Considerations for Writing Your Paid-Time-Off Policy

Creating a simple and fair PTO system can be a great incentive to keep employees on board
Considerations for Writing Your Paid-Time-Off Policy

Having a formal, written paid-time-off policy is important for any business. The implications of your policy are various. They can have a very real impact on employee morale, and a good PTO policy can even be a powerful tool for staff recruitment and retention. At the same time, PTO obviously affects your bottom line, and there are some hard, mathematical decisions you have to make as you consider what to include or not include in your company’s approach.

Different types of PTO
Here is one consideration to make: For years, many companies have broken down their employees’ PTO days into different classifications: vacation time, sick time, bereavement leave, and so on. Some companies still use this approach, but more and more are adopting a streamlined method in which employees simply have one bank of PTO days they can take, for whatever reason they like — they get the flu, take a family vacation, or just need a little time to escape and decompress.

There are some real virtues to this method, starting with the fact that you don’t have to worry about figuring out whether an employee’s use of paid time off is “legitimate.” All you need to concern yourself with is the total number of days each employee has to use; their reasons can be their own. This also helps create a sense of fairness and flexibility among employees, and it also reduces the amount of sick call-ins. Employees will not feel like they have to “use or lose” the sick time you’ve given them.

The PTO calendar
Something else to think about is the cycle of your PTO system: Will employees have X number of days to use each calendar year, or will the cycle be relative to their start/anniversary date? More and more employers are switching to the anniversary date model, because while it means employees are all on different timetables, it reduces the need to prorate the PTO time of new employees and it spares you from having to make tricky calculations for employees who are hired midyear.

A related point: As a business owner, you will need to decide whether a bank of PTO days is simply granted on the first day of the year, or whether PTO days are accrued as the year progresses. Granting days is undoubtedly easier, but may also be more of a financial hardship on the company.

How many days?
A final consideration to make: Will all employees receive the same flat number of PTO days, or will there be a tiered structure in place? One way in which many employers handle this question is to provide a different allotment of days for different groups of employees, almost always based on tenure with the company. In making this decision, it’s also important to decide your policy on how many days an employee can carry over into the next year — if any at all.

These are just some of the considerations that business owners should make as they seek to create a PTO structure everyone can feel good about.

About the Author
Amanda E. Clark is the president and editor-in-chief of Grammar Chic Inc., a full-service professional writing company. She is a published ghostwriter and editor, and currently under contract with literary agencies in Malibu, California, and Dublin, Ireland. Since founding Grammar Chic in 2008, Clark, along with her team of skilled professional writers, has offered expertise to clients in the creative, business and academic fields. The company accepts a wide range of projects and often engages in content and social media marketing, drafts resumes, press releases, web content, marketing materials and ghostwritten creative pieces. Contact Clark at


Comments on this site are submitted by users and are not endorsed by nor do they reflect the views or opinions of COLE Publishing, Inc. Comments are moderated before being posted.