From Susan M. Heathfield,
Your Guide to Human Resources.
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Definition:

See a sample Paid Time Off (PTO) policy.

A paid time off (PTO) policy combines vacation, sick time and personal time into a single bank of days for employee paid time off. A PTO policy creates a pool of days that an employee may use at their discretion. When an employee needs to take time off from work, the PTO policy enables this time off.

So, employees who may have had to lie about how they were using their time in the past, have the right to take PTO at their discretion to support work-life balance and flexibility.

To protect the company work load and customer service, you'll want to require that employees request PTO, with two days prior notice, unless the employee is truly sick. Establish other guidelines, as needed, before the adoption of PTO.

Advantages of a Paid Time Off Policy

• You treat employees as adults who are entitled to use PTO at their discretion without oversight.
• PTO gives the employer some control over unscheduled absences, a serious problem and cost for many.
• Employees value the flexibility that PTO provides.

Disadvantages of Paid Time Off Policies

• Some research shows that employers who adopt PTO may give employees fewer overall days than they had previously, and/or new employees accumulate PTO more slowly than longer term employees.
• Employees tend to view PTO as a benefit and use all of the time off, whereas they may not have in the past.
• Employees tend to view all PTO time as vacation and come to work when they are sick.

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