With everything going on around the world, one area that may have been forgotten during the pandemic is vacation and PTO policies. As stay at home orders extended to months and not weeks, many people cancelled their spring and summer vacation plans. Either because they were laid off or furloughed, or because of the uncertainty of travel during these months. As an executive or human resources leader, you will need to determine your PTO policies post Covid-19.
Cancellation of vacations could mean that more people than usual will be looking to take vacation time at the end of the year. This is especially true at organizations that have a use it or lose it PTO policy. Options that can be considered include allowing people to carry over vacation time, paying people for vacation time that went unused this year, mandating vacation time at set intervals to ensure there is adequate coverage, or if possible, closing operations for a week.
Organizations have to consider their cash flow position. If the pandemic has impacted revenue negatively, there may be a need to conserve cash. According to SHRM, “A substantial number of firms—42 percent—have made or are planning changes to PTO, vacation and sick-day programs to address the situation, according to a survey by consulting firm Willis Towers Watson. To minimize employees’ lost days, 24 percent of companies are planning to increase carryover limits. Meanwhile, a smaller share—16 percent—are requiring employees to take vacation time to reduce the build-up, and another 22 percent are planning or considering the same policy.”
According to Jackie Reinberg, North America consulting leader, absence, disability management and life at WTW, companies need to carefully consider changes to their PTO policy. “It (time off) is the most emotional benefit we have. It is the most valued. People don’t have a lot of control right now, and they are trying to control what they can.”
Executives and HR Leadership should make sure employees understand the PTO policy. Whether by email or in-person, create a transparent, open conversation so people can share if they are concerned about taking vacation time right now. Leadership can also lead by example by taking vacation themselves so employees feel comfortable taking it too. Any new policies should be clearly outlined for employees. For example, everyone must take a week off in either August or September.
Organizations that have unlimited vacation time may not have the same issue as companies with fixed vacation offerings. Of course unlimited vacation time means that there is nothing to carry forward, or if an employee is let go, there is no payout of unused vacation time as there is no unused vacation time. However in a situation like we’ve experienced this year, this PTO policy is causing less anxiety or confusion for employees and organizations alike.
While this year has been extraordinary, some of the policies coming out of the forced changes may be adopted for the long-term. As new options are offered, consider adding them to the employee handbook. One reason to formalize new options is in the event of a lawsuit. For example, HR leaders should be familiar with the Families First Coronavirus Response Act if an employee’s request for time off results from COVID-19. It can be confusing to understand how to handle PTO right now. If you are an executive or HR leader and have questions or concerns about creating PTO policies that support your culture, send us a note.