“I’m taking a sick day!” This familiar refrain usually is uttered with just cause, but not always. What if there were no sick days? No, we’re not suggesting employees be forced to work when they’re under the weather. Rather, many businesses are adopting a different paradigm when it comes to paid time off (PTO).
Under the “PTO bank” concept, employers merge most (or all) of the traditional components of excused absences (vacation time, sick time, personal days and so on) into one simple employee-managed account, typically offering not quite as many PTO days as under a traditional PTO system. One benefit of this approach is that employers are no longer put in a position to have to judge whether leave is used appropriately. PTO banks may not work for every business, but more and more companies are finding them beneficial.
6 Primary Motivations for Using PTO Banks
There are a number of reasons that employers are offering PTO banks. Specifically, according to a survey by the HR professional society WorldatWork, here are the six primary motivations:
1. Greater flexibility for employees. Like their employers, many employees appreciate not having to worry about distinguishing vacation time from sick time.
2. Ease of administration. Employers don’t have to deal with the complications of separating the various PTO components, which makes the HR and payroll staff’s job easier.
3. Increased cost effectiveness. More efficient administration often reduces the costs of time and resources spent dealing with employee absences and lost productivity.
4. The ability to stay competitive with other companies. Many employees and job candidates view PTO banks as a more contemporary and appealing approach to excused absences.
5. Reduced absenteeism. Interestingly, some employers have seen employees miss fewer work days once PTO banks have been established — possibly because of the greater sense of control employees have over their time.
6. Improved employee morale. Simplifying the PTO process and gaining greater command over their time off is typically viewed as a positive, empowering thing by employees.
Although these many potential benefits may seem enticing, PTO banks may not be right for every employer. For example, you may not want to disrupt your current system if it’s working well. Please contact our firm for a review of your PTO approach and how it’s affecting your financials.
For more tips on employee tax incentives and planning, visit our post on Employee Educational Expenses.