Pros and Cons of Offering
Paid Time-Off (PTO)

Jul 19, 2023 10:49:00 AM / by Payday HCM

In the past, employers commonly offered their workers separate paid time off benefits such as vacation time, sick leave, and more. Now employers are moving toward a new modern approach, incorporating all time-off policies into one all-inclusive PTO policy, but is it the smart choice? Here are the pros and cons of offering paid time off to your employees. 


Pros and Cons of PTO

The debate as to whether companies have an advantage by offering PTO versus separate vacation, sick and personal leave plans is constantly being researched.

To help HR professionals and other managers decide what the best choice for their business is, below are some advantages and disadvantages of combining the company’s separate paid time off benefits into a single Paid Time-Off (PTO) plan.


Advantages of Offering PTO

When it comes to offering PTO as a single, all-inclusive policy, managers can look to reap the following benefits and advantages:

  • Employees are less likely to feel the need to lie about being sick or having a doctor’s appointment in order to use all of their annual sick days. This can help create more transparency in the employee/employer relationship.
  • Incorporating a PTO policy commonly results in employees taking more vacation time and fewer sick days. This benefits employers in two ways:
    • Managers typically receive more notice about scheduled vacations, affording more time to plan for adequate coverage.  
    • PTO can help improve employee mental health and well-being. Employees often return to work more refreshed and productive following vacation leave. The same results do not hold true for employees utilizing sick days.
  • Employees tend to value the flexibility that PTO provides.
  • Managers only have to track PTO hours, as opposed to separately tracking each type of leave.


Disadvantages of Offering PTO

While there are many advantages to offering a single, universal PTO policy, employers should be aware of the drawbacks too, as no method is without some:

  • Employees are more likely to consume all of their PTO, whereas they may not have expended all of their sick or personal days in the past.
  • Employees tend to save all of their PTO time for vacations and come to work when they are sick, at times causing illness among other employees.
  • In some states, all earned PTO must be paid out upon separation of employment.  Should the company enforce separate sick leave and vacation policies, state law often mandates that unused, accrued vacation time be paid out upon separation of employment, sparing the employer from compensating the departing employee for his/her unused, accrued sick leave. 


Final Thoughts on Offering PTO

While the above pros and cons may have made your decision on offering PTO a bit easier, talking to an HR and payroll expert may help further, 

Employers should also keep up with other labor law compliance requirements, such as the federal FMLA and state minimum wage update

To learn more about how Payday HCM, through things such as powerful time and labor management solutions, is helping businesses manage time off for their work, contact us today. 


New Mexico Sick Leave Policy Sample

New Mexico Sick Leave Policy Sample

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