3. The PTO bank policy

This is the forth post in a series about 10 things to know when creating a PTO policy.

As mentioned several times in a prior posts, PTO policies generally fall into 3 broad categories:

• Unlimited PTO Policies
• Traditional PTO Policies
• PTO Bank Policies

This post focuses on the third option; the PTO Bank Policy

A “PTO bank” policy is to have a “bank” of paid time off that can be used for many different reasons like vacation, sick, holiday, or personal leave. This type of PTO policy is also known as a “PTO Plan” type policy. With this policy, staff taking a sick day draw from the same paid time off allocation as their paid vacation time off.

Allocating PTO in this way reduces the burden of justifying the reason behind taking time off as all time off comes from the same allocation. So, be it for a doctor’s appointment, looking after a sick loved one, or an afternoon off because the surf is pumping, the reason becomes less important if the time off is coming from the one place.

This type of PTO policy can also have the effect of reducing the total number of sick days taken, as it potentially reduces the feeling among staff that separate sick day balances have been earned and are therefore “owed”.

Some research suggests that while the administrative burden of implementing a PTO Bank policy is lower than that of a traditional PTO policy, staff members may have a harder time budgeting their PTO balances to leave enough time remaining to take in case they fall ill, forcing them to come into work while sick, or to take blocks of unpaid time off¹.

If you do implement this type of PTO policy, you will probably need an additional category of leave types that are separate from the PTO bank leave types.

This category contains unforeseen or “one-off” entitlements such as bereavement leave, and jury duty. Parental leave might also fall into this second separate category of time off. Depending on how progressive you feel, you can choose not to add explicit maximums for the amount of time staff can take for these entitlements.

This wraps up the posts about the 3 broad categories of PTO policies. Hopefully by now, you’ve got an idea of which type of policy is going to be best for your business.

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