An HR Glossary for HR Terms

Paid Time Off (PTO)

What is Paid Time Off (PTO)?

Paid time off (PTO) refers to periods where employees are allowed to be away from work with pay. Employees tend to use their PTO for different reasons such as sick days, personal matters, or rest days. PTO is separate from vacation time, as PTO consists of any paid absence whereas vacation allows you to book time off ahead.

Types of PTO:

  1. Unlimited PTO: Employees are allowed to have an unlimited amount of paid time off as long as they can complete all their work tasks. 
  2. Accrued PTO: Employees gather PTO over time for each hour they spend working. For example, under daily accrued, employees gather PTO time for each hour they spend working. 
  3. Fixed PTO: Employees have a set amount of PTO per year, and they can use it anytime they want throughout the year. The amount of time is renewed annually. 

Advantages of PTO:

  • More independence: Employees can have more control over their schedule and have the freedom to take time off if needed. Furthermore, employees can be more transparent about what their schedule is like, such as using the PTO to visit the doctor. 
  • Increase productivity: When employees have time to recharge without worrying about money, it will allow them to be more productive and efficient once they return. 
  • Reduce stress: PTO will allow employees to reduce their stress from work since they have the freedom to take days off whenever they are overwhelmed.

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