Paid Time Off (PTO)

What is “paid time off” (PTO)? 

Paid time off (PTO) is a type of benefit that employers offer to give their employees time off work to spend however they want. Also commonly known as “personal time off,” what’s good about PTO is that it is compensated time away from work. 

Another thing to know about PTO is that it can be used for any reason. Do you need to go to your child’s school for a meeting? How about that dental appointment you have been delaying? Want to visit your parents in your hometown? Or maybe you just want to spend some time at home to relax and de-stress? By all means. All of these can be reasons for PTO. With companies that have a PTO policy in place, employees no longer have to classify their leaves as vacation, sick, or personal days. With PTO, it’s up to you. 

Remember though that paid time off is different from government or state mandate leaves, maternity, FMLA leave, military leave, or unpaid leave. If you need help in determining what kind of leave you can avail for a specific, ask your HR team about it. 

What are the types of PTO policies? 

There are generally two types of PTO policies that employers can have. The first one is the traditional PTO where employees are given a predetermined set of time off at intervals such as monthly or quarterly. PTO can be given in day or hour increments. As an incentive to employees, employers can offer to increase PTO little by little according to an employee’s years of service to the company. 

In a traditional PTO, managers are tasked to monitor and keep track of the PTO used and the PTO balance of each employee. This can be accomplished manually or via HR software designed to track PTO. 

The next type of PTO is the unlimited PTO which allows employees to take time off as they need it. Companies that have unlimited PTO in place do not require employees to report PTO to their HR team. Instead, the approval comes from the employee’s manager. 

Even with this type of PTO, some companies still monitor the number of days or hours that employees use for accounting, approval, or other reasons. Because of this, some would say that it is not unlimited but more discretionary. 

Whichever PTO policy category you choose, remember to have a written policy. Explain it to all employees and keep them updated on any policy change.