Paid Time Off Policy (PTO) Pros and Cons

What Are the Advantages and Disadvantages of a Paid Time Off Policy?

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A paid time off (PTO) policy combines vacation, sick time and personal time into a single bank of days for employees to use to 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 time off. The employee may use the PTO at his or her 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, or to recover from the flu, the time use is no longer the business of the employer.

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 adult employees needing 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. Establish other guidelines, as needed, before you adopt a PTO policy.

(Employees tend to react unfavorably when a new system is adopted and the rules and guidelines dribble out later after the policy is in use.

So, think carefully about the ramifications of the decision.)

To help you think about whether a PTO policy will work in your organization, here are the advantages and disadvantages of adopting PTO over traditional paid time off days.

Advantages of a Paid Time Off Policy

  • 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 the 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.

Disadvantages of Paid Time Off Policies

  • 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. 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 practices.

    Managers in the organization need to set the pace and expectations and model appropriate behavior for employees. Coaching can also help address the issue of employees coming into work sick.

    Paid Time Off Policy Averages

    In a study conducted by the WorldatWork Association in September 2014, the average number of PTO days offered by employers was:

    • Less than one year of service: 16 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: 28 days

    You'll want to take a look at the whole survey report about paid time off. In addition to the range of paid time off days that employers offer, the rest of the employee benefit, paid time off, is explored.

    In several of the service periods of time, the number of days of paid time off dropped between their 2010 survey and the recent survey.

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