Paid Time Off (PTO)

A Paid Time Off (PTO) policy explains how employees earn and use paid time off for any purpose (including vacation, personal needs, and illness), plus the rules for requesting time, accrual and carryover limits, and whether unused PTO is paid out at separation, with jurisdiction-specific variations where state or local law requires different terms.

How to Write a Paid Time Off (PTO) Policy

• Start with why it's important for employees to take time off to re-energize.
• Define what PTO covers and how employees can use it.
• State who is eligible for PTO.
• Explain how PTO is earned, including the accrual method and when accrual starts.
• Clarify when PTO is available to use and how PTO is measured for policy purposes.
• Describe the request and approval process, including how unplanned absences are handled.
• Set rules for how PTO can be taken, including increments and any limits on consecutive use.
• Explain how PTO interacts with pay rules and time worked calculations.
• Address whether PTO continues to accrue during paid and unpaid leaves.
• Set carryover and forfeiture rules for unused PTO, including any legal exceptions.
• Explain what happens to unused PTO at separation, including payout rules and legal exceptions.

For advice on writing a Paid Time Off (PTO) policy in a specific jurisdiction, see below.