Paid Time Off Plans: Structuring a Plan that Benefits Everyone
Most employers are well aware of the advantage of having a well structured Paid Time Off plan that keeps them competitive in recruiting quality job candidates, as well as providing them a tool for recognizing their valued, loyal and tenured employees.
Well thought out Paid Time Off (PTO) plans can play a major role, both in fulfilling employee needs, as well as meeting employer objectives. In fact, employers might find that some employees view PTO benefits just as important as their actual salaries, bonuses, retirement plans or medical benefits offered through the company.
An exemplary PTO plan works to actually benefit both the employer and the employee, because it reinforces the following values:
Achieving the most benefit from a PTO plan for both the employer and the employee takes planning. Following is a list of considerations for when you are planning to draft a PTO plan for your company:
Evaluate how to successfully structure the plan. Employers will want to avoid implementing counterproductive time-consuming controls on their employees that end up canceling out the perceived benefits of PTO. There are always going to be those employees who try to manipulate or abuse any plan, particularly when an employer decides to use a separate sick leave and vacation plan. Trying to structure a "fool proof" plan where the vacation can be carried over and the unused sick days are forfeited can often provide opportunity for abuse for those employees who insist that nothing be "left on the table."
- Avoid placing the company in a position where managers must make exceptions to the plan. Making statements in a PTO plan such as "Exceptions may be made at the discretion of their manager." often leave the door open for inconsistent implementation and places the individual managers on the "hot seat." Whether it is allowing employees to use paid time off in advance of earning it or allowing more time off than the plan provides should be addressed in the plan and implemented on a consistent basis.
- Figure out some way to accommodate those employees who cannot or do not use all their PTO over the year’s time. Avoid implementing a "use it or lose it" policy. For a variety of reasons, sometimes even for client or project reasons, an employee is unable to use all their PTO. Employers do not want to penalize those employees, especially the deserving ones, who have earned their PTO, but did not want to let the company down .
- Set a positive tone with a PTO program For sure, employers do not want to come across as the PTO police, which can end up setting a negative tone. Employees are unlikely to view a negatively enforced program as a benefit, and managers must spend valuable time following up with employees to try and prevent abuse of the plan.
- Treat and respect employees as adults. Again, referring to number four above, employers should resist overly scrutinizing employees and behaving as PTO policing enforcement agents. When employees are respected as adults and some common-sense flexibility is incorporated into the plan, the program will be better enjoyed as a benefit by everyone concerned.
- Allow for carry-over PTO at the end of the calendar or anniversary year. This practice helps minimize the potential that an employee can go into the hole and end up with nothing. It also serves the employer well, because it helps reduce the tendency for employers who have a calendar-year plan to end up with a majority of the employee base scheduling time off during the fourth quarter in order to avoid losing it. When this temporary mass exodus happens, of course, the operations of a business can be significantly impacted. Again, it is important to think it through. Employers can still limit the carry-over time or they can set a deadline for use of carry-over. This element also serves to help get most employees through that period, after the end of their calendar or fiscal year, until the employees start accruing paid time off again.
- Be aware of the state laws affecting your PTO plan Some states actually have laws which prohibit companies from forcing employees to forfeit unused paid time off. As with any employee program, employers should check with their HR department or an employment attorney to ensure that the PTO plan provides for consistent implementation and allows the organization to still stay in compliance with all federal and state laws.
PTO plans, when well planned, developed and implemented can go a long way in benefiting both the employees and the employer. Many studies show that a PTO program can help reduce unscheduled employee absenteeism rates. They can also add to overall job satisfaction and good employee/employer relations. You know what I like to call that—WIN-WIN!
Created by: Judy Nunnenkamp
Last Modified On: 8/13/2009 7:19:56 AM
Paid Time Off Plans: Structuring a Plan that Benefits Everyone
Most employers are well aware of the advantage of having a well structured Paid Time Off plan that keeps them competitive in recruiting quality job candidates, as well as providing them a tool for recognizing their valued, loyal and tenured employees.
Well thought out Paid Time Off (PTO) plans can play a major role, both in fulfilling employee needs, as well as meeting employer objectives. In fact, employers might find that some employees view PTO benefits just as important as their actual salaries, bonuses, retirement plans or medical benefits offered through the company.
An exemplary PTO plan works to actually benefit both the employer and the employee, because it reinforces the following values:
Achieving the most benefit from a PTO plan for both the employer and the employee takes planning. Following is a list of considerations for when you are planning to draft a PTO plan for your company:
Evaluate how to successfully structure the plan. Employers will want to avoid implementing counterproductive time-consuming controls on their employees that end up canceling out the perceived benefits of PTO. There are always going to be those employees who try to manipulate or abuse any plan, particularly when an employer decides to use a separate sick leave and vacation plan. Trying to structure a "fool proof" plan where the vacation can be carried over and the unused sick days are forfeited can often provide opportunity for abuse for those employees who insist that nothing be "left on the table."
- Avoid placing the company in a position where managers must make exceptions to the plan. Making statements in a PTO plan such as "Exceptions may be made at the discretion of their manager." often leave the door open for inconsistent implementation and places the individual managers on the "hot seat." Whether it is allowing employees to use paid time off in advance of earning it or allowing more time off than the plan provides should be addressed in the plan and implemented on a consistent basis.
- Figure out some way to accommodate those employees who cannot or do not use all their PTO over the year’s time. Avoid implementing a "use it or lose it" policy. For a variety of reasons, sometimes even for client or project reasons, an employee is unable to use all their PTO. Employers do not want to penalize those employees, especially the deserving ones, who have earned their PTO, but did not want to let the company down .
- Set a positive tone with a PTO program For sure, employers do not want to come across as the PTO police, which can end up setting a negative tone. Employees are unlikely to view a negatively enforced program as a benefit, and managers must spend valuable time following up with employees to try and prevent abuse of the plan.
- Treat and respect employees as adults. Again, referring to number four above, employers should resist overly scrutinizing employees and behaving as PTO policing enforcement agents. When employees are respected as adults and some common-sense flexibility is incorporated into the plan, the program will be better enjoyed as a benefit by everyone concerned.
- Allow for carry-over PTO at the end of the calendar or anniversary year. This practice helps minimize the potential that an employee can go into the hole and end up with nothing. It also serves the employer well, because it helps reduce the tendency for employers who have a calendar-year plan to end up with a majority of the employee base scheduling time off during the fourth quarter in order to avoid losing it. When this temporary mass exodus happens, of course, the operations of a business can be significantly impacted. Again, it is important to think it through. Employers can still limit the carry-over time or they can set a deadline for use of carry-over. This element also serves to help get most employees through that period, after the end of their calendar or fiscal year, until the employees start accruing paid time off again.
- Be aware of the state laws affecting your PTO plan Some states actually have laws which prohibit companies from forcing employees to forfeit unused paid time off. As with any employee program, employers should check with their HR department or an employment attorney to ensure that the PTO plan provides for consistent implementation and allows the organization to still stay in compliance with all federal and state laws.
PTO plans, when well planned, developed and implemented can go a long way in benefiting both the employees and the employer. Many studies show that a PTO program can help reduce unscheduled employee absenteeism rates. They can also add to overall job satisfaction and good employee/employer relations. You know what I like to call that—WIN-WIN!
Some employees view PTO benefits as important as their actual salaries, bonuses, retirement plans or medical benefits.
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