Employee PTO Policy Sample

Table of Contents

    A Paid time off (PTO) policy includes a set of guidelines for employees’ particular time, paid sick days, and holiday time during a time. There aren’t any civil laws that allow employers to give PTO. Still, employers give PTO leave to help employees attain a healthy work-life balance. Likewise, employees don’t have to seek their employer’s authorization to take time off. 

    Types of PTO policies

    You must consider your company’s requirements and culture before deciding on a policy type; listed below are the types:

    • Traditional time off policies – Traditional PTO policies provide employees with a defined amount of paid time off for certain categories, such as personal days, sick days, and vacation.
    • PTO banks – Like traditional time off policies, PTO banks offer employees a predetermined set of paid time off for the year. This policy groups days off into one “bank,” and employees can take time off for any purpose. There is no delineation between sick, vacation, or personal days.
    • Unlimited PTO – Unlimited PTO is a developing employer trend. It permits employees to take time off as needed, with no predefined number of days granted. Companies that use this strategy do not require employees to log or disclose their days off to HR or other leadership.
    1. PTO donations – Companies that do not offer unlimited paid time off to their employees can consider including a PTO donation plan as an “add-on”. This plan allows employees to support their co-employees and team members by donating leave to others in emergencies.

    Best Practices to develop a successful PTO accrual policy

    A solid PTO policy benefits the employees, the employer, and the entire establishment. Here are some best practices for creating a successful PTO policy.

    1. Establish a flexible PTO policy – Employees tend to remain longer at employment, which provides more pay flexibility and employee benefits, so make sure your PTO policy fulfills their expectations.
    2. Create a clear and understood PTO policy – The paid time off policy should be properly stated, detailed, and accessible to all employees at your organization. Ensure they understand how to request or notify management about PTO days they intend to take.
    3. Develop a PTO policy based on company culture – To know what policy type will work best, you must first understand your business, personnel, and company or industry culture. You can also conduct an anonymous survey of employees to learn what they’d like to see in a PTO policy.
    4. Provide incentives or bonuses as part of your PTO policy – Consider allowing unused PTO to roll over instead of having a “lose it or use it” policy. Employees with flexible PTO benefits can transfer the value of any unused PTO to other requirements and priorities.

    PTO Policy Sample


    Purpose and Scope

    Employees profit from PTO because it allows them to maintain a healthy balance between their personal and work lives. Having a variety of PTOs shows your employees that you understand their circumstances and particular time off requirements. Employees are more likely to take holiday when they have sufficient PTO days in their account.

    PTO Accrual and Calculation

    When the employer sets an accrual rate, they determine the count of PTO for employees in a given year. PTO accrual rates are generally calculated – 

    • Every two weeks
    • Daily
    • Hours worked
    • Bimonthly
    • Yearly
    • Once a month

    Steps to calculate accrued PTO –

    1. Calculate the number of hours you accrue yearly – For example if your employer provides you with 15 days of paid time off over the year, you should multiply 15 by 8 (the number of working hours in a day). This is one way to calculate the overall number of hours you worked during the year.
    2. Calculate the number of hours worked throughout each pay period – If you are paid monthly, divide the total number of hours you accrue each year by the number of months in the year (12). If you get paid every two weeks, divide the hours by 24.

    For example, if you get 15 days off annually, you’ll accumulate 120 hours of PTO yearly:

    15 days x 8 hours worked per day = 120 hours

    If you are paid two times a month, divide 120 by 24, which is five, implying that you accumulate five hours of PTO per pay period:

    120 (hours) / 24 (pay periods) = 5 hours of PTO per pay period

    Determine the amount of time you’ve accrued – Multiply the accrual time you have in each pay period by the amount of time you worked.

    Requesting and Approving PTO

    You may be concerned that your request could be denied or your manager would be annoyed. However, with proper planning, your request is likely to be accepted. 

    Follow the tips listed below for assured PTO approval – 

    • Be smart enough when choosing your PTO time.
    • Be clear about your demands.
    • Make sure your work is up to date.
    • Consider the schedules of your team. 
    • Do not use commanding words.
    • Place your request in writing.

    Procedure for managers to approve or deny PTO requests  

    Managers should follow the steps listed below the Leave request procedure when determining approval or denial of the requests – 

    1. Determine how far ahead of time and how frequently time off should be requested.
    2. Make it clear when staff is not permitted to request time off.
    3. Design a method for dealing with overlapping requests, such as on a first-come, first-served basis or prior requests based on reason.
    4. Maintain a standardized system for employees to submit time-off requests such as app, email, or online form.
    5. Invest in a human resource management system that helps in tracking requests. Here, employees can request, and managers can approve on a time basis. This ensures the creation of an approval chain and automates the entire process. 

    PTO Usage and Restrictions

    There are times when work is demanding, and deadlines are really strict. People won’t be permitted to take time off during those times. Before using PTO, employees should consider the following questions –

    • How would overtime affect PTO?
    • What are the maternity, paternity, sick, compassionate, and bereavement leave policies?
    • What number of days can be carried forward to the following year?
    • What number of days may be accumulated?
    • Can you take PTO if your co-employees are on paid leave simultaneously?
    • Are you allowed to book more days than you have allotted?
    • How long in advance should PTO requests be submitted?

    Permissible reasons for taking PTO 

    • Employees should be permitted to take a family vacation or a break from work if they are ill or injured.
    • The most common paid holidays you can provide your employees are Easter, New Year’s Day, Christmas Day, and Labour Day.
    • For personal reasons, such as attending a doctor’s visit or a child’s kindergarten event
    • When a family member, relative, or friend dies, time off from work is provided.
    • Maternity or paternity leave; 
    • Time off for voting or ongoing elections and 
    • Time off for employees for engaging in military activity.

    PTO Payouts and Carryovers

    Unless you give unlimited PTO, you must decide whether employees can carry over PTO at the end of the time. Some factors that can impact how important PTO you can carry over are as follows –

    1. The laws of your state – As previously stated, certain states have regulations governing PTO carryover.
    2. Your company’s leave policy – Some employers permit unlimited carryover, while others impose restrictions.
    3. Employee retention – Some firms may allow more senior employees to carry additional PTO.
    4. Accumulated PTO balance – If an employee has a considerable amount of accrued PTO, you may want to limit the amount of PTO a person can carry over.

    PTO for Sick Leave and Family Emergencies 

    Employees don’t plan ahead of time for sick leave since they don’t know when they or a family member may get ill or injured. Still, in some cases, they can plan to use their sick leave policy at a specific time for a specific reason, similar to when preparing for an imminent surgery. 

    Particular days are generally used at employees’ discretion, and the time may or may not be pre-planned time off. Employees may use particular days for various reasons, including but not limited to moving, taking a demanded break for health, and responding to family emergencies.

    Additional Resources

    We began with paid time off, meaning before probing into the distinctions between PTO and holiday programs. Because holiday programs impact productivity and commercial budgets, the composition also includes some practices to explore and make the correct selections from the launch. 

    Each company’s demands, plans, and earnings are unique. Consider how you want to handle leaves to estimate which approach would work for your company. Employees must know which leaves they can take without using their PTO and whether they can combine paid time off with provided leaves. 

    cookie image

    By clicking “Accept", you consent to our website's use of cookies to give you the most relevant experience by remembering your preferences and repeat visits. You may visit "cookie policy” to know more about cookies we use.