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Potential negatives of a PTO plan:

Some employees will miss more work under a PTO plan, since all of the time can be used as vacation and since under a traditional plan they had less vacation available to them. If these are your better employees, this may not be desirable.

Making matters worse, some less productive employees, who would have abused illness/personal business allotments under a traditional plan, will be at work more under a PTO plan to conserve vacation time.

Thanks Herb for the additional pointers on PTO plan downsides. Perhaps the bloom is off the PTO rose to some extent - or it may be we are realizing that PTO approaches (like most human resource programs) are best tailored to the worker demographics and business needs of our organizations ... and we are now considering and choosing accordingly.

Appreciate the comment!

Employees use time off for so many reasons these days that calling one day off a "vacation" day vs a "personal" or "sick" day may cause employees to stretch the truth if they are out of sick days or really need time off to paint the house. Is that a true "vacation" anyway?

When a business relies on its employees to be at work, I agree the tracking needed really is scheduled vs unscheduled time off. It's the unscheduled time that creates issues.

Generic paid time off (PTO) requires employees to be adults and plan for their time off but allows them to be honest when time is needed unexpectedly. And rather than an unlimited-no tracking method where you have a general idea of who is taking time, you have a realistic picture of the time off needed.

If enough time is provided to accrue in the PTO bank, employees won't have to conserve their time off and come to work sick. On the other hand, you don't need to accrue unlimited balances and you may not have to pay out all accrued PTO time pursuant to a bona-fide policy to limit payouts if an employee leaves (check your state law).

Therefore you can control the liability to an extent while allowing employees to be in control of the time off they need for whatever purpose.

One plan doesn't fit all so employers do need to evaluate what is best for their organization based on their current plans, current employee behavior and desired behavior. And regardless of current time off benefits, working with Finance to plan the upfront costs and having employees engage in the conversion planning is key to a smooth transition.

Thanks, Karen. Great observations and points - appreciate your sharing them here!

Karen comments suggest two interesting points.

Employees who would lie under the traditional plans to fake illness or a personal business need to take more vacation would do well in a PTO plan. HR must do everything in its power to accommodate dishonest employees.

Also, in a PTO plan, absences are not coded by type of absence, so developing metrics on absence management is very difficult.

Nice to read so many very well stated pros and cons. It does rather illustrate why "best practice" is rarely one single method. Simple answers don't suit an unruly reality that refuses to conform to a common universal pattern. Rational responses to reward issues require situational analysis and careful judgment about appropriate options.

I agree one plan does not work for all. However, I disagree that a PTO is somehow rewarding or accommodating dishonest employees. PTO just clarifies the time off available and doesn't force a choice between which bucket of time to use.

Employees are often caught in a bind with an unexpected absence - think of the parent with a sick child who has no personal time to use- is it a sick day for them or does the company allow usage of sick time to care for a sick child? That is a gray area in some companies. PTO does not require us to define what is and isn't an acceptable reason for an absence. Or for what an employee may use time off.

The reality is that life is not put into buckets of vacation, sick and personal time for us. Empower the employees to plan their time off with PTO.

Howver you also would pply the same time off policies to PTO regarding usage. You can and should code the time off as scheduled PTO or unscheduled PTO to track usage. Follow disciplinary procecures for too many occurrences of unscheduled absences. It's actually easier to track.

The only difference with a PTO plan is that HR has only one bucket of time to accrue and maintain. Employees have one balance. Imagine that, something in an HR benefit that is actually made simpler. I can't argue with that.

Exactly. What is the problem with treating employees as adults? You get "x" days per year to use in whatever way you see fit. And if you come to work sick, we'll send you home.

By your own statements, we can't treat employees as adults, if we have to send them home when they report sick. Sounds like elementary school to me.

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