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01/15/2025

HR Question of the Month: Creating One PTO Bank

Source: Federated Insurance, December 17, 2024

Question

We currently divide employee days off into two banks: a vacation bank and a sick bank. We have a number of employees complaining that they do not have enough vacation days left at the end of the year to take time off around the holidays. They are asking if they can use their sick days to take time off (even though they’re not actually sick). We want to support our employees and are thinking about changing our employee time off to one big paid-time-off (PTO) bank that employees can use for any reason instead of two separate banks. What are the advantages of creating one big PTO bank?

Answer

There are several benefits of using a PTO plan versus traditional vacation and sick allotments. The company may appear more attractive to potential and current employees because they are allotted more days to takeoff. Since employees may not use all their sick days, they may view the lump-sum days as more vacation time. These plans also allow employees to feel that they are treated as adults and can make their own decisions about vacation and personal time without having to explain to their employers. In addition, the administration of these plans is generally not as complex and does not require as much guidance.

If a company is considering implementing a PTO plan, it should make sure this benefit option fits with its environment and culture. It is also best to establish clear directives for employees, such as procedures for requesting time off, before implementing the plan. Employers should work with local counsel to ensure their policies comply with all applicable laws, such as state paid sick leave laws.

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