In 1910, President William Howard Taft made the first concrete move to bring the spirit of the age-old proverb “All work and no play makes Jack a dull boy” to American workplaces. President Taft proposed that workers need 2 to 3 months of vacation (paid time-off) per year “in order to continue his work next year with the energy and effectiveness that it ought to have.”
It’s been almost 120 years since President Taft made this remark. Yet, all proposed laws mandating businesses to give employees paid leaves have been unsuccessful. However, the absence of a law has not stopped organizations from offering paid sick leaves, paid vacations, and paid holidays to their employees.
For example, according to the Bureau of Labor Statistics, paid vacation leaves (or paid time-off) were available to 70% of workers in small businesses, 85% of employees in medium-size establishments, and 89% of staff members in large enterprises.
Also read: Pros and Cons of VTO (Volunteer Time Off)
This could be primarily driven by the tight competition for top talent. It’s no secret that great talent is a rare commodity that all businesses are fighting over. As it turns out, more and more members of the workforce’s crème de la crème (especially among millennials) consider paid time-off benefits as an important deciding factor when choosing a company to work for.
Paid Time-Off (PTOs): Letting Employees Decide How to Spend Their Time Away from Work
One relatively new way to offer paid leaves as a benefit to employees is through the accumulation of paid time-offs or PTOs. In the past, more companies were offering vacation time broken down into specific allocations. For example, on an annual basis, employees often get 10 days of paid holiday, 2 weeks of paid vacation, 2 personal days, and 8 sick days.
With PTOs, employees accrue paid time off days based on a set of criteria such as tenure and number of hours worked, usually monitored using time tracking software or other tools. On average, employees accrue 30 days of PTOs every year. Unlike the more traditional method of allocating paid leaves to specific purposes, having a PTO policy allows employees to use their paid days off at their own discretion.
The PTO model is fast becoming the preferred way of giving employees time away from work benefits. However, before hopping on the bandwagon, it’s important for business owners, HR leaders, and managers to look at both the pros and cons of a Paid Time-Off policy.
First, let’s take a look at the benefits of having a good Pait Time-Off (PTO) policy.
Fewer Fake Sick Days
Some employees rarely get sick, and it’s not uncommon for these workers to fake an illness to get their paid sick days that would have otherwise been wasted.
Companies with a PTO policy have seen the number of their employees faking an illness decrease. Since there’s only one stockpile of paid days off that employees can use, they often reserve their PTOs for vacation or as a buffer for potential emergencies.
PTO also results in a better employer brand.
Easier Administration of Paid Days Off
Most of the time, the responsibility of tracking, approving, and recording paid vacation days falls on the shoulders of the HR department and team managers who are already buried under a pile of administrative tasks. With the traditional paid vacation model, they need to worry more about accuracy to make sure employees aren’t going over the allowable number of days per category.
It’s easier to monitor and administer paid days off with a PTO policy since everything is bundled together. It eliminates the need for the HR department or managers to police how employees are using their PTO benefits since employees are empowered to use their paid time off at their discretion. It gets even easier when employers use a time tracking tool that incorporates the PTO policy.
More Flexibility and Privacy on How Employees Use Paid Time-Off (PTOs)
“But you’ve already used all your paid sick days for the year.”
Imagine telling this to an employee who was hospitalized earlier in the year due to the flu, with no paid sick days remaining. Having a PTO policy prevents this from happening by giving employees the flexibility to use their days off when they need and in whichever way they want.
On the topic of privacy, there might be instances when employees are not comfortable sharing the real reason why they’re taking a day off. For example, the extreme pressure in today’s modern workplace is prompting more employees to take mental health days. There could also be instances when employees need to take time away from work because of any number of issues at home. Some things are personal and employees may feel uncomfortable sharing them with their colleagues.
We’ve just scratched the surface of the benefits of having a PTO policy. Unfortunately, there are also downsides.
Below are the cons of shifting to a PTO model from the traditional paid vacation model.
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Increased Presenteeism Among Sick Employees
One of the main reasons, if not the main reason why employees put a premium on PTO benefits when looking for a job is the desire to achieve a work-life balance.
That said, employees would rather spend their earned paid time off traveling or even enjoying a staycation than on a couch tending to a bad case of the flu.
So, while having a PTO policy in place reduces the instances of employees calling in a fake illness, it also increases the number of employees reporting to work even though they’re sick. This is called sick presen