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By: Ber Leary on September 11th, 2020

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Paid Leave Policies: How Does Your Company Compare?

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Your paid leave policy is a powerful tool for recruitment and retention. If you build a paid leave policy that helps employees to manage their work-life balance, it will lead to increased loyalty, better engagement and low attrition rates.

On the other hand, an unpopular paid leave policy can result in your best people looking for opportunities at other employers.

So, how much paid leave should you offer? What types of leave do employees expect? And how can you leverage your paid leave policy as a retention tool?

In collaboration with our partners at NFP, we’ve been asking employers how they approach their paid leave policies. After a massive survey of 200 employers in 16 states, plus the D.C. metro area, we’ve got a clear picture of leave policies across the country. How does your company stack up?

How much paid time off do employees expect?

New employees typically start out with around two weeks of paid time off, or PTO, per year. Our survey data shows that:

  • 48% of employees in the first year of their contract receive 11-15 days of PTO
  • 32% receive up to 10 days of PTO
  • 12% get an allowance of 16-20 days

Employees usually expect to see an increased PTO allowance after their first year. Eighty-eight percent of companies say that they use PTO to reward tenure and encourage loyalty.

What happens to PTO balances?

There are two common ways that employees earn their PTO balance:

  • Accrual: Employees accrue PTO for each hour worked, as is the case with 81% of employers.
  • Lump-sum: Employees are awarded a block of PTO at regular intervals, such as the anniversary of their employment start date. This is the case in 16% of employers.

In both instances, the amount of available PTO might not match the employee’s needs. Sometimes they don’t have enough, other times they have too much.

Employers handle such scenarios in different ways. When someone has a PTO surplus:

  • 74% of employers allow employees to carry forward unused PTO into the next working year.
  • Only a certain amount of unused PTO can be carried over. Around a third of employers exercise a carry-forward cap of 40 hours.
  • 14% of employees have to forfeit unused PTO if they have a balance at the end of the working year.
  • 3% of employers pay unused PTO as cash, while a further 3% offer a mix of cash payouts and carry forward.
  • 18% of companies allow staff to donate unused PTO to a colleague.

Sometimes, an employee won’t have enough PTO for their immediate needs. In these circumstances:

  • 60% of employers will allow staff to go into a negative PTO balance. Most companies impose a negative balance limit of 40 hours.
  • 3% of employees are allowed to purchase additional PTO.
What’s the typical policy on sick leave?

Employers are divided on the issue of sick leave. Some companies we surveyed offer paid sick days that can be used in case of illness. Other employers ask their staff to cover any absences with their PTO balance, whether they’re ill or on vacation.

The exact numbers break down like this:

  • 50% of employers provide separate vacation leave and sick leave allowances
  • 45% of employees use their PTO for both
  • 3% offer unlimited time off

The standard sick leave allowance for new employees is six to ten days. Just under half of companies provide this amount, with a third of companies offering under five days.
Sick leave really means sick leave – these days must be used for medical purposes, and proof may be required, such as a doctor’s letter.

What happens to unused sick leave? According to our survey:

  • 55% of employees can carry over some unused sick days
  • 25% of employees lose any unused sick days
What about personal days?

Personal days are hugely popular among employees. You don’t have to book them in advance like vacation days, but you don’t need to produce a doctor’s letter like sick days.

  • 28% of employers offer personal days
  •  72% of those offer a max of 3 personal days per year

Personal days can be difficult to implement, as they can cause unexpected disruption to daily resource plans. But they undoubtedly help manage the work-life balance, which is a major issue in staff recruitment and retention.

Other common types of leave

Employers have to support their staff through all kinds of life situations, some of which require specific leave.

Our survey revealed some common trends among employers nationwide, such as:

Parental leave
Forty-five percent of employers offer paid parental leave for the birth or adoption of a new child. Of those companies, 74% of those employers offer equal amounts of paid leave to both parents.

Bereavement leave
Nine-tenths of employers offer bereavement leave for the loss of a close family member. A further twenty percent offer bereavement leave for a family friend. A small number of employers provide pet bereavement leave.

Volunteering leave
Only 16% of employers allow their staff to take time off for volunteering. Demand is low, however, as the majority of such employers say that fewer than one-quarter of employees use the available allowance.

Sabbaticals
Six percent of employers offer sabbatical leave, with only half of that number offering paid sabbaticals. This kind of leave is usually only available to tenured employees. 

Conclusions

How generous should you be with your paid leave policy?

Ultimately, it depends on your employees’ expectations. If they feel that the current policy is fair, they’ll be happy to work for you. But if they think they can get a more generous paid leave package elsewhere, they might consider moving on.

The figures above should give you an idea of the current state of play across the country. To ensure your policy is in the right place, you should talk to your staff and find out if they’re satisfied with what’s currently on offer.