The Basics of PTO Explained

PTO or Paid Time Off is a system of allocating time off benefits under a single type.  Instead of having a program that incorporates different leave types such as Vacation, Sick Time or Personal Time there is a single type called PTO that an employee can use at their discretion.  For example, in a traditional program an employee might get 10 vacation days, 5 sick days and 3 personal days.  In a combined PTO program, the employee would get 18 days that could be used for vacation, sick or personal.

Shift from Traditional Leave Type Programs to PTO

There has been an increase in the number of companies that have implemented these types of combined PTO programs over the past few years.  They tend to be simpler to manage since there are fewer policies to maintain.  This can result in a reduced cost to the company to manage the program.  It can also be easier for the employee since they can simply request Time Off.

PTO Combined with Other Leave Types

Even with a Paid Time Off system of benefits, many companies will still choose to have separate leave types.  These may include types such as Bereavement and Jury Duty that might not be an earned benefit.  Keeping these leave types separate allows them to be tracked independently.  Companies can also choose to track things like working from home or corporate travel.

Other Considerations

There are many things to consider when choosing to implement or change a PTO solution.  Local laws union labor contracts may impact how Paid Time Off policies are defined.  Some states require sick time to be tracked separately.  It may be necessary to have a separate leave type for sick time in addition to any other PTO an employee may be eligible for.  Other states have minimum sick time requirements, but they may be included in a PTO program as long as the time allotted meets the state minimums.  Some states consider any earned Time Off as wages or a benefit that cannot be taken away from the employee.  It’s important to check your state and local laws when implementing a PTO program.

 
Our customers are using Time Off Cloud to manage and track PTO as well as traditional leave types.

Learn more about the basics of PTO and Leave Programs in this KB article:

https://timeoffcloud.zendesk.com/hc/en-us/articles/360018537212-Step-4-Setup-Leave-Programs