Is 4 Weeks of Paid Time Off (PTO) Good?

As an employer, you want to do everything you can to take care of your employees—and that includes making sure they have ample PTO to cover vacation time, personal days, or any other time they may need to take off.
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But the question is—how much paid time off is enough? Is your PTO policy more or less competitive than other companies? And if you’re offering your employees four weeks PTO, is that good?

Defining PTO

Before we jump into how much PTO is considered competitive, let’s quickly cover what, exactly, is considered PTO.

PTO is an umbrella term to cover any paid time off you offer your employees. That includes everything from:

• Sick time. If your employees need to take a day off because they’re sick or need a mental health day, that would fall under PTO.
• Vacation time/personal time. Offering your employees paid hours for things like vacations or to attend to personal issues is also considered PTO.
• Paid holidays. If you pay your employees on federal holidays—but don’t require them to work on those holidays—that’s also considered PTO.
• Paid leave. Any type of paid leave (for example, sick leave or maternity leave) is also considered PTO. (If an employee takes an unpaid leave, that wouldn’t fall under the PTO hours umbrella.)

There are a number of different ways to structure a corporate PTO policy, including:

• Vacation time, sick time, and personal time. Many companies offer a certain number of PTO days for vacation, sick leave, and personal days (which is typically accrued based on how many hours the employee works in a pay period and whether they’re full time or part time). While the number of days vary from company to company, employees usually get somewhere in the ballpark of 10 days of vacation time, five days of sick leave, and two personal days. In addition, the company may also offer a number of paid holidays (like Christmas or New Year’s Day).
• X number of PTO days. Instead of breaking down PTO into sick days, personal days, vacation days, and paid holidays, some companies give their employees a blanket number of PTO days per year that they can use as they please—so, for example, an employee might opt not to take any sick days, but then use all their PTO days to take a three-week vacation.
• Unlimited PTO. Some companies, particularly in the tech sector, offer unlimited PTO—where employees can take unlimited vacation or sick days. While this concept may sound appealing to employees in theory, in practice, it often doesn’t work out as they expected (for example, some companies frown on taking too much time off—and employees don’t get paid for unused vacation at the end of the year like they might with other PTO structures).
• Increasing PTO. Some companies also opt to give employees more PTO the longer they’re with the company. So, for example, new hires might get 10 days of PTO their first year—but then get an extra day the next year, an extra week after five years of employment, and an extra two weeks of vacation after 10 years of service with the organization.
  

Why a competitive PTO plan is important

Now that you know what PTO is, let’s cover why having a competitive PTO plan is so important for your business.

A generous PTO policy is a good move for your business for a few reasons, including:

• It can help attract and retain top talent. When you offer a competitive PTO package, it can help attract new employees to your company—and help keep them there. In fact, 63% percent of employees say they would turn down a job offer that did not include PTO.
• Offering plenty of paid time off shows that you’re invested in your employee’s health, happiness, and success—which can go a long way in supporting your talent acquisition and retention efforts.
• It encourages work life balance. If your employees work around the clock and don’t get any days of vacation, sick time, or other PTO days, they’re going to burn out—and they’re not going to do their best work. A generous PTO policy helps encourage work life balance with your employees and can keep burnout at bay (which is especially important now, as we navigate the COVID-19 pandemic).
• It can make for a better work environment. When employees are offered things like benefits, paid vacation, and plenty of PTO, they’re going to be more invested in their jobs and the company, which can make for an overall better (and more productive) work environment.
  

Is 4 weeks of PTO good?

Clearly, a competitive PTO plan is a good move for your business (and for your employees!). But what, exactly, counts as “competitive?” Is four weeks a good amount of PTO to offer your employees?

The answer is—it depends.

According to a 2019 article from the balance, on average, US employers offer 10 paid holidays, two weeks paid vacation (or, in other words, an additional 10 days), two personal days, and eight days of sick leave. That’s 30 days total—which, in terms of business days, would be six weeks.

From that perspective, offering four weeks of PTO wouldn’t be competitive.

But there are other factors at play. For example, if your team is mostly employees who work less than 20 hours during the work week, they’d typically be entitled to a lower amount of time off or amount of vacation days—and if you offered them four weeks of PTO, it would be considered extremely competitive.

A rule of thumb

Ultimately, you’ll have to make the decision on what the right PTO policy is for your company and your team. But as a rule of thumb, the more generous you can be, the better. At the minimum, you should aim to write a PTO policy into your employee handbook that’s in line with other major employers in your area—and if you can, aim higher than that. Again, the more generous you are with your PTO, the more you’ll be able to attract and retain top talent—and the better off your business will be as a result.