Paid Time Off Should Offer a Reasonable Amount of Hours or Days

In business, there are pluses and minuses to everything. When it comes to having a paid time off bank, the real plus is that it benefits your employees in a big way. 

A paid time off (PTO) bank combines an employee’s sick time, personal time and vacation time into an allotment of hours, which allows employees to use the available hours at their discretion. I think this is a great perk for all staff and one of my favorite benefits. 

There are a number of pluses to offering employees a paid time off bank, including:

• It’s easier to manage the hours each employee has available (it’s all one category).
• You have the ability to manage single/unplanned days off if they get excessive.
• Employees are able to manage their own PTO hours, and the truth for most of your staff is they will have more time to use than under the former system.
• Employees love it 

A downside to paid time off is that all the hours are, in a sense, considered vacation time. When an employee leaves, you may, depending on state law, have to pay the exiting employee for all the unused PTO he/she accrued. 

I think the biggest mistake employers make with paid time off is that employers don’t manage it very well. 

They don’t look at how many employees are taking off at one specific time and whether or not the employees all have time left in their PTO banks. Employers think it’s someone else’s job to manage this, but that’s not the case. It is the employers’ job to manage their staff’s attendance and vacation. Keep track of it and coach and counsel if it is a performance issue. 

If an employee comes to you and says, “I’m taking next week off,” you need to make sure the employee actually has a week of paid time off available and that you as a business can afford that time off. It is valid to say, “I’m sorry; you can’t have the week off as two other people have already requested that week off, and we need you here.” 

Another mistake employers make is thinking that employees won’t look at the before and after when you change from vacation, sick and personal days to PTO. 

Some companies that choose to use paid time off banks give less days overall (than they would if they gave the time separately as sick/personal/vacation), but since employees can use the time at their discretion, it usually doesn’t feel like less time. For your best employees, who usually have the best attendance and do not use all the sick days allotted for them, it will be more time. 

Employees will still calculate and compare the time available. If the hours don’t add up to what they used to get when they had sick/vacation/personal time separately, you’re going to get some complaints. 

For example, if you previously have offered 18 days to employees (12 vacation days, 5 sick days, 1 personal day), but then you change to a paid time off bank system and offer 16 or 17 days, employees will notice. 

Some companies change from sick/vacation/personal time to a paid time off bank system and reduce the number of days because, with PTO, employees can use the time however they wish. In my experience, for most companies, less than half of the staff will use their full sick allotment. If you are reducing time, I would only do so by one or two days. 

You still want to make sure you offer an amount of PTO that’s reasonable for your business operations. PTO is a benefit given to staff by you and not a requirement; it is an opportunity for your staff to enjoy and recharge outside of work. 

In my next Insight, I’ll give steps to take if you want to develop an effective paid time off program for your company.  

Note: This Insight is intended for general us only. You are encouraged to consult an attorney for any applicable state laws governing paid leave.

When it comes to having a paid time off bank, the real plus is that it benefits your employees in a big way.