Choosing a PTO Policy Your Employees Can Buy Into

August 10, 2021
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The number of available jobs continues to rise post-pandemic, and now more than ever companies are competing for employees. It is not just salaries or wages employers are using to entice potential candidates, it’s also benefits. Fast food restaurants are offering tuition credits. Small and large businesses alike are offering flexible work schedules. After a year of limited travel, people also want to know how much paid time off, or PTO, they will be offered. The national average for PTO is 10 days per year, but is that enough to be competitive in the current market? There are unique ways to give your employees the PTO they need to stay without breaking the bank for your business. 

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Traditional Leave

Some businesses offer a traditional leave policy which divides days into reasons for needing the time off. For example, the categories might be medical/illness, bereavement, and vacation. Some companies choose to break this down further into family illness, maternal/paternal leave, etc. According to Workest by Zenefits, “A typical leave policy grants employees 10 days of vacation, 8 sick days, and 2 personal days.” Employees may be enticed by this over a PTO policy because after doing quick math they will see traditional leave offers more time off, although it is allotted for specific reasons. 

PTO Bank

A PTO policy usually includes a certain number of days accrued in a period of time for each employee. Typically, hourly employees accrue PTO based on the number of hours they work. Salaried employees accrue PTO per pay period or yearly. Employers may choose to allow employees to rollover days into the next year or pay days out at the end of the year. This may cause you to pay a lot out at the end of the year or at the time of retirement for your employees, which is something to consider when choosing a policy. 

Employees appreciate a PTO bank as opposed to a traditional leave policy because the days can be used for any number of reasons, giving them more flexibility. If you want to offer the most flexibility, allow your employees to take hours off rather than days. This will allow employees to only take an hour or two when they have an appointment, versus a whole or half day, which will encourage them to get back to work when possible. 

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PTO Donation Plan

Although people are concerned about vacations, COVID-19 also made people more aware of time they may need to care for themselves or loved ones if sickness does arise. While FMLA may cover serious illnesses, it is usually unpaid and not all situations will qualify. If an employee has children, elderly family members, or even a weak immune system, 10 days will not be enough. 

This is where a PTO Donation Plan may be a useful option. At the beginning of the year, you can ask employees to donate 1 or more days to the PTO Donation Plan. If they donate, they will have the option of using the bank of days that year if necessary. This saves you from having to offer more days while still offering the PTO needed. This should be used concurrently with a PTO Bank. 

The best way to create a competitive PTO policy is to first decide what your company can afford, and then determine the policy for each level of employee. You will also want to decide whether you will allow negotiations upon offering a position. Candidates may try to negotiate for more time off, which is valid, and you will just need to know ahead of time whether you will entertain those negotiations.


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