PTO or paid time off is the employee leave policy where a company can sanction a set of leaves for the employees for which there will be no pay cut. PTO policy means that employees will get their pay even when they do not attend the office for a specific period.
PTO leave can be taken for various reasons, including grief, sickness, vacation, marriage, or even when you want to spend some personal time with your family.
What is PTO?
Paid time off is when you are paid for not working. It includes holidays, sick time, and all wrapped up under one category that permits you to use the time as you want. In a large organization, a PTO leave policy bundles the personal days off, vacation, and sick days in a specific block of hours rather than separating days for each reason.
More and more companies now offer unlimited PTO leaves where you do not have to accrue time before taking paid leave from your work. But there are stipulations like being with the organization for a specific time.
How does PTO work?
PTO primarily works by allowing employees to accrue leave over a particular time. When the employees work for, say a month, a specific number of PTO leaves is granted. It is like a savings bank account- the more you invest, the more you earn the interest.
For instance, salaried employees get 1.5 PTOs each month, so their accrued PTO will be 18 days collected over a year. Also alternatively, companies can allot a set number of paid time offs and hours to the employees based on what policy they have in their organization.
In such cases, PTO is not accrued, but they stay constant throughout the year. This is how PTO works in traditional setups. In various systems, PTO leaves are as per the company policy. For example, a company provides 30 leaves per year- 10 vacation leaves, 10 casual leaves, 8 sick leaves, and 2 personal leaves.
PTO offers employees these 30 days under a single category- Time off. The organization can also sanction all these leaves at once or divide the days into 7 for each quarter or 15 days for every 6 months.
Types of PTO
While many people link PTO with sick time or vacation only, the actual meaning of PTO can apply to when employees get paid while they are not working. As a result, you can say there are many types of PTO. Here we will list the most common PTO types.
1. Vacation time
Vacation time is the pre-planned time that an employee takes for rest, recreation and relaxation. The amount of leaves an employee takes for vacation is typically between a few days to 2 weeks. The employee requests the time off and schedules well in advance so that there is no disruption of work while they are away.
2. Sick time
Sick leaves are the period of time when the employee stays at home to recover from an injury or illness, and takes medical treatment for themselves or their family members. Mostly the sick leaves are not planned as the employees cannot predict their sickness time or when a family member will get injured or ill.
In such cases, the work gets hampered to a certain extent. But there are certain cases where an employee can plan in advance to use the sick leaves, like when they are preparing for some upcoming surgery, etc.
3. Personal days
Personal days are when an employee takes off from work for personal reasons other than vacation or illness. Here, employees can use the personal days according to their will, which may or may not be pre-planned.
Some examples of personal days include but are not restricted to attending some appointments, moving/shifting, taking a break to prevent burnout, responding to some emergencies, etc.
4. Bereavement leaves
Bereavement leave is when an employee takes off to grieve and cope with the death of some family member. The employer has the discretion to take the decision who qualifies as the immediate family member, with most companies recognizing the relatives of an employee as their immediate family members like spouse, children, parents, and parents in law, son in law and daughter in law, grandparents, grandchildren, brother, sister, or any other member from the same family.
A company’s bereavement policy establishes a pre-determined amount of time that an employee can take off after the death of a family member, with some employers even offering flexibility in extending the time period over others.
5. Parental leaves
Parental leaves are the days when an employee gets away from work, getting the full payment when there is a new addition to the family. Parental offs vary company by company, with some offering more parental leaves than others. There are some companies as well that are more lenient when it comes to approving parental leaves.
Also, some companies offer maternity leaves to just women who are pregnant or who have just given birth. Other firms offer paternal leaves to fathers as well. Further, some companies approve parental leave for employees who choose to adopt a child.
6. Paid holidays
Paid leaves are when a company offers its employees paid day off to spend some time with their family or even celebrate a publicly recognized holiday. Some companies remain open on the paid holidays and offer their employees the choice to attend the office for double the pay that day.
Companies can select which holidays they offer as paid leaves with many of them recognizing approximately 10 holidays per year.
7. National holidays
National leaves are the set publicly declared holidays that the employees get. The companies usually set these under their PTO policy.
Floating leaves
Floating holidays are the leaves when a company allows employees to choose a paid holiday. Employees can use the floating leave for publicly recognized holidays when their company doesn’t consider a specific leave a paid holiday. Some companies even allow employees to use the floating holidays for the crucial days that are non-publicly recognized like birthdays or anniversaries of the employee.
Why is it important to understand the PTO policy of your company?
Knowing how your company’s PTO policy works are crucial as it helps to ensure that you maximize your employee benefits. Knowing and understanding how the PTO policy works allows you to plan the time you take off and to create a healthy life-work balance.
You may wish to use the PTO to address your family’s needs, recover or heal from a sickness or injury, or even take a vacation for relaxation. Knowing how the company’s PTO policy works can further help the employees to use their time at work productively and improve their overall job performance.
When you understand what to expect from your PTO policies, you can use the time at work in a better way and focus on the tasks that need your attention rather than finding time to address things that need your attention outside of work.
Advantages and disadvantages of PTO
Advantages of Paid time off
- PTO policy can serve as a recruitment incentive and attract employees
- Provide vacation time to the employees who do not use the banked time for other things
- The employees can use the leaves as and when required when some unforeseen situations arise
- Shorter and more frequent vacations can help to maintain that work-life balance
- Reduces absenteeism
- Easier for HR to manage the leaves
- Offers flexibility and autonomy to employees
Disadvantages of Paid time off
- A lot of employees may wish to take some days off at the year-end to avoid losing the leave
- When an employee quits, the management has to honor PTO commitments
- A large number of hours can look like a lot of time than it actually is to the employees who do not consider that it covers several purposes
- Employees may even run out of PTOs and may be required to work when they are sick or lose their pay
- Some employees hoard sick leaves
Conclusion
Employees of a company need long paid time off. An organization gains more popularity if it has an impressive PTO policy. The employee can take a break from work without affecting their pay. Companies also benefit from the PTO policy since the employees return to work with refreshed minds, more energy, and relaxation.
This way, employees get more focused on work after unloading the stress. Offering several types of PTO leaves to employees provides an apparent reason for taking the leaves by employees. And due to this, the organization can better understand the employee’s situation.
The company can further track the leaves taken the maximum number of times. Also, companies should include paid time offs in their policy to provide better flexibility to employees.
