How COVID-19 Changed Vacations and PTO

By Gregg Makuch - Mar 24, 2021 9:10:33 AM - 6 MINS READ

The coronavirus pandemic has led to employees banking a massive surplus of unused vacation time. If employees can’t use their PTO to visit a sandy beach, ski resort, or go to Disney World, they don’t want to use it at all — but it’s costing their employers big time.

92-percent-covid-changed-vacation-plans-PTO-exchangeSince lockdown orders went into effect, employers have been struggling with high PTO balances as employees forego vacation or let their vacation days expire. A whopping 92% of employees cancelled, postponed or avoided booking a trip due to the pandemic, according to a survey by Chicago-based IPX1031. Further, this trend looks like it continued during the winter holidays - 61% of employees planned on working, according to a survey of more than 1,000 full-time employees by business software firm Skynova.

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It’s no surprise that the pandemic has impacted previously planned trips. According to respondents, 40% outright cancelled a vacation and 23% postponed their vacation.

Along with making changes to when they planned to travel, Americans have also made changes to how they will get to their destinations. Overall, 64% said they did not feel safe flying on a commercial airplane during 2020 and 1/3 said they will wait until a vaccine is available to fly again, which is thankfully happening right now.

Even before the pandemic, employees had a tough time spending their hard-earned time off. For 2018 (the latest year data are available), more than half (55%) of American workers report not using all their days off - totaling 768 million unused vacation days for that year, up +9% vs. 2017, according to a survey commissioned by the US Travel Association.

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Shockingly, 236 million of those days were forfeited completely - equating to $65.5 billion in lost benefits.

How does PTO get forfeited?

Virtually every organization has a PTO / vacation accrual limit - meaning a number of earned, accrued PTO hours that employees cannot exceed. This is reasonable - you can't let accruals grow to infinity. So when an employee hits this limit and doesn't take vacation and reduce the PTO balance, then future earned PTO hours are not booked and the value of this compensation is retained by the organization. Essentially, employees are "giving back" to the company a piece of their hard-earned compensation.

COVID Changes the Nature of Vacation

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These trends look to accelerate due to COVID-19.

According to the IPX1031 survey, over half (56%) of employees will have unused PTO balances entering 2021, creating a PTO Time Bomb. If current trends continue, companies could see an increase of about $60B in accrued PTO liability for all of 2020.

 

Even among employees who did take vacation, stressors increased. Fully two-thirds of employees regret taking the time when they did, for a variety of reasons. 27% report regret that the time off caused increased stress, and 20% reported that they were not able to relax compared with normal vacations.

covid-vacation-stress-pto-exchangeNormalizing time off will help employees feel more comfortable using their balances: 28% said they didn’t use PTO last year because they’re afraid of getting fired or hurting their chances for a promotion, according to the Skynova study. As a result of these fears, many employees take what says Jackie Reinberg (National practice leader of absence management at Willis Towers Watson) calls “pretend time off” — working while on vacation. It’s a problem that stems from company culture.

Reinforce Company Culture with More PTO Options

Companies are facing a dilemma about how to address employees' reluctance to take time off.

PTO Exchange has developed a flexible benefits platform that allows employees to convert unused vacation into personal needs and priorities – retirement accounts, student loan payments, emergency cash-out, donations, leave-sharing, charitable causes and more. These options can both help reduce employee stressors and reduce the growing PTO liability growing on employer balance sheets.

This is a notable time with many companies making bold adjustments to their PTO strategy and trying to find new ways to help their employee community bridge the changes that are affecting their lives.

If PTO donations, leave-sharing, cash-out or one of our other service plans are something that can help your organization navigate through this situation, we are here to help.

Learn more about the PTO Time Bomb and what your organization can do to get ahead of this freight train of surplus PTO.

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Additional Resources:

Gregg Makuch

Gregg is CMO at PTO Exchange. Passionate about solving customer problems, cycling, caffè, wine, and all things Italian.

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