PTO stands for paid time off. But what exactly is paid time off? It used to be the norm for companies to offer separate paid time off benefits to employees such as: Sick leave, Personal leave, Paid vacation leave, etc.

With terminology varying from company to company, it’s very important to establish what paid time off is and isn’t.Remember that PTO is an all-encompassing policy. Separate policies like...Sick leave, Personal days; and Vacation plans … are part of a traditional paid time off policy. Separate policies do not fall in line with the modern PTO model that companies are gravitating toward today.A great way to think about PTO is this: Vacation leave is paid time off, but not all paid time off is vacation leave.

With a PTO plan, you do not have a set number of vacation days or sick days that you can take. Instead, employees are provided with a singular paid time off plan in which they can allocate time off for whatever reason.

Are PTO Policies Affected by Law?

In short, yes. It’s important for employers to issue clear PTO policies while coinciding with state laws. Conversely, it is also important for employees to fully understand their company’s PTO policies.

What is the Purpose of PTO for Employees?

PTO policies offer employees more flexibility and freedom to choose when they can utilize paid time off and for what circumstances. It also allows employees the opportunity to take full advantage of their paid time off. For example, if an employee working under a traditional leave policy accrues more sick days than they need but doesn’t have enough vacation time to go on a family trip, they cannot allocate their additional sick days to go on vacation.

Sorbet
- Nov 25, 2021
- 5 min read

What is PTO? Here’s a Comprehensive Guide to Understanding PTO

Updated: Nov 10, 2022

Let’s begin by painting a clear picture of what paid time off (PTO) is and isn’t — starting with what it’s not.

In the past, companies would separate their employees' time off benefits into a set number of days for sick leave, paid vacation, personal days, etc. Once you used all the days in a specific category, that was it for the year.

But PTO is totally different now in that it’s an all-encompassing policy.

So instead of having several separate policies, PTO rolls them all into one nice, neat, ‘ all-inclusive plan. It's the one benefit that employees really care about. In fact, it’s one of the top 3 most important employee benefits according to Harvard Business Review.