Sick/vacation time vs. PTO

amwkim · January 2004

We are thinking of re-vamping our Paid time off program. Currently employees (less than 5 years of service) accrue 2 weeks of vacation, 5 sick days, 10 holidays, and 1 personal day each year.

The biggest complaint I have is the amount of sick days seem insufficient to me. It was suggested by the owners that perhaps we should lump all of the accrued time into a Paid Time Off (PTO) bucket. This way, an employee would have 26 days each year to use as they pleased.

My concern is how to handle this when an employee terminates. (We only pay out accrued, unused vacation time.)

Does anyone have anything else I should be concerned about? Any advice? Do you have this system? Do you like it?

Thanks
~Kim

LindaS · January 2004

I would not recommend lumping the holidays into the PTO program but lumping everything else is a good idea. If you are going to do this you would also need to address your policy of only paying out vacation since "vacation" no longer exists. The problem with PTO plans is that it can become difficult to require employees to pre-schedule "vacations" but on the other hand it takes the supervisor/manager out of the decision making process of determining which applies when an employee is absent.

MrCreosote · January 2004

In Illinois we have to pay out unused Vacation time but not unused sick time. If they are combined into PTO, they would both have to be paid out, and we would have an additional expense. This is required by state law, though, so yours may be different or it may not be addressed.

Dfox · February 2004

We are also in Illinois. We have our employees earn the PTO over the first ten months of the year. An example, an employee can earn 18 for a year, therefore, each month the earn 1.8 days.

We do run into problems if they use more than they earn, because in Illinois, you can't deduct used unearned time from their final pay check.

ljault · February 2004

[font size="1" color="#FF0000"]LAST EDITED ON 02-02-04 AT 02:32PM (CST)[/font][br][br]If you lump it all together, you can't make a distinction between which hours you pay out at term - you'll need to pay all of the hours out. My suggestion is (and I'm trying to sell this very plan at my own workplace!) that you lump the vacation & sick together, leaving the holidays alone. That will keep you from having to pay those holiday hours out at separation. Just a thought. A PTO plan is far more effective than separate vacation & sick accruals. Employees are less likely to call in "sick" when they know it comes out of their PTO bank, which could eat into vacation hours, if abused.

Good luck!

Lola815 · February 2004

We don't have PTO because 1. we pay out vacation/personal time when the employee terminates and 2. we want employees to stay home when they are sick. If it was all lumped together I know half of our employees would not stay home. We also have no max on our sick leave and most of our employees treat their sick time like short term disability. We had one guy brake his back (off the job) and he had enough sick time to keep his paychecks coming the whole time he was out. Also, we allow employees to use sick time to take care of sick family. I can see why people like PTO, but for us, keeping it separate has been a better choice. Good luck.

HRGirl · February 2004

We have it and I love it. Everyone starts off the year with 25 days. We give new hires 3 weeks vacation when they start and 10 holidays. We have never had sick days or personal days. If ee's opt not to take the healthcare, they get an additional weeks vacation. If and I say if (no one hardly ever leaves here) someone leaves, we prorate everything. It's an awesome system, works great for us. We also offer flex time so our PTO is hardly ever used, we have ee's that rollover hundreds of hours and our President is fine with that.

martman99 · February 2004

We just started a similar program. However, be careful about stating "accrued". That may be interpreted as "earned/vested". Your handbook/policy manual should address the issue of entitlement to PTO, sick, vacation or Holiday pay upon termination. We do NOT accrue time. It is annually renewed. If an employeee terminates, voluntarily or otherwise, they are NOT entitled to any unused PTO. Additionally, our PTO is on a "use-it-or-lose-it" basis. If they have not used it by the last paycheck of the year, they lose it. We still track what time is used for sick and vacation, however.

Does that help?

Sick/vacation time vs. PTO

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