Paid time off (PTO) is a type of company policy that combines vacation, sick and personal time for employees to use as paid time off from work.
In most cases, PTO is accrued over a period of time and is credited to an employee’s bank of hours each pay period. It’s also common for employers to assign a set amount of days a year for accrued time off, e.g. 10 days the first year of employment, 15 after five years, etc. Depending on the company, PTO can roll over from year to year or employees can lose any unused paid time off at the end of the year.
Offering PTO is beneficial for both employees and employers. For employees, PTO offers the flexibility to use time off for vacation, sick and personal days, as opposed to creating separate buckets for each. For employers, a paid time off policy can help reduce the amount of unscheduled employee absences and serve as an attractive benefit for applicants as well as current employees.
For more information on paid time off, check out this article. Also, be sure to check out our sample PTO policy perfect for the small to medium sized business.
Previous:PEO – Professional Employer Organization
Next:Gross vs. Net Pay