A: Paid Time Off (PTO) days are often a convenient way to offer employees time to cover vacations, personal days and sick leave, all in one lump sum. As a work benefit, PTO availability has been shown to increase employee morale, while at the same time contributing to workplace efficiency and reducing the total number of sick days taken, by ensuring that employees don’t feel the need to come to work sick when ill and running the risk of infecting others. In many cases, PTO is accrued either in a lump sum each year, with the amount given increasing with seniority, or by a predetermined ratio of PTO hours to hours worked (say, one PTO hour per eight-hour shift, or one PTO day per 40-hour work week). However, Virgin founder Richard Branson popularized a new form of PTO, when he began offering his employees unlimited PTO. Which form your PTO program takes will depend on a number of factors.
Q: Should my PTO be unlimited or standard?
A: Unlimited PTO works under the assumption that employees are trusted to get their work done, only taking time off as it fits their needs and schedule. This set-up works best in results-driven workplace environments, such as sales or marketing departments. Any departments where employees are paid a straight hourly wage, or where their salary is not directly tied to a quantifiable measure within their job description, would most likely be better suited for a more standard PTO program.
Q: Should my program be flat or tiered?
A: Most companies that offer PTO average 12 to 15 days per employee. While a number of businesses offer the same number to all employees, most companies will tier their PTO, giving more days to employees after reaching certain milestones such as 2, 5, and 10 years with the company. Flat systems are much easier for HR departments and management to track and outline, but tiered systems may encourage greater employee loyalty and a higher feeling of satisfaction among the longest-tenured workers.
Q: Should my PTO be rolled over year to year, or “use it or lose it”?
A: For many companies, PTO is accrued year to year, with any unused PTO being “lost” at the end of the calendar year and all employees starting over at zero the following year. This is often the preferred method because it is easier for HR departments to track and prevents employees from stockpiling massive amounts of PTO for an early retirement or large payout upon quitting. Another way of counteracting this problem is to put a cap on the number of hours employees are allowed to save at one time, requiring them to then use some before any more can be saved up. On the downside, “use it or lose it” plans have a tendency to overburden companies with an abundance of absenteeism at the end of the year as employees rush to use any PTO they still have on the books as the year draws to a close. Also, depending on where your company has offices, a “use it or lose it” program may be illegal in some states.
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