What is PTO and How is it Different From Vacation?

PTO — paid time off — encompasses vacation time, sick days, etc. PTO can be either advantageous depending on personal preferences, professional rank, and the precise nature of a company’s PTO schema.

Life is hard, and punitive workplace policies make it harder.?

Even those who work from home could benefit from some time off. PTO offers a partial solution. We’ll discuss what PTO is, its advantages and disadvantages, and how it’s different from vacation time and other forms of leave.

What Is PTO?

Traditionally, employee time off has been specifically classified. Employees under such conditions are eligible for:

• Sick days
• Mental health days
• Flex time

PTO combines each of those designations. That means less paperwork. It also erases certain connotations and interrogations that coincide with a specific type of time off: Are you “sick enough” to take a sick day? Who’s to say how “healthy” you ought to be mentally? Do you deserve flex time?

PTO is an innovation in terms of workplace equality.

However, not all companies offer PTO — or not as such. Some classify all time off as PTO. Other companies offer PTO but still offer other, discrete categories of leave, such as:?

• Vacation days
• Extended sick leave
• Maternity/Paternity leave
• Jury duty?
• Holiday pay
• Disability leave
• Sabbatical leave

These are meaningfully distinct from what is usually lumped together as PTO. Some of these aren’t under an employee’s control (long-haul illness, jury duty), while others require extensive planning and cooperation with HR and fellow employees (childcare leave, sabbatical, vacation).?

While many argue that classifying everything as PTO is the way to go, doing so may confuse the nature of an employee’s leave. And that can be obstructive in terms of coverage.

How PTO Works

Employees generally accrue PTO over time. It adds up week by week, hour by hour.?

Some companies offer unlimited PTO as part of their standard benefits package. It may not matter how much an employee works or how long they’ve been with a company: PTO can be a no-strings benefit.

Unlimited PTO

Only about 9 percent of employees are offered unlimited PTO.?

Is this good? Some employers offering an unlimited PTO policy do away with vacation time. Which means a few things. First, employees can’t cash out unused vacation or sick days.

Second, an unlimited PTO system could alter vacation time. The idea behind vacation time is that employees taking a vacation have earned time off that is theirs entirely. It is a motivating force. But when unlimited paid time off is always on the table, vacation time may equal some time spent on the computer or speaking with co-workers about projects.?

Ultimately, choosing between unlimited PTO and those that just offer vacation time is a personal choice. Both can be great options for employees.?

What Is Vacation Time??

Vacation time is a block of time employers allow employees to take off work, traditionally so they could take their families on vacation.?

The length of vacation time varies by employer.?

At some companies, employees are guaranteed vacation days as part of their benefits package. At others, employees earn vacation time the same way they accrue PTO — that is, they accrue it fraction by fraction by working so many hours.?

Taking a vacation offers many benefits, such as:?

• Lowered blood pressure
• Reduced stress, and the resultant improvement in mental health and one’s sense of well-being
• Increased motivation in workers who were getting burned out

But if you aren’t the type to sit on a beach drinking from a coconut, vacation time might mean little. Yet an employer’s vacation time policy still benefits you: Many companies will allow you to turn those unused vacation days into a cash bonus.

What vacation time has over PTO is this bonus-pay element. PTO allows for a wholly contiguous schedule, at a steady pay rate, whereas vacation time can result in a windfall — or a vacation.??

Are You Eligible for Both??

Depending on your company’s policy, you may be eligible for both PTO and vacation time —although, in a sense, unlimited PTO nullifies vacation time.?

Some employers have a use-it-or-lose vacation time policy. California is one of several states that says that employers must, by law, remunerate employees for unused leave.?

In some cases cashed-out vacation or benefit days are subject to Social Security and Medicare taxes; in others they’re considered standard income, tips or gifts.?

In any case, a PTO-plus-vacation time package may offer the fairest coupling of cash-out and non-transferable benefits.?

And although it may be unpleasant to do so, consider this situation in terms of termination. LinkedIn recruiting blogger Tejal Wagadia informs readers that severance packages can, in some cases, be negotiated: “When you are being let go, and they offer you a severance, don’t just sign it immediately. Legally you get time to review what you are signing.” That includes unused PTO and vacation hours.?

How to Accrue Hours for Time Off?

On average, employees earn 10 to 14 days of vacation time per year of employment.?

Depending on your employer — and whether you’re salaried or hourly — you may accrue time off based on the number of hours you work. This varies with the employer.

Once you know your employer’s required ratio of time worked to time off accrued, you can calculate how many hours you’d need to work to get a certain period off.

Say you earn 0.5 hours of time off per eight-hour workday and you want to take 10 work days off for vacation — that is, 80 work hours. To figure out how long you’d need to work to earn that amount of time off, perform the operation that follows:?

• Five eight-hour workdays per week multiplied by 0.5 hours of time off accrued per each workday equals 2.5 hours of leave earned each week.
• Divide your 80 desired off hours by 2.5.
• The result: You’ll need to work for 32 weeks (without absences) to earn 80 hours —10 days — of vacation time.

Is one method of accrual better? That’s determined on an individual basis. There are benefits to each protocol, just as there are advantages to both salaried and hourly work.

Deciding if PTO or Vacation is Better for You

Some get what they want out of PTO, others out of vacation time. In any case, the goal of time off should be attaining your best possible work-life balance. Our lives don’t all look the same, so it is up to you to work with what you’ve got to get what you know you need.??

Key Takeaways:?

• PTO is an employee leave innovation that collects under one heading the previously balkanized categories of sick days, personal days, and other short-term forms of employee leave.?
• Some companies have conventionalized PTO thoroughly enough that they’ve eliminated vacation time. There are benefits and disadvantages to this.?
• In any case, time off has been shown to improve worker health and productivity. Employers are still figuring out how to balance traditional benefits such as vacation time with newer, increasingly in-demand innovations such as PTO, unlimited PTO, and “mental health days.”

(Reporting by NPD)