Paid time off (PTO)

What is PTO?

Paid time off (PTO) is a policy that allows employees to take time away from work and still receive their regular compensation. It typically covers holiday days, personal time, and sick leave, though some companies separate these categories while others combine them under a single PTO bank.

PTO gives employees the flexibility to manage their time off according to their needs without having to disclose specific reasons to employers, depending on company policy.

How does PTO work?

Companies offer PTO in several formats:

• Accrued PTO: Employees earn time off gradually, often based on hours worked or tenure. For example, an employee might accrue one day of PTO per month.
  
  
• Lump-sum PTO: Employees receive their full annual allotment of PTO at the start of the year or on their work anniversary.
  
  
• Unlimited PTO: Employees can take time off as needed, provided it doesn’t disrupt business needs. This is a common PTO policy in startups or flexible workplaces.
  
  
• Rollover PTO: Employees can carry over unused PTO into the next year, either in full or up to a certain cap.
  
  

Why do companies offer PTO?

Offering PTO is a key part of employee well-being and helps companies:

• Prevent burnout and support mental and physical health.
  
  
• Attract and retain talent with competitive benefits.
  
  
• Encourage a healthy work-life balance.
  
  
• Build a culture of trust and autonomy.
  
  

PTO vs. sick leave or holiday leave

While some companies separate sick leave, personal leave, and holiday, PTO policies often combine them into one bank. This gives employees more flexibility but also requires them to manage their time off responsibly.

In contrast, separate leave policies may provide more structure and ensure that sick time is reserved specifically for illness or emergencies.

Things to consider with PTO

Before implementing or using a PTO policy, it’s important to:

• Clarify accrual rules, limits, and eligibility.
  
  
• Communicate expectations around approval processes and blackout dates.
  
  
• Understand local labour laws, especially in countries where time off is mandated.
  
  
• Decide how unused PTO is handled upon termination—paid out, forfeited, or carried over.
  
  

How Remote can help

Managing PTO across borders gets complicated fast. With Remote, you can easily set up and manage localised time-off policies that comply with local laws and cultural norms.

Our platform simplifies leave tracking, payroll, and compliance‌ — ‌so your global team always gets the time off they deserve. Discover how Remote can help simplify your global HR today.