Is Your Company's Unused PTO Liability Putting You at Risk?
Nearly half of employees don’t use all their paid time off (PTO). This trend signals problems for both workers and employers. Here’s what HR needs to know— and do—about unused vacation time.
Employees Aren’t Using All Their PTO
A recent survey found that 48% of employees don’t expect to use all their earned vacation time this year, and 36% haven’t taken any vacation days in the past 12 months. The top barriers include high vacation costs, heavy workloads, no available colleagues to cover work, manager discouragement, and an always-on culture. Experts say this indicates many employees face obstacles to taking time off. Establishing a culture that values recharging can benefit both workers and companies. Another survey found 45% of employees report burnout, which vacation time can help alleviate.
Risks of Unused PTO
When employees don’t take vacation days, risks emerge for both them and their employers:
For Employees:
- Increased Burnout: Vacation deprivation worsens stress and exhaustion, increasing the risk of health issues.
- Work-Life Imbalance: Without breaks, work overtakes personal life, reducing time for family, hobbies, and relaxation.
For Employers:
- Retention and Engagement Issues: Employees skipping vacations are more prone to burnout and quitting. Replacing workers incurs costs and disrupts productivity.
- Productivity Declines: Well-rested employees are more focused, creative, and collaborative. Using vacation time enhances performance.
- Financial Liabilities: Unused PTO accrues on balance sheets as a monetary obligation, similar to debt or pension liabilities. U.S. employers’ total unused vacation liability is over $1 trillion, approximately $7,600 per full-time employee.
Current PTO Use Trends
Research shows employers provide an average of 20 total PTO days per year for longer-tenured staff. However, 75% of workers didn’t use all their PTO days, 60% found it difficult to detach from work during vacation, and 86% still checked work emails or took phone calls. An Empower survey also showed 50% check email on vacation, and 35% feel anxious about requesting time off.
Strategies to Overcome PTO Utilization Barriers
Employers play a vital role in enabling staff to use earned vacation time. Best practices include:
Rethinking Benefits
- Communicate Expectations: Clearly explain PTO policies and protocols.
- Encourage Managers to Take Vacation: Urge managers to take PTO to model behavior.
- Remind Employees About Balances: Send notifications about unused days.
- Educate on Benefits of Breaks: Share how PTO usage reduces turnover and increases productivity.
- Remove Organizational Barriers: Identify and fix obstacles to PTO use.
- Encourage Planning: Counsel staff to submit vacation requests in advance.
- Encourage Disconnecting: Set expectations for workers to refrain from work contact during vacations.
Ultimately, leadership must catalyze a culture shift where self-care and recharging are valued. HR can drive this transformation through policy communication, data transparency, top-down encouragement, and removing obstacles to vacations. With buy-in, companies can achieve a well-rested, engaged workforce while controlling vacation liability risks.
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