One of the most reviewed and contemplated workplace policies is Paid Time Off (either combined PTO or the traditional Vacation/Sick time).  We are often asked “How much should we offer?” or “How much do I have to offer?”

Believe it or not, there is no federal mandate that any employer has to offer paid vacation time, but employers who choose not to are in the vast minority.  According to the 2013 Employee Benefits survey conducted by the Society for Human Resource Management (SHRM), 93% of employers surveyed offer some type of paid vacation time to full-time employees (with 97% offering paid holidays).

Do you have a current PTO policy, or are you thinking of creating one?  We suggest you consider these current trends as you review your company’s time off benefits:

From a Traditional Policy to Combined PTO

Traditional Policies (separate Vacation and Sick time) are declining as combined PTO policies are now the majority of the market (up to 52% in 2013, from 42% in 2009).  Under a combined PTO plan, employees experience more freedom and flexibility in managing their leave.  In traditional plans, often vacation and sick time accrue differently and have various carry over rules.  Employees unfortunately will often lie about being sick if they’d like an extra vacation day and only have sick time remaining, generating distrust between the employee and employer.  PTO allows an employee to be more honest about leave and the employer can better prepare for planned absences ahead of time (instead of scrambling to cover for someone that called in “sick”, when that employee is really heading to the beach for a long weekend).  Additionally, a PTO system is an attractive benefit for healthier employees and usually means less paperwork for administration.

Average PTO Offered

The average number of vacation days an employee can take most often depends on the length of his/her employment.  The chart below lists PTO averages for full-time employees.  Data sources include PTO systems and traditional Vacation/Sick time systems.

Length of Service

Average Range of Paid Time Off

1 year

15 – 18 days

3 years

18 – 22 days

5 years

22 – 25 days

10 years

24 – 26 days

20+ years

25 – 30 days

Sources:  U.S. Bureau of Labor Statistics, National Compensation Survey, WorldatWork, SHRM

Encourage Employees to Use their Time Off

Actively encouraging employees to take time off should be an integral part of any company’s culture.  Much research has shown that companies with effective time off policies have less turnover and higher employee engagement.  Most employees who take vacations are generally more productive, healthy, innovative, and happy than those employees who don’t.  Good communication from management is key, but we also encourage limiting the amount of time an employee can carry over to the next benefit year (as in “up to one week” or up to “1/3 of one’s annual accrual”).  That way, employees understand if they don’t use it, they lose it. 

As our economy rolls through multiple changes in benefits, Paid Time Off is a benefit one has much control over as an employer.  We encourage companies, big or small, to offer this employee-friendly benefit primarily to be competitive in attracting and retaining talented, satisfied, and productive employees.

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