What Works for Not Working? The State of PTO Policies.

Corporate Synergies

As Seen in Employee Benefit News

As Seen In

PTO is gaining ground as a time-off policy. That’s because no one wants to feign illness when they really need to chaperone Junior’s class trip.

Summer is approaching, which means your employees are probably looking forward to getting away for well-deserved paid time off (PTO), or vacation–whichever term your company uses to describe it.

PTO has become so ubiquitous of a term to describe vacation that the two seem to be one in the same. They’re not, when it comes to a time-off policy. PTO is paid time off for any reason, whereas vacation and sick days describe the intent for time away from work.

The low unemployment rate and an increasing number of job openings signal to employers that they need to offer more time off to compete for employees—and workers are taking it. The average amount of time a worker takes off increased for the third year in a row to 17.2 days. But employees are still not taking all the time they’ve earned.1

It begs the question: What type of time-off policy works best—a PTO bucket or a traditional vacation and sick leave program? And if the answer is PTO, how much should you offer?

PTO seems to be winning out against a traditional vacation and sick leave policies. According to a recent World at Work survey, 43% of companies offered PTO in 2016, up from 28% in 2002.2 The reason? Flexibility. Everyone’s called in sick to work feigning illness even though they weren’t actually sick; a bank of PTO eliminates that need.

PTO might also make employees feel like they’re being treated like responsible adults capable of managing their time off while still being productive in getting their job done. They may feel empowered having more control over their schedule and appreciate the work-life balance to manage doctor appointments, day care issues and any other issues that arise.

For employers, the advantage of PTO is improved absenteeism—40% of employers that made the switch from vacation and sick time to PTO reported that employees were more present. Administering PTO also eliminates the hassle of managing vacation and sick leave policies.

While PTO is more popular than vacation and sick leave, how much time off employers offer is still a big question. Some prominent tech companies have started offering unlimited PTO to their employees over the last decade in hopes of attracting and retaining the best talent. These employers saw unlimited PTO as a win-win-win:

  • It eliminates time spent administering, tracking and enforcing a limited PTO policy.
  • It benefits employers financially—in traditional limited PTO scenarios, employees can often bank time off, roll it over from year to year and get paid out on it when they leave.
  • It increases employee engagement—your workforce might feel a greater level of trust to manage time off.

But for employees, the reality isn’t such a big win.

Unlimited PTO can have unintended negative consequences.

Employees may struggle to figure out how much is too little time off, and how much is, well, too much. One way to combat this issue is for executives to lead the way in taking an appropriate amount of time off and communicating it to the company.

Another potential downside is employees might take off less time than before.3 In several reported instances, employees who don’t have clear guidelines on what to do will take less time off—or no time at all. To tackle this issue, set minimum guidelines and communicate frequently to remind employees they should take time off.

Whether you opt for PTO, unlimited PTO or vacation and sick leave, communicate the policy clearly. Outline how employees can communicate their intention to take PTO—what’s the procedure for scheduled time off versus unscheduled time off? How can employees ensure that projects keep moving while they’re away?

Employers should also remind them of the policy at different times throughout the year, such as before summer begins and before busy work periods where employees are prohibited from taking PTO as business dictates.

Consider how you measure an employee’s effectiveness and your time-off policy’s success. How will you determine that employees are taking enough time off? And what will you do about employees who may take time off and whose work suffers as a result?

Finally, don’t neglect compliance. No matter the type of policy you’ve created, ensure you’re complying with paid-sick-leave laws; there are now eight states and 32 jurisdictions with such laws in place.

Before making a change to your time-off policy, weigh the pros and cons and consider whether the program a cultural fit for your company.

1 CBS MoneyWatch, “Americans are starting to take more vacation”
2 WorldAtWork, “Paid Time Off Programs and Practices.”
3 Inc., “The Surprising Benefits of Unlimited Vacation”


© 2018 Corporate Synergies Group, LLC. No part of this material may be republished or distributed without prior written consent.

Download PDF   Subscribe to the Knowledge Center