Growth of Paid Time Off (PTO) Programs Hits Plateau

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Annual survey suggests that number of organizations that have switched to paid time off (PTO) leave banks versus traditional leave policies that separate vacation, sick, and personal time has stopped growing. This is despite the fact that organizations have seen a marked reduction in unscheduled absenteeism after switching to PTO programs.

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According to the 2006 annual survey by the Alexander Hamilton Institute, the number of organizations utilizing a paid time off (PTO) leave program has stopped growing, despite the fact that PTO programs have been shown to reduce unscheduled absenteeism.

Fifty-six percent of the over 800 organizations responding to the survey still use a traditional leave policy that separates and tracks vacation, personal, and sick leave, as opposed to PTO programs -- the same percentage as in 2005. In a PTO program, most organizations combine vacation, sick, and personal leave into one bank.

Respondents who have instituted PTO lauded the results, with 56% claiming they had reduced unscheduled absences, and 89% stating that their switch to PTO had met or exceeded their expectations.

Among the other benefits of PTO programs pinpointed by users were easier record-keeping for accrual, eligibility and usage; less confusion among employees about time off schedules; and better recruiting and retention strategies.

Respondents sticking to their traditional time off (TTO) policies cited the costs involved in switching to PTO and paying for accumulated sick leave, record-keeping changes, and tracking sick time for legal reasons.

Survey Shows Amount Of Time Off Varies By Method Used

Because PTO programs typically include sick time in their "banks," the number of days off given is always greater when compared to the number of vacation days given using traditional policies.

Examples: 58% of five-year veterans at PTO firms get between 16-25 days off, while only 15% of the same veteran group at TTO firms receive similar vacation allocations; 54% of PTO vets with 10 years plus receive 21-30 days versus just 12% of the traditional group.

Also, employees are allowed to use their time off earlier in PTO programs than traditional ones. The most popular waiting period before vacation kicks in for TTO new hires was 6-12 months, while for PTO users it was one-to-three months.

Survey Spotlights Employer-Friendly Features

The survey also examined a number of issues from both forms of leave that are important to employees, including number of holidays given, whether organizations allow carryover days, and whether time is given at the beginning of the year or accrued during the year.

  • Over 60% of both groups offered employees between 7-10 holidays annually.
  • By substantial margins (PTO: 72-28%; TTO: 61-39%, for vacation), both groups allowed carryover of days off from one accrual period to the next.
  • 49% of traditional responders start their vacation time clocks at the beginning of the calendar or anniversary year, but only 33% of PTO users did likewise (they preferred a pay period accrual method).

One major goal of the survey is to give organizations a way to benchmark how their leave programs -- whether PTO or traditional -- compare to those of other employers. That comparison is critical today for retention of top employees and lowering or turnover rates, especially in light of the fact that departing employees often cite leave policies due to quality of life issues as a reason for their decision to leave.

Copies of the Report that contains both the results of the survey as well as a guide for converting to a PTO program are available at:

About Alexander Hamilton Institute (AHI)

Alexander Hamilton Institute provides employment law information to Human Resources professionals, Personnel managers, front-line managers and supervisors, and top management in a variety of formats including newsletters, loose-leaf manuals, CDs, booklets, audio conferences, and webinars.

For more information about the survey, contact: Melissa Pomerantz at 201-825-3377, ext. 110.


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Schuyler Jenks
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