Once upon a time, most organizations offered their employees time off in the categories for which they were used. These traditional plans included some combination of sick days, personal days and vacation days. In recent decades, however, more companies have adopted the paid time off model, or PTO. Here’s what to know about it and how to navigate the PTO model if your employer offers it.
What Is PTO and How Does PTO Work?
With the PTO model, each employee earns a set number of hours or days off that can be used for any purpose. Whether an employee takes off for vacation or a sick day, it’s up to the employee’s discretion. These PTO programs come in two flavors: a set number of days or hours in a “bank” system or an unlimited amount of time off. Each system has its pluses and minuses from both the employee and employer’s perspective, so it is important for workers to know their organization’s particular approach and how it impacts their work-life balance and personal needs.
Pros and Cons of a PTO Model
In the traditional model, an individual had to disclose the primary purpose of the time off request. This inevitably led to some fibbing on the margins as an employee might call in sick to attend a child’s conference or game or start a vacation early. In some cultures, this truth-bending was unnecessary and in others, it was accepted as a common practice. But as with all stretching of the truth, it impacted group trust and cohesion.
The PTO model, in turn, purports to treat group members as adults and lets them decide how to use their time off without judgment or second-guessing. The PTO system also allows for more careful and nuanced planning by workers who can decide throughout the year the proper balance of time off for vacation, holidays and religious observance, personal and family needs and even mental health days.
Of course, there are drawbacks to any system. With liberal PTO setups, employees can be unsure whether they are supposed to take their full allotment of time or if that is frowned upon. The company’s culture and and each individual’s preference can influence the extent to which PTO is utilized by employees.
This is especially true with the relatively new concept of unlimited PTO. First deployed by progressive technology companies, the unlimited PTO approach assumes that workers will make good decisions about their work-life balance and not abuse the ability to take unlimited time off.
Of the 200 companies surveyed by U.S. News, 20% offer unlimited PTO, 15% of which are technology companies; 39% of companies surveyed do not offer unlimited PTO.
It is interesting that unlimited PTO is often used by companies that have high achieving cultures. Cynically or practically, that sort of company’s leadership probably knows that most ambitious team members will not take excess advantage of the unlimited PTO. It is much like the neighborhood kid who gets a better pay outcome by offering to mow a lawn or shovel a driveway for whatever the homeowner thinks the job is worth rather than a set agreed-upon price.
[READ: What Is Flexible Time Off?]
Best PTO Practices for Employees
With any PTO program, prudent employees will follow a few best practices:
— Budget time for later in the year. Some organizations allocate time on a calendar year, some on a fiscal year and others on the employee’s anniversary hire date. In any case, it is important not to use too much too soon or you might be lacking allocated days later in the year.
— Give proper notice. It is best to give your team and leadership as much time as possible regarding time off requests. If you plan to take off certain cultural or religious holidays for observance, for example, you should be able to give notice months in advance. Other personal needs may arise more suddenly, like sickness or funeral attendance, but again, try to give your team as much notice as possible.
— Be considerate. Like giving proper notice, do not be selfish during peak seasons or stressful periods for your team. A tax accountant who plans a wedding or vacation in March will not be popular for long with his or her CPA firm.
[READ: 8 Types of Employee Benefits.]
What to Know and Ask Surrounding PTO at Your Company
— See if PTO is negotiable during the hiring process or annual reviews. Most organizations allot PTO based on seniority of rank or longevity at the company. More PTO may be easier to grant by hiring managers even if additional cash compensation in the form of salary or bonus is unattainable.
— Ask if your organization offers PTO pooling or gifting. It can be a comforting gesture when members of a team or department pool PTO to be used by a colleague who has experienced misfortune of some sort.
— Understand if your bank system’s PTO program is “use it or lose it.” Can PTO be carried over or even cashed out at exit? Companies enforce “use it or lose it” policies both to simplify accounting accruals and to encourage employees to take time off. Fewer companies allow PTO hoarding these days because it is more commonly recognized that time off is healthy for the individual and the organization.
— Follow your company’s policy. Every organization has different accounting methods for recording the usage of PTO. Some may even allow days off that are “off the books” and not recorded. As an individual, be sure to follow the policies and procedures as they are enforced at your company even as you benefit from the occasional generosity of your management.
It is easy for employees to instinctively distrust the intentions of their company regarding time off. The Dickensian image of miserly employers denying personal, sick or vacation days out of greed or spite, is outdated. Modern PTO policies are designed to put power and flexibility back in the hands of team members. Follow the advice of this article and you will be better refreshed, balanced and effective for your organization.
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Update 06/17/22: This story was published at an earlier date and has been updated with new information.