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How Much ‘Paid Time Off’ Should Your Company Offer Employees?

Posted: 13 Sep 2019 07:30 AM PDT

As summer draws to a close, have your employees taken advantage of all the paid vacation time available to them? Workers who don't take sufficient time off can suffer from stress and burnout, making them less effective at their jobs. Yet a survey by employee scheduling and time tracking software provider TSheets reports that many U.S. employees don't take advantage of employee paid time off (PTO). Here's a closer look at what the survey found.

Employee paid time off by the numbers

PTO is one of the most desired benefits among employees. About three-fourths of employees in the survey say it's "very important" to have paid vacation time, sick time, and holidays at their jobs.

Nearly seven in 10 (69%) of employees in the survey get PTO. The industries most likely not to get any PTO are hospitality and food workers. Among employees who do get paid time off, the average amount of PTO days annually is:

  • 7 vacation days
  • 6.5 sick days
  • 4 personal days
  • 6.5 holidays
  • 2 volunteering days

Employees who get a lump sum of paid time off are offered an average of 8.8 days annually.

Employees aren't using their paid time off

Although most workers do get PTO, that doesn't mean they're actually using it. More than 60% of those with PTO admit that they didn't use all of their time last year. On average, TSheets estimates the amount of PTO that employees left on the table adds up to approximately $1,800 per employee in unused PTO each year.

So why aren't employees using all of their time off? The majority of employees who don't use their PTO say they are saving it to use later (that is, to carry over to the following year). In addition, 11% of extremely honest employees say they don't get sick often enough to use all of their sick days.

The takeaway: Of course, some employees may want to save their vacation days for a longer vacation next year, rather than using them all up this year. However, it's important to strike a balance between this need and the need for employees to get some downtime. Be sure you're creating a culture where employees feel comfortable taking time off when they need it. You can start by actually taking some days off yourself.

Another behavior that can be more harmful to your business: 84% of employees say they go to work when they're sick instead of taking a sick day. One-third say this is something that their employers actually encourage.

Ironically, the employees who need time off the most may be the least likely to use it. The employees in the survey who say their work is extremely stressful are more likely to work during their time off (70% have done so) or go to work when they're sick for a period of more than one week (one in five have done so).

The takeaway: For many businesses, there's no reason anyone who is sick should come into work. If your business allows for employees to work from home—at least, in emergency situations such as being sick—employees will feel they can handle urgent work while still getting some rest. At the same time, don't create a culture where employees feel they can't stop working even when they're ill. Taking a day off to recuperate can often mean less time lost in the long run.

Keep in mind that your highest performers—those under the most stress—may be more likely than others to need an encouragement to take a break.

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How should you manage vacation time?

Have you considered implementing unlimited vacation days at your business? Ironically, this may be a good way to limit the amount of vacation your employees use. Some 16% of employees in the survey say their companies have unlimited vacation policies. However, most of those employees actually use fewer vacation days than the average employee who has a set amount of vacation days. Employees with unlimited vacation days generally use between one and five days per year, compared to the average 10.7 vacation days of PTO that employees with specified vacation days use.

The takeaway: If you want employees to actually benefit from some downtime, it's probably best not to allow for unlimited vacation. This can actually backfire and create a culture where people don't feel comfortable asking for time off.

Most employees in the survey said their employers handle requests for vacation time fairly. However, there are still some times of year when everyone wants to take time off. Christmas Eve and spring break are when the most conflict over who gets time off occurs. In most businesses, when multiple employees want time off, who gets the time is decided based on seniority.

The takeaway: If you frequently find conflict arising over popular vacation days, be sure to create a system for requesting time off and make sure employees know about it. For example, you can set up a request system that's first come, first served or use a seniority system. It's also a good idea to set deadlines; for example, that requests for time off in June must be made in May. If you find that everyone frequently wants certain times off and your business allows for it, you could consider closing down (such as for the week between Christmas and New Year's) and giving everyone time off at that period.

What's more important than time off?

Paid time off is important to employees; however, wages are more important. The majority (74%) of employees in the survey say they would rather earn more money than receive more time off. Maybe that's because over half of them say the amount of time off they have is adequate.

(Disclosure: TSheets is a client of my company.)

RELATED: Time Out! How Taking a Vacation Will Make You a Better Entrepreneur

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