How Leave-Sharing Supports Employees and Builds Workplace Cohesion

Over the past few years, the need for flexible benefits has never been more clear. From a pandemic that overturned many old assumptions about how and where we work to a period of economic uncertainty and volatility today, employees have continually reassessed what they need from employers. This has led HR teams to reconsider how they provide benefits and the type of benefits they offer, recognizing that adapting to employees’ demand for flexibility is critical to maintaining a healthy workforce.

HR teams can provide this flexibility with their existing resources by establishing leave-sharing programs. Leave-sharing allows employees to donate their unused paid time off (PTO) to a shared pool that their colleagues can draw upon in the event of a medical emergency or natural disaster. This provides employees with immediate assistance in times of crisis, creates a sense of organizational solidarity, increases morale and engagement, and demonstrates the company’s commitment to employee well-being.

All these benefits will help HR teams attract and retain employees in a competitive labor market while reducing the balance sheet liabilities that often come with large accruals of unused PTO. At a time when traditional benefits like PTO remain widely underused, and employees are demanding greater flexibility, leave-sharing enables HR teams to support their workforces, improve their workplace culture, and drive productivity.

Leave-Sharing Helps HR Teams Meet Employees’ Evolving Needs

HR teams are responsible for keeping pace with shifting employee concerns and priorities, which requires them to reevaluate conventional wisdom regarding benefits. For example, while PTO is a mainstay of most companies’ benefits programs, less than half of employees utilize all the time they earn. This doesn’t just mean employees leave a lot of hard-earned PTO on the table but also creates significant liabilities on companies’ balance sheets.

Convertible PTO programs solve these problems by allowing employees to put the value of their time off toward other financial priorities: emergency savings, student loan payments, retirement contributions, etc. Employees can also use their PTO to help others, from charitable contributions to leave-sharing. This is particularly important when employees struggle financially more than companies realize – 83% of leaders believe employees are financially healthy, but just 55% of workers agree.

While 70% of employees say they’re interested in customizable benefits, only 27% say their companies offer a high level of flexibility. If this huge disconnect isn’t addressed, it will lead to frustration, disengagement, and even turnover. Fortunately, HR teams can take action immediately by providing programs such as leave-sharing to help employees help each other. Leave-sharing gives employees the support they need to navigate financial crises that result from medical emergencies or natural disasters. And, it leads to a more cohesive and engaged workforce.

How Does Leave-Sharing Work?

PTO Exchange recently published a comprehensive guide to launching a leave-sharing program. The guide delves into how these programs operate, their tax implications, and how HR teams can even implement them in a single day. One of the top benefits of leave-sharing is that it allows HR teams to repurpose existing resources (already-funded PTO) to quickly provide a safety net for employees facing medical emergencies and natural disaster crises.

Employees who need time off must submit a formal written request, and the company will determine how much leave to grant based on their needs. When employees donate their PTO to a leave-sharing pool (instead of a specific colleague), there are no tax implications—they can’t claim contributions as deductions or charitable donations. However, employees’ time from a leave-sharing pool must be reported as taxable wages. Companies can also donate to these pools to ensure enough time available when employees need it.

Employees may deposit some of their PTO that they receive in a given year into a leave-sharing pool, and if the leave-sharing pool ends or closes, the hours that were not used are returned to the employee if they are still employed with the company. This ensures that PTO is used as efficiently as possible – a drastic improvement over the wastefulness of conventional PTO programs, which require employees to “use it or lose it” or accumulate unnecessary, unfunded liabilities. But most importantly, leave-sharing gives employees peace of mind and creates a culture of mutual support and care.

How to Establish a Leave-Sharing Program

While a leave-sharing program can be set up in a single day, HR teams must consider several factors as they develop and implement their programs. First, it’s necessary to outline a budget. This will depend upon several factors: how much time companies anticipate employees will need, how leave-sharing will affect employees’ access to state disability and unemployment benefits, and employees’ level of interest in donating to and using the program.

Next, employers must determine eligibility based on potential or immediate need. Companies must also establish donation procedures with a concrete set of written policies that address donor consent, the logistics of donating time, and how the time will be used. Finally, it’s vital to designate administrators of the leave-sharing program, such as members of HR teams who can serve as employees’ points of contact. Companies can also rely on third parties to administer programs and adjudicate any issues that may arise.

Leave-sharing helps companies address many needs at once: it provides greater flexibility for employees, reduces balance sheet liabilities associated with unused PTO, and facilitates a more cooperative work environment. By establishing a leave-sharing program, HR teams will show employees that the company will support them when needed.

Rob Whalen is the Co-founder and CEO of BNFT is a comprehensive benefits platform for employees to unlock the full flexibility and value of their total rewards while providing HR teams with a low-cost and easy-to-use tool. 

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