Traditionally, most companies have offered a paid leave package to employees that differentiates between vacation, personal and sick days. However, combining all categories into a single paid time off (PTO) bank is a growing trend. A PTO model increases employee flexibility and has the potential to boost morale and productivity. And with 70 percent of employees ranking flexible work hours as very important, it is a policy worth considering.
PTO is an appealing benefit that companies can use to help attract and retain top talent. What employee wouldn’t want more work flexibility? Another big plus is that employees won’t be tempted to lie about being ill to use up all of their allotted sick days. Whatever reason they have to take time off, it’s up to them and they don’t have to justify it. There’s an advantage on the paperwork side too — PTO eliminates the administrative burden of tracking how many hours of which leave category each employee has used.
However, a PTO policy isn’t without its downsides. It can incentivize employees to come in to work sick to save more of their leave for vacation, which risks the spread of illness. On top of that, merging types of leave can give an unfair advantage to employees with good health and/or fewer family responsibilities. Employees who use more sick days, either for themselves or to care for an ill child or family member, may resent losing out on more vacation time compared with their co-workers. And while some sick days go unused under a traditional plan, be aware that employees are more likely to expend all of their PTO.
If your company is considering implementing PTO, it’s important to establish clear, detailed guidelines before it goes into effect. Here are a few basics to consider:
- What happens to employees’ hours accrued under your company’s old policy
- How the amount of PTO will be tiered by seniority, job position or other factors
- Whether unanticipated leave such as jury duty or bereavement will be kept separate from PTO
- Whether PTO will carry over to subsequent years or have a time window
- How much prior notice will be required to take PTO in a non-emergency
- What constitutes an emergency
- When an employee can be sent home if they come in sick
Do the perks of PTO lead to better work/life balance than a traditional leave package? It certainly has the potential to be a win-win for employers and employees. (Some companies, such as Kronos and Mammoth HR, are even taking it a step further by implementing “unlimited vacation” policies.) Maximized freedom to choose how they use their time off is certainly a big plus for many employees, but whether the pros outweigh the cons largely hinges on the particular company and whether its workplace structure is conducive to the greater flexibility.