Paid time off is paid time off, right? Wrong. There are a few key distinctions between paid time off (PTO) and vacation time that not only determine how your employees use them, but also how they must be handled by your practice. It is important to understand the difference when creating your internal policies.
What is Paid Time Off?
PTO is defined as any time an employee is being paid while away from work and not working. Basically, PTO is paid leave. While taking a vacation may be part of your PTO, it is not all that it has to be used for. PTO can be used for pregnancy leave, disability leave, jury duty, holiday pay or even sick leave.
Typically, companies will offer a certain number of PTO days per year for eligible employees. Employees will have one bank that all their days off are taken out of.
What is Vacation Time?
Vacation time is paid time off that can be taken without condition.
It is important to note that this does not mean employees can use vacation time whenever they want; your practice still gets to determine how much advance notice is required. What it does mean is that employees do not need to meet any legal requirements to take the time, as they do for other legally-protected leave. Basically, an employee can let you know they are taking their vacation time without having to provide you with a valid reason.
Why Does the Distinction Matter?
More and more companies are trying to strike a better work-life balance. That concept includes the idea of mental health days. Many are coming to terms with the idea that simply having a body at a desk is not in fact better than having am employee whose head is also in the game.
Offering vacation days allows your employees to take the occasional mental health day. Instead of having to lie about being sick or car trouble, you give your employee the control to just admit they need a day. This leads to a more honest work environment.