You need a paid time off (PTO) policy in your organization so that the employees understand your rules and expectations about the amount of time they need to spend at work. The policy assures that misunderstandings about the amount and type of PTO are minimized.
The PTO policy also ensures that, as an employer, you have a published framework that provides guidance for you for making decisions that ensure the fair and equitable treatment of employees. Both of these goals are a win for both employers and employees.
Following is the sample PTO policy.
Purpose of Paid Time Off
The purpose of Paid Time Off is to provide employees with flexible paid time off from work that can be used for such needs as vacation, personal, or family illness, doctor appointments, school, volunteerism, and other activities of the employee's choice. The company's goal is to reduce unscheduled absences and the need for supervisory oversight.
The PTO days you accrue, effective (date) replace all existing vacation, sick time, and personal business days that you have been allotted under prior policies. The vacation time you accrued in the past will carry over, in excess of the PTO policy, per the company's guidelines at the time.
Guidelines for PTO Use
Each full-time employee will accrue PTO bi-weekly in hourly increments based on their length of service as defined below. PTO is added to the employee's PTO bank when the bi-weekly paycheck is issued. PTO taken will be subtracted from the employee's accrued time bank in one-hour increments.
Temporary employees, contract employees, and interns are not eligible to accrue PTO.
Eligibility to accrue PTO is contingent on the employee either working or utilizing accrued PTO for the entire bi-weekly pay period. PTO is not earned in pay periods during which unpaid leave, short or long-term disability leave, or workers' compensation leave is taken.
Employees may use time from their PTO bank in hourly increments. The time that is not covered by the PTO policy, and for which separate guidelines and policies exist, include company paid holidays, bereavement time off, required jury duty, and military service leave.
To take PTO requires two days of notice to the supervisor and Human Resources unless the PTO is used for legitimate, unexpected illness or emergencies. (Use the Paid Time Off form to request PTO.) In all instances, PTO must be approved by the employee's supervisor in advance.
Your Company appreciates as much notice as possible when you know you expect to miss work for a scheduled absence.
Paid Time Off Exceptions
- Employees who miss more than three consecutive unscheduled days may be required to present a doctor's release to the Human Resources department that permits them to return to work.
- PTO taken in excess of the PTO accrued can result in progressive disciplinary action up to and including employment termination. This time off will be unpaid. The only possible exception to this policy must be granted by the company president.
- PTO accrued prior to the start of a requested and approved unpaid leave of absence must be used to cover hours missed before the start of the unpaid leave.
- Under the company's Family and Medical Leave Act (FMLA) policy, all accrued PTO time is taken before the start of the unpaid FMLA time.
- Unscheduled absences, due to illnesses of four hours or more, that result in consecutive days absent from work, are considered one absence incident in relation to potential disciplinary action.
Progressive Disciplinary Action Defined
Progressive disciplinary action relative to incidents of absenteeism is administered on a rolling 12-month calendar as follows:
- One to three incidents: No disciplinary action. Supervisory coaching
- Fourth incident: Verbal warning with a documented coaching session
- Fifth incident: Written warning in the employee's file
- Sixth incident: Employment termination
Additional Potential Disciplinary Action
- An employee who receives a second written warning in a rolling 24 month time period will have their employment terminated.
- An employee who has used all of their FMLA and Short Term Disability benefits, and is still unable to return to work, will have their employment terminated.
- Any employee who misses two consecutive days of work without notice to their supervisor may be considered to have voluntarily quit their job.
Specific Eligibility for PTO
PTO is earned on the following schedule based on a 40-hour workweek. PTO is prorated based on the number of hours worked on an employee's regular schedule. (Thank you to Amy Casciotti of the TechSmith Corporation for the sample numbers.)
Years of Service
- 1-2: 144 working hours per year, earned at a rate of 2.7693 hours for each full work week in a calendar year.
- 3-4: 152 working hours per year, earned at a rate of 2.9231 hours for each full work week in a calendar year.
- 5-6: 160 working hours per year, earned at a rate of 3.077 hours for each full work week in a calendar year.
- 7-8: 168 working hours per year, earned at a rate of 3.2308 hours for each full work week in a calendar year.
- 9-10: 176 working hours per year, earned at a rate of 3.3847 hours for each full work week in a calendar year.
- 11-12: 184 working hours per year, earned at a rate of 3.5385 hours for each full work week in a calendar year.
- 13-14: 192 working hours per year, earned at a rate of 3.6924 hours for each full work week in a calendar year.
- 15-16: 200 working hours per year, earned at a rate of 3.8462 hours for each full work week in a calendar year.
- 17+: 208 working hours per year, earned at a rate of 4.0 hours for each full work week in a calendar year.
Each employee may carry 80 hours of accrued PTO over into a new calendar year. Employees are responsible for monitoring and taking their PTO over the course of a year so that they do not lose time accrued when the current calendar year ends. (PTO is subject to supervisory approval and not every employee can take accumulated time in December; the company must continue to serve customers.)
If extenuating business circumstances prevented the employee from taking scheduled PTO, this PTO may be carried over and taken in the first half of the next calendar year with the approval of the department head and Human Resources.
Employees are paid for the PTO they have accrued as the employment ends. If an employee has used PTO time not yet accrued, and employment terminates, the PTO taken is deducted from the final paycheck. Employees who give two weeks' notice of employment termination must work the two weeks without utilizing PTO.
Employees who are rehired will receive credit for former time worked and accumulate current PTO for the combined time.