|
Published on November 19, 2007
BusinessWorld Wealth Manager Section
A leave program that works for both the company and the employees
In an environment where the costs of providing benefits are soaring,
companies are continually looking at value enhancement and innovative ways to
achieve the benefits employees desire while minimizing costs.
Leave programs, which cost the company money, is one area which has been
subject to cost review while still satisfying the needs of employees for time
away from work. From the point of view of the employer, sick leaves are the most
subject to abuse. A significant number of employees have the notion that if not
used, these leaves go to waste. So they think of all sorts of medically-related
excuses to stay away from work. This can create some problems for diligent and
healthy employees who rarely, if ever, take sick leave and come to resent those
who “milk the system.” Faced with such problems and their inevitable impact on
employee morale, satisfaction and productivity, the Paid Time Off program may
just be the solution.
A Paid Time Off (PTO) program combines vacation leaves, sick leaves and other
leaves into one pool. The program is designed to provide associates with greater
flexibility in using time off for whatever reason. For example, 15 days of
vacation leave and 15 days of sick leave can be combined under the PTO program
as 20 days of PTO.
The PTO program encourages employees to maintain their work/life balance by
regularly taking time away from work whether for relaxing, fulfilling family
obligations, pursuing an interest, or caring for their own health needs.
In general, PTO offers:
- Security – the assurance that employees will receive income during time
away from work
- Flexibility – depending on the design of the program, PTO other than
vacation and sick time, can be used to take care of family member/s, saved for
unexpected needs, cashed out, or donated.
But before jumping in to shift your current leave programs to a PTO, consider
the following five steps:
- Determine which leave programs will be included in the PTO and assess
current usage before the program is offered. Will your PTO include allowances
for vacation, sick and emergency leaves or will it include only the first two
or other leaves? Whatever it is you decide, the PTO allowance is best
maximized when it is less than the sum of the all the leave allowances
combined. To come up with a justifiable sum, it is necessary to look at the
number of “reasonable” sick leave days and/or emergency leaves an employee
will take in a year before adding it to the vacation days.
- Figure out how to transition accumulated vacation and sick leaves, if any.
If there are existing vacation and sick leave days in bank, there should be a
plan on what to do with this. You may either decide to continue to bank this
or use this up over time.
- Determine how much time can be accumulated or cashed out, if this will be
allowed at all. If accumulation will be allowed, up to what limit? Will unused
PTO be convertible to cash and if so, what is the allowed number of days for
conversion.
When deciding on whether to allow the conversion of unused PTO to cash, the
rationale for granting the PTO should not be lost, i.e., it should encourage
employees to take the PTO rather than to forego it for the money instead.
Moreover, will the cash outlay versus the time away from work be affordable
for the company?
- Understand the laws affecting the implementation of the program. The
policy should be checked against appropriate labor laws.
- Set the policies for the program clearly. As in all programs, there is no
substitute for a well-laid out, clear-cut policy which will anticipate most,
if not all, questions behind the introduction of the program. Also, in the
interest of transparency, the purpose and objectives of the program must be
clearly articulated for employees to understand.
In the end the success of the program will depend on how employees value
time-off because as in beauty, value is in the eye of the beholder.
 |
Maricar Cabading is the Director and
Consulting Actuary for the Actuarial and Benefits Consulting Group, Watson
Wyatt Philippines. Watson Wyatt Worldwide is the leading global consulting
firm on people and financial issues. For more information on this article,
please contact Maricar Cabading at
maricar.cabading@watsonwyatt.com
or call (63) 841-5135. |
|
