Traditionally, churches had offered separate paid time off benefits to employees, such as paid vacation, sick leave and personal days. However, in the past decade, many churches have moved to a more flexible Paid Time Off or “PTO” benefit that incorporates all policies into one all-inclusive PTO plan. The debate as to whether churches benefit from offering PTO versus separate vacation, sick and personal leave plans is constantly being evaluated. In an effort to assist churches in making an informed decision in this regard, below are some advantages and disadvantages of combining the separate paid time off benefits into a single Paid Time-Off (PTO) plan.

Advantages of a Paid Time Off Policy (PTO):

• Employees are not incentivized to lie about being sick or having a doctor’s appointment in order to use all of their annual sick days, resulting in more transparency in the employee/employer relationship.
• Research consistently illustrates that incorporating a PTO policy will result in employees taking more vacation time and less sick days. This benefits churches in two ways; first, they receive more notice about scheduled vacations, affording more time to plan for adequate coverage. Second, most mental health professionals agree that employees return to work more refreshed and productive following vacation leave. The same results do not hold true for employees utilizing sick days.
• Employees tend to value the flexibility that PTO provides.

Churches only have to track PTO hours, as opposed to separately tracking hours for vacation, sick and personal days.

Disadvantages of a Paid Time Off Policy (PTO):

• Employees are more likely to consume all of their PTO, whereas they may not have expended all of their sick or personal days in the past. 
• Employees tend to save all of their PTO time for vacations and come to work when they are sick, at times causing illness among other employees.
• In some states, all earned PTO must be paid out upon separation of employment. Should the church enforce separate sick leave and vacation policies, state law often mandates that unused, accrued vacation time be paid out upon separation of employment, sparing the church from compensating the departing employee for his/her unused, accrued sick leave.

Clergy Financial Resources serves as a resource for clients to help analyze the complexity of clergy tax law, church payroll & HR issues. Our professionals are committed to helping clients stay informed about tax news, developments and trends in various specialty areas.

This article is intended to provide readers with guidance in tax matters. The article does not constitute, and should not be treated as professional advice regarding the use of any particular tax technique. Every effort has been made to assure the accuracy of the information. Clergy Financial Resources and the author do not assume responsibility for any individual’s reliance upon the information provided in the article. Readers should independently verify all information before applying it to a particular fact situation, and should independently determine the impact of any particular tax planning technique. If you are seeking legal advice, you are encouraged to consult an attorney.

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