Paid Holidays or Paid Time Off

I had a great Memorial Day yesterday. We celebrated my daughter's birthday in Baton Rouge. It was great to see friends and family. It was only possible because so many of them had the day off. It made me think about paid holidays as opposed to Paid Time Off (PTO) policies.

The Request for Paid Holidays:

I once worked for a company that did not have designated Paid Holidays. The company provided PTO to compensate for the lack of holidays. Rather than provide 10 days of PTO and 7 holidays, the company provided 17 days of PTO, which could be used for any reason the employee wanted.

We had one employee who periodically campaigned for paid holidays. I tried to explain to her that her PTO could be used to make any holiday a paid holiday. She could not grasp the distinction. To her PTO was equivalent to vacation time, and holidays were distinct from vacation time.

I tried to explain to this employee that establishing set holidays reduced flexibility. For example, I have never taken off for Memorial Day unless my employer was closed. Even if most of the office took off the day for Memorial Day, I would go into work. It was more valuable for me to work (with fewer interruptions I might add) on Memorial Day and save the PTO day. The employee still felt it was better to have holidays, citing the fact that she felt guilty taking off of work. She felt that by having holidays she would not have to feel guilty, since everyone would be off of work.

Eventually, we put the matter up for a vote. The vote was between (1) reducing the amount of PTO and provide an equivalent number of paid holidays; or (2) maintaining the PTO schedule (no change). The PTO (no change) option won and the matter was closed. The PTO option won because most employees understood that the flexibility was more valuable than reductions in the feelings of guilt that accompanied taking a off for a day.

The Guilt Aspect:

I would argue that it benefits the company to encourage employees to take time off so long as it does not negatively impact operations. Time off helps employees remain productive at higher levels and reduces burnout. This mentality combined with a flexible PTO schedule enhances the paid time off benefit offering. Consider how an employee would feel when his or her employer wants the employee to have down time, encourages it even, and further does not dictate on which days the employee must use this time. I would argue that the employee will find more value in this arrangement than in one where the employee was provided set holidays but was discouraged from taking time off on other occasions.

The Diversity Problem:

Further, as companies began to realize the value of diversity, the religious holiday question becomes pertinent. I recently read an article on the Society for Human Resource Management (SHRM) website by Rebecca Hastings that provided the example of the Burlington, Vermont school board, which added a Muslim and Jewish holy day to its school calendar, only to have requests from representatives of the Hindu community to add Diwali to the list of holidays recognized by the school district.

(http://www.shrm.org/hrdisciplines/employeerelations/articles/Pages/HolidayPolicyInclusive.aspx)

Why Holidays are Better:

All of that noted, I would add that the liability of utilizing PTO as opposed to Paid Holidays is that, depending on the state in which you operate, the PTO may be considered due at the time of termination, whereas Paid Holidays are only due if the employee works for the employer at the time of the Holiday. Segregating holiday and sick leave from a PTO policy can reduce the liability due at termination.

Additionally, to help alleviate the religious holiday concern, employers may designate "floating holidays" which can be used by the employee at his or her discretion.


My Conclusion:

Employers are well served in creating as many free or low cost benefits to provide employees. Job sharing, telecommuting, and flexible start/end times are all examples of benefits that mean a lot to employees and don't cost employers much, if anything. Similarly, PTO plans provide more flexibility for employees and thus allow them to utilize the time in the way they see fit. There is no additional cost for providing paid time off in this method and the added benefit is priceless.

The problem that companies must strive to overcome is an environment which discourages the use of PTO. A culture that encourages employees to work hard and put in extra work when needed can be combined with a culture that encourages employees to recharge, take time off, honor their families and their commitments, and observe their religious holidays in a manner that is consistent with their religious beliefs. By establishing such a culture, employers will find that they have employees who want to produce (if only due to peer pressure) and are better able to produce (as they are less likely to suffer from burnout).

In the end, each company should make the decision that best fits its culture, whether that means set holidays, flexible holidays, PTO, vacation time, or no paid holidays. When making the decision, employers should consider their workforce and the needs of their employees. There is no right or wrong answer, but by considering the benefits and detriments of each method of providing time off, and further, the specific terms of the policy, employers can enhance their benefit offering at little or no cost.


Works Cited:

http://www.shrm.org/hrdisciplines/employeerelations/articles/Pages/HolidayPolicyInclusive.aspx