The Pros and Cons of a Paid Time Off (PTO) Policy

A paid time off (PTO) policy combines vacation, sick time, and personal time into a single bank of days for employees to use when they take paid time off from work. A PTO policy creates a pool of days that an employee may use at his or her discretion. 

When an employee needs to take time off from work, the PTO policy enables a certain amount of the time off to be paid hours. The employee may use the PTO at their discretion, whether they need the time for doctor's appointments, kid's school conferences, to pick Johnny up at the bus stop, to wait for a furnace repairman to arrive, or to recover from the flu. The time use is no longer the business of the employer, which is another step in the direction of treating employees like the adult people they are.

Paid Time Off Policies Protect Workers and Employers

So, employees who may have lied or made up stories about how they were using their time in the past have the right to take PTO at their discretion to support work-life balance and flexibility. This has allowed employers and employees to stop the practice of employees needing to ask permission from their manager to miss work.

To protect the company workload and customer service, you'll want to require that employees request PTO with at least two days prior notice unless the employee is truly sick, which is often not predictable. Establish other guidelines, as needed, for employee sickness, vacation, and personal time before you adopt a PTO policy.

Examples of a Typical PTO Policy

According to a study by the Society for Human Resource Management (SHRM), 67% of employers offered a bank of paid time off in 2022. This compares to 99% of employers that offer paid vacation time, 20% of employers that offer paid mental health days in addition to regular sick leave, and 6% of employers who offer unlimited PTO.

In a study conducted by the WorldatWork Association in 2019, the organization polled employers about the range of paid time-off days that employers offer, along with other types of employee benefits.

The average number of PTO days offered by employers was:

• Less than one year of service: 17 days
• 1-2 years of service: 18 days
• 3-4 years of service: 19 days
• 5-6 years of service: 22 days
• 7-8 years of service: 23 days
• 9-10 years of service: 24 days
• 11-15 years of service: 26 days
• 16-19 years of service: 27 days
• 20+ years of service: 29 days

Benefits of a Good PTO Policy

A good PTO policy can offer benefits to employees and businesses alike. You treat employees as adults who are entitled to use PTO at their discretion without oversight. Managers are not put in the position of having to police their reporting employees' use of their benefit, paid time off.

PTO gives the employer some control over unscheduled absences, a serious problem, and cost for many. Employees can schedule time off in advance which assists with work coverage.

Employees value the flexibility that PTO provides. It gives them the option of using paid time off when they most need it—whether to care for a sick child who can't go to daycare or to take a vacation with the family at the beach.

In the past, employees may have been untruthful about why they needed to take time off from work because they wanted their manager to think positively of them. PTO, in allowing them to make adult decisions, provides no reason for employees not to tell the truth.

Disadvantages of Paid Time Off Policies

Of course, with every silver lining comes a dark cloud, and PTO policies are not immune to downsides. Some research shows that employers who adopt PTO may give employees fewer overall days than they had previously, and/or new employees accumulate PTO more slowly than longer-term employees.

Employees tend to view PTO as a benefit and use all of the time off, whereas they may not have in the past when they had time off for personal days, sick days, and vacation. Americans, especially, are notorious for not taking paid vacations and other paid time off of work.

Employees tend to view all PTO time as vacation time and come to work when they are sick. Employers can discourage this practice with absenteeism management in action. Managers in the organization need to set the pace and expectations and model appropriate time-off-work behavior for employees. Coaching can also help address the issue of employees coming into work sick.