World Library  
Flag as Inappropriate
Email this Article

Paid time off

Article Id: WHEBN0008897760
Reproduction Date:

Title: Paid time off  
Author: World Heritage Encyclopedia
Language: English
Subject: Compensation and benefits, Corporate donations, Role conflict, 21 demands of MKS, Lebaran
Collection: Employment Compensation, Employment in the United States, Leave
Publisher: World Heritage Encyclopedia

Paid time off

Paid time off or personal time off (PTO) is a policy in some employee handbooks that provides a bank of hours in which the employer pools sick days, vacation days, and personal days that allows employees to use as the need or desire arises. Generally PTO hours cover everything from planned vacations to sick days, and are becoming more prevalent in the field of human resource management. Unlike more traditional leave plans, PTO plans don't distinguish employee absences from personal days, vacation days, or sick days. Upon employment, the company determines how many PTO hours will be allotted per year and a "rollover" policy. Some companies let PTO hours accumulate for only a year, and unused hours disappear at year-end.[1] Some PTO plans may also accommodate unexpected or unforeseeable circumstances such as jury duty, military duty, and bereavement leave.[2] PTO bank plans typically do not include short-term or long-term disability leave, workers compensation, family and medical leave, sabbatical, or community service leave.[3]

It is unclear as to when PTO bank-type plans were first being utilized in the workforce. In a 2010 study conducted by WorldatWork, 44% of 387 companies surveyed said they started using PTO bank-type plans prior to year 2000.[4]


  • Benefits 1
  • Disadvantages 2
  • Workforce trends 3
    • Length of service 3.1
  • Cultural differences 4
    • Belgium 4.1
    • Brazil 4.2
    • Canada 4.3
    • China 4.4
    • Finland 4.5
    • France 4.6
    • Lithuania 4.7
    • United States 4.8
      • California 4.8.1
      • Massachusetts 4.8.2
      • Pennsylvania 4.8.3
      • New York City 4.8.4
  • References 5
  • External links 6


  • PTO can be an attractive benefit for healthy employees because they are offered more vacation time under a PTO plan than they would be under a plan that differentiates sick leave and vacation.
  • Theoretically, the employee will be honest in scheduling PTO in advance, allowing the company to plan around the absence, rather than "calling in sick" at the last minute.
  • PTO is usually attractive to younger workers, who tend to rate work-life balance as an important source of job satisfaction.
  • The flexibility of PTO plans aligns with the current trend in the United States of having more frequent but shorter vacations.[1]
  • Tracking PTO is less onerous for management and employee than tracking personal, sick and vacation days.
  • Employees who give adequate two weeks' notice before retirement or resignation may be paid for all unused, accrued PTO.[1] ...


  • At first glance, PTO may not be attractive for employers due to little direct advantage. This is because the employer pays the employee for time spent not working; thus, receiving nothing in return for the expense.
  • Employees may tend to miss work more frequently, which can be seen as a drawback for the employers and lead to absenteeism. This can be offset by the employer establishing acceptable and unacceptable standards of unscheduled PTO (call-offs).
  • If an employee has used all of his or her allotted PTO days yet becomes ill, he or she will most likely have to work while sick, which may result in lower productivity. In order to compensate for the lack of remaining PTO, he or she may also have to cancel a planned vacation, and take a financial loss.
  • If PTO hours go unused, employees may sometimes call in sick near the end of the year so they can obtain the benefit of paid leave before it disappears. Employers may counter this tendency by paying employees for some or all of their unused days at year-end or upon retirement or resignation.[1]
  • Employers in the United States need to be aware of their state labor law regarding paid time off. If not, the policy might not be legally enforceable.

Workforce trends

A longitudinal study conducted by WorldatWork of over 1,000 organizations of different sizes concluded that over recent years, PTO plans have become more actively utilized by the general workforce. In 2002, about 71% of organizations were using traditional distinguished paid time off system, and about 28% were utilizing the PTO bank-type system. As of 2010, the use of the traditional paid time off system decreased to 54%, while the use of the PTO bank system increased to around 40% of all organizations.

Recent information may indicate that PTO bank-type plans are difficult to implement in very large organizations. In 2010, only 32% of organizations with 20,000+ employees had a PTO bank-type system. However, 51% of organizations with 10,000-19,999 employees had PTO bank-type plans. In organizations with less than 100 employees, 48% had PTO bank-type plans.[4]

In the 2010 study performed by WorldatWork, industrial differences were also found. 97% of organizations in the Health-care and Social Assistance industry utilize PTO bank-type systems.[4]

As of 2012, nearly one in five employees in the United States receive leave in the form of a PTO bank plan, but the contours of such policies are often little understood—especially outside of the human resources community.

Among employees with paid leave, lower-wage employees are less likely to have access to a PTO bank than a traditional paid vacation system. 51% of employees in the lowest average wage quartile have access to any vacation time, and only 9 percent of the lowest wage employees have access to a PTO bank. 89% of employees in the highest wage quartile have access to vacation time and 28% have access to a PTO bank.

There is also a difference in PTO among employment status. 9% of Part-time employees have access to a PTO bank, whereas about 23% of full-time employees do.

14% of

External links

  1. ^ a b c d e [1], MoneyHowStuffWorks
  2. ^ a b [2], BusinessSalary
  3. ^ a b [3], ClaspPTO
  4. ^ a b c [4], WorldatWork
  5. ^ a b [5], Mainstreet.
  6. ^ a b c Susannah Nevison: What Countries Offer the Most Paid Time Off?, Thomasnet, 2009-11-10.
  7. ^
  8. ^
  9. ^


In January of 2014—17 days after taking office—the Mayor put forward paid sick leave legislation that expanded this right to more New Yorkers – including 200,000 of whom do not currently have any paid sick days. The law will take effect on April 1 and apply to all workers at businesses with five or more employees, encompassing those excluded under the previous legislation that applied to businesses with 15 or more workers.[9]

New York City

Most states, in fact, do not require unused vacation balances to be paid out upon termination, and very few states have formal rules protecting employees from changes in the vacation policy; however, all states must comply with federal labor laws such as the Family Medical Leave Act.[8]

There is no Pennsylvania labor law which requires an employer to pay an employee not to work. Benefits like sick leave, vacation pay, and severance pay are payments to an employee not to be at work. Therefore, an employer only has to pay these benefits if the employer has a policy to pay such benefits or a contract with you to pay these benefits. An employer must follow its own rules for these kinds of payments.


Discharged (fired or laid off) employees must be paid all wages due and owing on the day of termination. The term "wages" includes all vacation time earned under the employer’s written or oral policy.


Vacation is legally vested per formal language in the California Labor Code. Vacation cannot be forfeited once earned, and unused balances must be paid out upon termination.


Because there are no federal requirements in the United States, the states must each determine respective regulations for paid time off in the state labor law. Because of this, employers not only need to be aware, but also need to establish and follow a formal written policy for paid time off. Failing to formally establish paid time off policies may result in violating the state's code and the policy not being legally enforceable.

United States

Lithuania has 28 days of holiday allowance and 12 public holidays.[6]


Many French businesses and shops can shut down completely for two weeks in August or July every year. Following social regulations, workers receive 25 days in paid time off a year, in addition to National holidays.[7][5]


In Finland employees are entitled to 25 days of vacation starting from their second year of employment.


Chinese workers receive an average of 21 days of PTO per year.[6]


Workers in Canada receive an average of 19 total days of PTO a year.[6]


Brazilians are allowed 30 days of paid leave and 11 public holiday allowances for a total of 41 paid days off a year. Brazilian Labor Law requires that the 30 days must be taken all at once or divided into two parts (with one part not being less than 20 days).[5]


In Belgium employees are entitled to a minimum of 20 days of vacation, pro rata their proportion of employment in the preceding year.


In contrast, the United States does not have similar legal requirements. U.S. companies determine the amount of paid time off that will be allotted to employees, while keeping in mind the payoff in recruiting and retaining employees. In the United States, paid vacation is typically two weeks or less per year for the first few years of employment in addition to roughly 10 paid federal holidays in the United States.[1]

In Western European countries, federal laws require a minimum number of paid vacation days (→ annual leave), with new employees receiving 30 days off per year in many countries.

Cultural differences

Source: Society for Human Resource Management, 2004 SHRM Benefits Survey.[2]

Average number of total paid days off in the US
Years of service Average days per year
Less than 1 year 14
2 years of service 17
3 years of service 18
4 years of service 18
5 years of service 21
6 years of service 23
7 years of service 23
8 years of service 23
9 years of service 23
10 years of service 25
11 years of service 26
12 years of service 26
13 years of service 26
14 years of service 26
15 years of service 27
More than 15 years of service 27+

Paid time off usually increases with years of service to an organization. This provides a greater benefit for employees who have been with the organization longer.

Length of service


This article was sourced from Creative Commons Attribution-ShareAlike License; additional terms may apply. World Heritage Encyclopedia content is assembled from numerous content providers, Open Access Publishing, and in compliance with The Fair Access to Science and Technology Research Act (FASTR), Wikimedia Foundation, Inc., Public Library of Science, The Encyclopedia of Life, Open Book Publishers (OBP), PubMed, U.S. National Library of Medicine, National Center for Biotechnology Information, U.S. National Library of Medicine, National Institutes of Health (NIH), U.S. Department of Health & Human Services, and, which sources content from all federal, state, local, tribal, and territorial government publication portals (.gov, .mil, .edu). Funding for and content contributors is made possible from the U.S. Congress, E-Government Act of 2002.
Crowd sourced content that is contributed to World Heritage Encyclopedia is peer reviewed and edited by our editorial staff to ensure quality scholarly research articles.
By using this site, you agree to the Terms of Use and Privacy Policy. World Heritage Encyclopedia™ is a registered trademark of the World Public Library Association, a non-profit organization.

Copyright © World Library Foundation. All rights reserved. eBooks from Project Gutenberg are sponsored by the World Library Foundation,
a 501c(4) Member's Support Non-Profit Organization, and is NOT affiliated with any governmental agency or department.