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PTO Banks Reduce Unscheduled Absences; Employers See Hurdles

If paid-time-off (PTO) programs that bank together sick days, personal days and vacation days are helping to reduce unscheduled absences, as survey data suggest, why aren’t more employers embracing them?

The 2007 Survey of Traditional Time Off and PTO Program Practices by the Alexander Hamilton Institute, a provider of employment law information, shows that the majority of the over 1,700 organizations that responded still use a traditional-time-off (TTO) program. Specifically:

  • 63 percent of respondents track sick, personal and vacation time in separate banks.
  • 37 percent combine leave time into one PTO bank.

Many said they haven’t switched to a PTO approach because they are:

  • Unionized employers that need to negotiate paid time off.
  • Government employers that need to credit sick time toward retirement benefits.
  • Employers in states with laws requiring payment of accrued vacation time on termination, so keeping vacation, personal and sick leave separate cuts down on the amount of time that needs to be paid out.

While unionized and government employers have greater forces to contend with than just convincing their workforce that switching to a PTO solution is a good idea, PTO advocates say that termination pay and other cost reasons might be shortsighted and that employers should weigh those costs against the potential savings of reducing unscheduled absences.

“One of the incentives for switching from TTO to PTO is to cut down on the number of unscheduled absences, and survey results support the notion that it works,” said Alexander Hamilton Institute President Schuyler T. Jenks.

Jenks recounts that when asked how many workdays their employees missed because of unscheduled absences each year, most PTO and TTO employers almost equally said three to four days. But more PTO than TTO employees missed only one to two days, while more TTO than PTO employees missed five to six days.

Unscheduled Absences

Employers were asked how many workdays their employees missed without prior notice.

Unscheduled Absences

Those with traditional-time-off programs:

Those with paid-time-off programs:

1 to 2 days



3 to 4 days



5 to 6 days



Source: Alexander Hamilton Institute.

When PTO employers were asked if implementing a PTO program had reduced unscheduled absences, more than half (56.5 percent) replied in the affirmative. Of those respondents:

  • 54 percent said unscheduled absences were reduced up to 10 percent.
  • 2.5 percent said unscheduled absences dropped between 11 percent and 20 percent.
  • 3.6 percent said unscheduled absences dropped more than 20 percent.

Of all PTO users, a large majority said that their PTO program either met their expectations (78.4 percent) or exceeded them (14.6 percent).

Stephen Miller is editor/manager of SHRM Online's Compensation & Benefits Focus Area.


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