. Establish other policies for employee sick, vacation and personal time as needed before implementing a PTO policy.

Note: Employees tend to react unfavorably when a new system is implemented and the rules and policies are not known until later, after the policy is in use. So think carefully about the implications of the decision and make every effort to fully inform employees of all related rules and policies before implementation. Your goal is to familiarize your employees with the implementation of a new policy from the beginning.

Benefits of a good PTO policy

A good PTO policy can provide benefits to both employees and companies. They treat employees as adults who are entitled to use PTO as they see fit, without supervision. Managers are not put in the position of having to control their employees' use of their benefit, paid time off.

PTO gives the employer some control over unplanned absences, which are a serious problem and cost for many. Employees can schedule their absences in advance, which helps with work coverage.

Employees appreciate the flexibility that PTO provides. It gives them the ability to use paid time off when they need it most - whether it's to take care of a sick child who can't go to daycare or to take a vacation to the beach with family.

In the past, employees may not have told the truth about why they need time off from work because they wanted their supervisor to think positively about them. Since PTO allows them to make adult decisions, there is no reason for employees not to tell the truth.

Employers can address employee attendance only with people who take advantage of the system or have attendance issues, rather than setting a lot of rules and policies for the average employee who comes to work regularly and without problems.

Disadvantages of paid time off policies

Of course, for every silver lining, there is a dark cloud, and PTO policies are not immune to drawbacks. Some research shows that employers who implement PTO give employees fewer days overall than before, and/or that new employees accumulate PTO more slowly than longer-term employees.

Employees tend to see PTO as a benefit and use all the time off, whereas they may not have done so in the past when they had time off for personal days, sick days and vacation. Americans in particular are notorious for not taking paid vacation and other paid time off.

Employees tend to treat all PTO time as vacation time and come to work when they are sick. Employers can counter this practice with effective absenteeism management. Managers within the company need to set the pace and expectations and model appropriate behavior to employees regarding time off from work. Coaching can also help address the issue of employees coming to work sick.

Average Policy

A 2016 survey by the Society for Human Resource Management (SHRM) found that the majority of companies offered PTO plans (87%) and paid leave (91%) to their employees based on their length of service. For PTO plans, the average days of leave granted per year ranged from 13 to 26 days, depending on length of service, and for paid leave plans, from eight to 22 days."

In a study conducted by the WorldatWork Association in September 2014, the average number of PTO days offered by employers was:

Less than one year of service: 16 days
1-2 years of service: 18 days
3-4 years of service: 19 days
5-6 years of service: 22 days
7-8 years of service: 23 days
9-10 years of service: 24 days
11-15 years of service: 26 days
16-19 years of service: 27 days
20+ years of service: 28 days

In addition to the range of paid time off days employers offer, the rest of the employee benefit, paid time off, is also examined.

In several service periods, the number of days of paid time off decreased between the 2010 survey and the 2014 survey.

Find Out More... The Advantages of Automating Paid Time Off Tracking

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