Many companies have begun to switch over from offering sick days and vacation time to offering a set amount of paid time off, or PTO that can be used for any reason. There are pros and cons to this approach, however.
Advantages of PTO
PTO is easier to calculate than separated leave policies, simply because any time off is counted the same. This minimizes the amount of time spent making adjustments to ensure that paid time is deducted from the proper bank. Since it all counts the same, there’s less room for error and misunderstanding.
There’s no need to figure out whether an employee is lying about being sick, because it doesn’t count any differently if the employee is sick or not. When PTO is in place, many employers report that there tend to be fewer unscheduled absences than when separate sick leave is in place.
When a PTO system is in place, employees tend to view all of their PTO as vacation days. This means that they are more likely to use all of their PTO, which can be viewed as either an advantage or a disadvantage. Since employees seem to perform better with regular vacations, we’re going to call it an advantage.
Disadvantages of PTO
Employees become less likely to call in sick when PTO is in place because they’d rather “save” the PTO for vacation. This may minimize the number of unscheduled absences, but can put your other employees and your customers in jeopardy. To discourage employees from doing this, employers should send sick employees home and encourage employees to call in sick when necessary.
Employees may also take PTO all at once or early in the year, which leaves no backup plan in place if they become sick or need to take time off for any other reason. To avoid this, some employers establish a system where PTO is accrued throughout the year.
Why Paid Leave Is Good for Business
Paid leave isn’t required in many places, particularly if a company employs fewer than 50 employees. Paid leave can make a company more attractive to top talent, can encourage employees to stay home when sick, and can provide employees with a refreshing break from responsibilities, however. Paid leave can help employees to be more productive while at work by allowing them flexibility to take care of personal needs.
Strategies for Offering Paid Leave
Whether you decide to offer separate types of paid leave or PTO, it’s important to have a strategy in place for requesting, tracking, and dispersing the leave. Employees should know from the start how to request leave, how much time is required for approval, any policies surrounding sick days, and how the paid time is earned. These strategies must be consistently and effectively managed for paid leave to work.
Payroll software can help you to manage paid leave, reducing time spent on paperwork and ensuring a pleasant experience for all involved in using and dispersing the paid time. If you would like to review payroll software options that could help you establish or improve a paid leave program, visit our vendor match page and we can help you get started.