The Hidden Cost of Unused PTO: Why You Should Encourage Employees to Take Time Off

A troubling new study reveals that the majority of employees are not using all of their paid time off (PTO), costing them and their employers.

PTO Going to Waste

According to a report by FinTech company Sorbet, 62% of employees with PTO did not use all of their vacation time in 2023, letting a third of it go to waste. This figure has nearly doubled in just four years. On average, U.S. employees held onto nearly $3,000 worth of unused PTO last year. With 178 million employees nationwide, that translates to over $312 billion in accrued but unused PTO.

Younger and remote employees proved less likely than their counterparts to take vacation days. The study found various factors driving these trends, including difficulties disconnecting and financial pressures.

The True Cost

Employees lose out on extra compensation rightfully earned, as employers waste huge sums on generous PTO policies that employees don’t fully utilize.

There are other costs too. Numerous studies have linked unused vacation time to increased stress, burnout risk, lower productivity, and higher turnover rates. And when employees do take time off, many report struggling to disconnect, checking emails and taking calls. Constant connectivity defeats the purpose of PTO and prevents employees from recharging.

Encouraging Utilization

Employers should take steps to encourage better PTO utilization rates. Firstly, they can foster a culture that promotes disconnecting from work and values rest and rejuvenation. They can lead by example with senior leadership.

Other options include adding extra incentives, allowing employees to cash out unused time, enforcing device-free vacations, and reviewing workload distribution to identify roadblocks to taking time off. Reminding staff that PTO represents earned benefits, not bonuses, can also help overcome reluctance.

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Copyright © 2024 Smarts Publishing. This is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice.