With the New
Year here, it may be the perfect time for your company to rethink its time off
policy. The traditional time off structure for employees is comprised of separate
days off for vacation time and sick time. The more modern approach to time off
is a bank of days called paid time off (PTO), which combines all time off days
into one set number to be used for whatever the employee chooses. It is
important to look at several different factors when choosing which arrangement
works best for your company. Many companies are moving toward PTO for a variety
of reasons ranging from ease of management to reducing unscheduled time off to
incentive for new hires.
The
traditional time off plan can be cumbersome and hard to manage. At a time when
businesses are looking to streamline operations for economic reasons, PTO is a
way to take the bulk of managing time off and put it into the employee’s hands.
This relieves the human resource department from policing employees and
managing multiple types of days for each employee. There is no longer a need
for management to ensure that sick days are truly being used for ill employees.
Also, employees must manage their own days off by planning ahead and thinking
about saving days in case of illness.
Also
important to employers is the number of total days that their workers are
permitted per year. Often the traditional route provides for more time off than
PTO. The average days off after one year of employment for vacation are ten and
for sick days are eight. The average total days off after one year of
employment for those with PTO are 15. Therefore, with PTO, employers are paying
out for fewer days out of the office. Three days does not seem like much until
it is multiplied by the number of employees in the company. In a small company
with 10 employees, that is approximately a month of time off being paid out.
High employee
morale is important to ensure a positive work environment and company productivity.
Employees often complain when a peer seems to be abusing the company’s time off
policy. PTO takes away the possibility of misusing the system. A day off is a
day off. It does not matter whether the employee is sick, volunteering, or on
vacation. The way they use their PTO is completely up to them. Workers often
feel that PTO “levels the playing field,” especially those that feel cheated
because they never use their sick time while others use all of their sick and
vacation time. Studies show that 72% of companies that use PTO state that it
has been good for morale. Employees also report that they find PTO to be
helpful in balancing home and work. They do not have to justify taking time for
a “mental health day” or going on a field trip with their child’s class.
Though it
seems that PTO is much easier on all fronts than traditional leave, there are
several things that must be taken into consideration. It must be decided if the
time will be accrued or given up front, if it will roll over at the end of the
year (fiscal or anniversary), what the policy will be for unpaid time off, and
how emergencies will be handled. Abuse is possible. Employees that continually “call
in,” show up late, or attempt to work when sick are all problematic. Setting
policy for all of these situations is the key to having a healthy PTO system.
Also important is determining what the time frame for requesting time off will
be and how the requests will be handled.
While there
are no laws about paid time off, it is essential to lay out exactly what the
policy will be. It should be included in the employee hand book and it is
important to have employees sign off that they understand any changes to the
current system and will abide by the rules.
There will
be two more posts in this series. The first will explore sick time donations
and floating paid holidays. The second will delve into plans that offer
extended time off. Come back to learn more about the trends in paid time off.
Sources:
Fegley Shawn,
et al. (April 2009). Examining Paid Leave in the Workplace. SHRM. Retrieved December 20, 2012. http://www.shrm.org/research/surveyfindings/articles/documents/09-0228_paid_leave_sr_fnl.pdf
Paid Time Off
Programs and Practices. (May 2010). WorldatWork.
Retrieved December 20, 2012. http://www.worldatwork.org/waw/adimLink?id=38913
United States
Department of Labor. (March 2009).
Employee Benefits Survey. Bureau of Labor Statistics. Retrieved
December 20, 2012. http://www.bls.gov/ncs/ebs/benefits/2009/benefits_leave.htm
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