<img height="1" width="1" style="display:none" src="https://www.facebook.com/tr?id=690758617926394&amp;ev=PageView&amp;noscript=1">
The Complete Payroll Blog

Should it be Vacation Time or Just PTO?

Posted by Complete Payroll | Jul 15, 2019 7:00:00 AM

Should it be Vacation Time or Just PTO_ - Complete Payroll

Traditionally, employers offered separate paid time off benefits to employees, such as paid vacation, sick leave and personal days.  However, in the past decade, many companies have moved to a more flexible Paid Time Off or “PTO” benefit that incorporates all policies into one all-inclusive PTO plan. The debate as to whether employers benefit from offering PTO versus separate vacation, sick and personal leave plans is constantly being researched. In an effort to assist employers in making an informed decision in this regard, below are some advantages and disadvantages of combining the company’s separate paid time off benefits into a single Paid Time-Off (PTO) plan.

Advantages of a Paid Time Off Policy (PTO): 

  • Employees are not incentivized to lie about being sick or having a doctor’s appointment in order to use all of their annual sick days, resulting in more transparency in the employee/employer relationship.
  • Research consistently illustrates that incorporating a PTO policy will result in employees taking more vacation time and less sick days. This benefits employers in two ways; first, employers typically receive more notice about scheduled vacations, affording more time to plan for adequate coverage.  Second, most mental health professionals agree that employees return to work more refreshed and productive following vacation leave.  The same results do not hold true for employees utilizing sick days.
  • Employees tend to value the flexibility that PTO provides.
  • Employers only have to track PTO hours, as opposed to separately tracking hours for vacation, sick and personal days. 

Request an HR software demo

Disadvantages of a Paid Time Off Policy (PTO):

  • Employees are more likely to consume all of their PTO, whereas they may not have expended all of their sick or personal days in the past.
  • Employees tend to save all of their PTO time for vacations and come to work when they are sick, at times causing illness among other employees.
  • In some states, all earned PTO must be paid out upon separation of employment.  Should the company enforce separate sick leave and vacation policies, state law often mandates that unused, accrued vacation time be paid out upon separation of employment, sparing the employer from compensating the departing employee for his/her unused, accrued sick leave.  

If your city or state requires paid sick leave, you'll need to ensure that your PTO policy meets the law's minimum requirements. 

Topics: Labor law, Employees, Human resources, Benefits

Is your current payroll or HCM situation less than perfect?

Written by Complete Payroll

We do payroll, HR, timekeeping and more for employers all over the country from a small, rural town in Upstate New York. And we're constantly publishing articles and other resources to help business owners, HR managers or anyone that helps manage a workforce. Welcome to Payroll Country!

Are you using our free resources?

We're constantly publishing free tools to help with payroll, HR and other administrative objectives.

New call-to-action
New Call-to-action

Subscribe to instant blog email notifications

Recent Posts

General Disclaimer

The materials and information available at this website and included in this blog are for informational purposes only, are not intended for the purpose of providing legal advice, and may not be relied upon as legal advice.  The employees of Complete Payroll are not licensed attorneys. This information and all of the information contained on this website are provided pursuant to and in compliance with federal and state statutes. It does not encompass other regulations that may exist, including, but not limited to, local ordinances. Complete Payroll makes no representations as to the accuracy, completeness, currentness, suitability, or validity of the information on this website and does not adopt any information contained on this website as its own. All information is provided on an as-is basis.  Please consult an attorney to obtain advice with respect to any particular question or issue.