How to Create a PTO Policy

Author: Halley Harrelson Published: October 2022

How to create paid time off policy

What is paid time off?

Paid time off policies describe how much paid time off your employees will get each year, what it can be used for, and how it is earned. It is time employees could take for themselves and get paid just like they would if they were working. There are three different types of PTO policies: traditional PTO, flexible PTO, and unlimited PTO.

Things you should consider before creating your PTO policy:

1. Require a deadline for calling in sick. This policy may not be needed for every business. However, establishing a deadline may be helpful if you run a company that can quickly become short-staffed for a shift.

2. Determine a PTO policy for different employee types. For example, for full-time and part-time employees.

3. Decide whether or not employees can accrue time. Decide whether you will provide PTO in one giant sum or if the employees need to accrue their PTO throughout the year.

4. Require manager approval. The manager’s endorsement will help you manage your employee coverage.

5. Decide whether or not employees can roll overtime at the end of the year. You can decide to use a use-it-or-lost-it policy or a flexible one that rolls over any or all of the accrued days over the next year.

6. Give thought to implementation. Think carefully about how you will implement your PTO policy.

7. Continually evaluate your PTO program. This will help you stay attuned to trends in usage, employee sentiment, and any manager concerns.