Our small accounting firm is considering converting to PTO from Vacation/Sick leave. I'd love to hear from anyone that's done this and if you are happy with the decision to do so. Also, would like to know how well the employees received the change.
Our company consists of 46 employees. The nature of work that we deal with requires adequate time off to avoid employee burn-out. We converted to PTO 4 years ago and everyone loves it. We gave up a few holidays to do the conversion but ended up with more time off as a whole.
It works out great because the employees manage their own sick vs vacation time off and the HR department need only keep track of PTO days instead of the various categories. It also helps to retain good employees.
Our company is currently on vacation/sick days but I would like to propose PTO. I would like to compare how everyone's PTO time is accrued and if it's carried over, etc. Your input is appreciated!! Thanks!
The PTO plan has been in existence at our company for the last 5 years. The employees really like it and it makes keeping track of time a whole lot easier for managers and for the HR department.
We accrue it on a tiered basis
1-4 years = 80 hours, 5-9 years = 184 hours, 10-19 years = 224 hours and 20+ years = 240 hours.
We do not allow carryover from one year to the next, however, we did write a provision into our 401K profit share plan that allowed the employees to put a portion of the unearned time into their 401K accounts at the end of their anniversary date if it is not used, which is also on a tiered level:
1-4 years 40 hours, 5-9 years 80 hours, 10-19 years 120 hours, and 20+ years 160 hours.
This has been a great improvement over either carry over or pay outs. It allowed us to cut down on those that stockpile, than either take it all at once or quit and have a large lump sum payment in carry overs, it also is an improvement over pay outs as it is written in our profit share 401K under the 125 plan which allows it to go into the plan tax free so no witholding taxes or SS taxes are taken out and none must be matched by the company.
It is a win win for all and everyone loves it.
Here's the policy we decided on for our new PTO plan, including carryover. We are also implementing a supplement sick leave bank to avoid too much PTO accrual in one year.
Completed Years of Employment: Paid Time Off: <?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />
1 year 80 hours (3.33 hours per pay period)
2 years through 5 years 120 hours (5 hours per pay period)
6 years 128 hours (5.33 hours per pay period)
7 years 136 hours (5.67 hours per pay period)
8 years 144 hours (6 hours per pay period)
9 years 152 hours (6.33 hours per pay period)
10 years and over 160 hours (6.67 hours per pay period)
Employees will be allowed carry over into the next year up to two times the amount of PTO entitlement for the current year. Any unused PTO in excess of that amount will be rolled into accrued Supplemental Sick Time and may only be used for Supplemental Sick time.
Terminating employees will be paid either for their earned but unused PTO or their annual entitlement, whichever is less. Unused PTO carried over will be used in this calculation.
Our employees were pleased when we did this as well. Very few used their sick days so now they feel like they get more time off.
In addition, it's much easier to track in payroll.
We converted at the end of Q2: 15 days doled out evenly over 52 pay periods in the first 5 years, 20 days after 5 years, accrued in the same fashion with no accrual allowed past the annual cap (i.e., no carry over). We encourage our employees to take time off from work.
It was generally well received and it also has been a bit of a recruitment boost for us since employees don't have to wait a year to get their vacation time.
Most of the comments on PTO have been positive. Any negatives that we should be know about?
The transition has a few decision points that can cause friction on some plans.
If you use a benefit-year vacation plan (anniversary of hire), you will have more problems than if you use a calendar year plan. For instance, how will you handle a person who just received their year's vacation allotment in comparison to a person who is about to get theirs under the old plan? If the new plan allows for a larger bank than many or most employees would have had under the combined vacation/holiday/sick banks, you will need a good way to communicate why benefits were reduced. Once you are on PTO, I really don't know of any real downsides to it but the transition can be tough.
One thing that is possible, depending on your processes, is that a person can burn up 3 or 4 days of PTO and, because it's not sick leave, you may have FMLA qualified events going on that are not reported to HR until after their PTO is exhausted.