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

  • 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 ...

  • smart contract

    A smart contract, also known as a cryptocontract, is a computer program that directly controls the transfer of digital currencies...

SearchSecurity

  • RSA algorithm (Rivest-Shamir-Adleman)

    The RSA algorithm is the basis of a cryptosystem -- a suite of cryptographic algorithms that are used for specific security ...

  • remote access

    Remote access is the ability to access a computer or a network remotely through a network connection.

  • IP Spoofing

    IP spoofing is the crafting of Internet Protocol (IP) packets with a source IP address that has been modified to impersonate ...

SearchHealthIT

SearchDisasterRecovery

  • virtual disaster recovery

    Virtual disaster recovery is a type of DR that typically involves replication and allows a user to fail over to virtualized ...

  • tabletop exercise (TTX)

    A tabletop exercise (TTX) is a disaster preparedness activity that takes participants through the process of dealing with a ...

  • risk mitigation

    Risk mitigation is a strategy to prepare for and lessen the effects of threats faced by a data center.

SearchStorage

  • 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 ...

  • enterprise storage

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

  • optical storage

    Optical storage is any storage type in which data is written and read with a laser. Typically, data is written to optical media, ...

Close