Creating a Paid Time Off (PTO) policy

Key points to include

Standard PTO policy

First, let’s take a look at what kind of content you should cover in a standard PTO policy. It’s important to go over the basic details early. This might include:

• Eligibility for PTO
• Any applicable waiting period
• When to use PTO versus other types of leave

Then it’s time to get into the details of the PTO policy. Be sure to include the following:

• How time is allotted and/or accrued
  • Can employees have a negative balance?
  • Is there a can on PTO hours?
• Requesting PTO
  • How far in advance should it be requested?
  • What’s the proper way to make a request for PTO?
  • What increments are acceptable (e.g., hourly, 4-hour minimum, full day)?
  • Are there limitations (e.g., maximum length of a single PTO request)?
• Pay for PTO
  • How/when is PTO paid
  • Is it “use it or lose it,” or does the time rollover into the new year?
  • Payout upon separation from the company

Unlimited PTO policy

If your company offers unlimited PTO, it’s not quite as simple as saying “take all the time you want.” Instead, it’s important to provide guidance to ensure your expectations are clear:

• Commitment to fulfillment of job responsibilities, above all
• Procedures for requesting/taking PTO
• The minimum number of days employees must take each year (more in What’s trending below)
• Interplay with other legally established leaves (FMLA, maternity, etc.)

Why it matters

As with all handbook policies, you should explain why the policy exists. As mentioned in the introduction, this won’t require as much convincing as something like your dress code policy. Regardless, it’s important that you draft an introduction based on the specifics of your PTO policy.

For a standard PTO policy, you might START with something like this:

Our people are our priority, and we encourage you to take paid time off (PTO) to maintain a healthy work-life balance. We’ve found that our employees are at their best when they’ve had opportunities to refresh and recharge. To ensure things run smoothly while you’re away, it’s important that you adhere to our PTO procedures.

When it comes to an unlimited PTO policy, your may instead START with this:

To promote a healthy work-life balance, we provide our employees unlimited paid time off (PTO). As long as your work gets accomplished, we encourage you to take as much time as you need to refresh and recharge. To ensure we can continue offering unlimited PTO, it’s important that you adhere to the procedures that follow.

What’s trending

When unlimited PTO first came on the scene, minds everywhere were blown. Most employers thought it sounded too risky to give their employees that type of freedom. Employees thought it sounded heavenly and didn’t want to spend another second working for a company that regulated PTO.

As with most groundbreaking ideas, it didn’t take long for the dark side of unlimited PTO to rear its head, mostly at the detriment of the employee. Without clear expectations, employees were fearful of taking advantage of the policy, proving “loyalty” by refusing to take any time off. That led to unhappy, overworked employees, which impacted business productivity.

It has become evident that there are pros and cons to standard and unlimited PTO policies. Regardless of your approach to PTO, it’s important that your expectations are outlined in a way that empowers employees to use the policy as intended. If employees don’t take time away from work, they’re likely to become disgruntled, which is the antithesis of what PTO hopes to accomplish.

By analyzing company-wide PTO usage, you may realize that it’s necessary to amend your policy to keep your employees happy and free from burnout.

Additional notes

Make it easy for employees to access related policies, such as:

• Leaves of Absence
• Sick Leaves
• Paid Holidays
• Attendance and Punctuality

While you’re perfecting your handbook, check out some other Blissbook content focused on policy creation:

• How to Write Policies & Procedures
• How to Write a Culture-First Employee Handbook