Browse Definitions :
Definition

paid time off (PTO)

Contributor(s): Matthew Haughn

Paid time off (PTO) is a work policy that provides employees with a pool of bankable hours that can be used for all purposes. Also known as personal time off, PTO can also refer to any period of time that an employee is paid while taking leave from work. 

A PTO policy includes employees’ personal days off, sick days and vacation time in a single block of hours rather than specifying separate numbers of days allowable for each. PTO can differ from one employee to the next and may be supplemented, for example, by time in lieu if an employee works overtime. The agreement with a given employee specifies an individual’s number of paid hours, including what yearly rollover (if any) is allowed. When leaving a job, an employee may cash out PTO, assuming all requirements have been met.

Some benefits of PTO:

  • It can provide more vacation time if an employee doesn’t need to use banked time for other things.
  • Employees can use the hours as needed when unforeseen situations arise, as long as the time is available.
  • Good PTO policy can serve as a recruitment incentive to attract employees.
  • The policy can help retain desirable employees by offering living wages when they are unable to work.
  • Undifferentiated time off is simpler to track than multiple blocks of time for separate purposes.
  • More frequent, shorter vacations as desired can help maintain work-life balance.

Some disadvantages of PTO:

  • No direct perceivable advantage to employers.
  • Employees may tend to use all of the available hours, which might not be the case when some are specified as sick days, for example.
  • Multiple employees may end up trying to take days off all at the same time at the end of a year to avoid losing PTO hours.
  • Employees may run out of PTO and be required to work while sick or lose pay.
  • The larger pooled number of hours can look like more time than it actually is to those employees who fail to consider that it covers all purposes.

PTO plans are mostly only used in the United States, where there are no laws for minimum vacation time. In U.S. human resources management, PTO planning is becoming more common. However, employers must be aware of state laws to ensure that the PTO policy is enforceable.

This was last updated in May 2017

Continue Reading About paid time off (PTO)

Start the conversation

Send me notifications when other members comment.

Please create a username to comment.

-ADS BY GOOGLE

File Extensions and File Formats

SearchCompliance

  • compliance audit

    A compliance audit is a comprehensive review of an organization's adherence to regulatory guidelines.

  • regulatory compliance

    Regulatory compliance is an organization's adherence to laws, regulations, guidelines and specifications relevant to its business...

  • Whistleblower Protection Act

    The Whistleblower Protection Act of 1989 is a law that protects federal government employees in the United States from ...

SearchSecurity

  • orphan account

    An orphan account, also referred to as an orphaned account, is a user account that can provide access to corporate systems, ...

  • voice squatting (skill squatting)

    Voice squatting is an attack vector for voice user interfaces (VUIs) that exploits homonyms (words that sound the same but are ...

  • WPA3

    WPA3, also known as Wi-Fi Protected Access 3, is the third version of the security certification program developed by the Wi-Fi ...

SearchHealthIT

SearchDisasterRecovery

  • business continuity policy

    Business continuity policy is the set of standards and guidelines an organization enforces to ensure resilience and proper risk ...

  • business continuity and disaster recovery (BCDR)

    Business continuity and disaster recovery (BCDR) are closely related practices that describe an organization's preparation for ...

  • warm site

    A warm site is a type of facility an organization uses to recover its technology infrastructure when its primary data center goes...

SearchStorage

  • cache memory

    Cache memory, also called CPU memory, is high-speed static random access memory (SRAM) that a computer microprocessor can access ...

  • enterprise storage

    Enterprise storage is a centralized repository for business information that provides common data management, protection and data...

  • disk array

    A disk array, also called a storage array, is a data storage system used for block-based storage, file-based storage or object ...

Close