Companies are shifting to unlimited PTO — but employees can’t take every day off. So, what gives PTO meaning in the modern work landscape?

Traditional vacation, sick leave, and other types of time off policies are losing their luster. As a result, businesses and employees alike are rethinking these policies. Should you join the fray and switch to a more progressive PTO policy?

The only way to answer these questions is to understand the difference between PTO and vacation. We’ll cover this topic in detail so you can implement the best policies for your business to simplify your processes and boost morale and productivity.

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What is PTO?

PTO refers to the policy that allows employees to take time away from work and still receive their regular pay. This concept is broad and can encompass a variety of scenarios, such as vacations, personal time, or illness. 

In the United States, state and federal laws do not require companies to provide PTO. This means that businesses have a lot of discretion in giving paid sick leaves and other forms of time off. That said, eligible employees are entitled to 12 weeks of unpaid and protected time off for medical and family reasons. 

As a result, PTO policies can significantly differ from one company to another. Some companies may offer a ‘bank’ of PTO, allowing employees to use their time off as they wish. Others may have separate policies for sick leave, vacation, and personal time. As previously mentioned, some offer unlimited PTO where there is no PTO bank to draw from at all. 

Even though PTO isn’t mandatory, many companies offer it thanks to the benefits it brings, which we’ll cover later. 

Types of PTO

There are a few different types of PTO that you should know about. 

  • Personal leaves: This type of PTO allows employees to take time off for personal reasons, such as appointments, family needs, or rest days. The nature of these leaves depends on the individual’s personal needs and isn’t specified by the company.
  • Sick leaves: Sick leaves are meant for health-related absences, enabling employees to take time off when they or a family member are sick.
  • Bereavement leave: Bereavement leave offers time off in the event of a death in the family, providing employees with the necessary time to grieve and take care of related matters.
  • Industry-specific PTO: Some industries have unique types of PTO. For instance, The oil and gas industry offers ‘field breaks’ while academics have sabbaticals, which may or may not come with partial compensation.

Understanding these nuances helps everyone. Employers and HR personnel can create better policies while employees have an opportunity to learn about their rights and plan their time off better.

Now that we’ve delved into the various types of PTO let’s shift our focus to exploring the many benefits they offer.

Benefits of providing PTO

Woman reading on PTO

While PTO isn’t a federal requirement for businesses, they often provide it because it benefits both employees and the business. Here’s how:

  • PTO policies boost employee mental health, prevent burnout, and create a more positive work environment.
  • Time off policies lead to reduced absenteeism and ensure that people come in regularly.
  • Paid time off positively impacts retention and referrals as employees value a workplace that offers PTO.
  • PTO boosts your employees’ performance and productivity, not to mention increased creativity and innovativeness in the workplace.
  • Unlimited and flexible PTO attracts top talent and is a major reason for people to join a company.

The benefits of incorporating a PTO policy extend beyond these points. But there’s no question that unlimited or otherwise, PTO creates powerful and long-reaching advantages for everyone.

What is a vacation?

Benefits of vacation

Vacation refers to a specified amount of time that an employee is eligible to take off from work to relax, refresh, and seek better work-life balance.

PTO encompasses all types of leaves or breaks, including vacations. That means vacations don’t reflect all other types of PTO, like paid sick leave or jury duty.

In this way, a vacation is narrow and has a particular intent. Like PTO, it is not federally mandated, unlike matters on minimum wage or overtime. Because of this, the amount of vacation time an employee is entitled to often varies depending on a company’s policy, an employee’s length of service, and other factors.

Vacations offer important benefits to employees as it gives them a much-needed break from work and contributes to overall life satisfaction.

Key distinctions between PTO and vacations 

So, we’ve established some basic definitions and skimmed through the distinctions between PTO and vacations. Now, let’s dive a little deeper into their differences so we can understand their policy implications and how best to manage them.

  • Flexibility. PTO allows employees to use time off for reasons that a company may not specifically outline. This is beneficial so employees don’t use their sick or vacation days when another issue arises.
  • Accrual. PTO could be accrued over a period of time. Some places have employees earn their PTO as they work, which they can use once it reaches a certain threshold. On the other hand, vacation time may be granted upfront for the entire year or accrue over a longer period of time.
  • Usage and permissions. Employees can use PTO without justifying their reasoning. Longer-term vacations require advanced notice and are primarily used for holidaying.
  • Payout. In some companies, unused PTO can be carried over to the next year or may even be paid out to employees if they leave the company. On the other hand, vacation time is usually use-it-or-lose-it, meaning it cannot be carried over or paid out if not used.
  • Management. Vacation is typically scheduled in advance. PTO may occur suddenly.  This helps managers have a better handle on their team for bandwidth or shift scheduling purposes. 

These differences can help you understand how best to manage so you’re not only productive but also doing the best for your team. 

Policy implications around PTO and vacations

Let’s look at the key elements of a PTO policy. A comprehensive PTO policy should address these critical elements:

  • Time off allowances. How many hours or days can employees accrue? Is the eligibility criteria based on factors like seniority, job role, and years of service?
  • Time off usage policies. Detail when and how much PTO can be taken. This includes restrictions like black-out dates during peak seasons or rules around extending vacations.
  • Time off request and approval process. Clearly state how employees should request PTO, the notice period required, and common reasons for denial. Also, mention any exceptions like emergency or bereavement leave.
  • Unused PTO. Decide whether unused PTO can be carried over or expires after a certain period.
  • Accrual. Is there a set number of PTO days, and does it accrue if an employee doesn’t use them? How will a company disperse unused PTO? This could be a lump sum payment method, the bank method, or the ‘use it or lose it’ approach. 

Defining your company’s PTO policy is essential to keep employees happy and to ensure that your workflows run smoothly. Next, we’ll look at how to implement a PTO policy so you can automate it in your business.

Vacation and PTO tracking

For employers, managing PTO and vacation time can be a daunting task.

To do so effectively, you need to have clear and consistent policies and also encourage employees to take adequate time off. If you try to do this manually, you’re likely to get overwhelmed and confused trying to figure out who’s out, when, and if they’re owed any accrued time.

This is where employee scheduling software comes into play. Especially one that has features to take PTO into account.

With the right tool, you can accurately track your employees’ hours and easily manage their time off requests. You can also monitor employee productivity and ensure the workload is balanced when certain employees are on vacation or PTO.

This can help prevent burnout and improve overall team morale as your employees gain clarity to manage their work and personal lives better.

Use Hubstaff to implement PTO policies

Hubstaff PTO screenshot

Use Hubstaff to manage time off requests. 

If you want to make PTO requests, approvals, and reports ‘hands-off’ experiences for your business, then you need Hubstaff. Here are a few features and benefits to consider:

  • Hubstaff’s PTO tracking system can do a one-time setup to define your PTO policy. Then, translate it into steps, features, and rules to streamline approvals. 
  • Easily track and manage time off requests from all employees.
  • Automatically calculate total vacation days, sick days, personal days each employee has taken, and the remaining balance. This way, you don’t have to manually keep tabs on it.
  • Create detailed reports of when your team takes PTO for accurate payroll calculations.
  • Get real-time updates about who’s out of the office and when they are returning if work needs to be reassigned while an individual is away.
  • Pay your team with Hubstaff Pay or make payments across an array of payroll platforms right from the Hubstaff app. 

For detailed information, follow our step-by-step guide to setting up a PTO policy.

Explore Hubstaff’s powerful benefits to your business

The features laid out above are just a few of what Hubstaff offers to businesses. It can also:

Overall, Hubstaff’s full range of workforce management features ensures you’ll create a more efficient, organized, and positive workplace culture with employee morale and productivity in mind.

Manage PTO and vacations seamlessly

Manage PTO and vacations seamlessly

Today, providing and managing time off is critical for businesses of all sizes. Employees expect flexibility and transparency, so companies must keep track of their employees’ time off for accurate payroll calculations and to maintain productivity. 

You’ve learned the differences between PTOs and vacations and why implementing a clear PTO policy is essential. Hopefully, you’re also left with clear answers regarding how Hubstaff ensures that managing PTOs and vacations is a breeze. Now, it’s time to take action.

Unlock productivity with a free Hubstaff trial!


What is earned time off vs. paid time off?

Earned time off and paid time off are often used interchangeably, but they have some slight differences. Earned time off usually refers to the amount of time an employee has earned based on their tenure in a company. This can include vacation days, sick days, or personal days. 

Paid time off, on the other hand, is the compensation given to employees for taking time off, whether for vacation, sick leave, or personal days. In some companies, PTO needs to be ‘earned,’ as in, an employee needs to work at the business for a fixed amount of time. 

In some companies, earned time off can be converted into paid time off and paid out to employees if not used. 

What is the difference between PTO and public holiday?

Public holidays are special dates the government sets that usually honor important national, cultural, and historical events. Employees typically get these days off from work. These holidays do not affect an employee’s accrued time off balance. Almost all businesses in a country observe these holidays.

PTO is something that employees can use as they see fit, as long as it aligns with company policy. PTO can be used for various reasons, like taking a vacation, dealing with an illness, or handling personal matters.

What is the meaning of work leave?

Work leave is the time that an employee takes off from work for various reasons, such as vacation, sickness, or personal matters. This can include both paid and unpaid time off and is often regulated by a company’s policies and local labor laws.

What is a work of leave?

A work of leave is another way to say work leave. In some countries, it is common to use the phrase ‘work of leave’ instead of just ‘leave.’ This refers to time off from work that an employee takes for any reason. There are different types of leave, such as PTO, sick leave, and maternity leave. In general, a leave refers to the time an employee is absent from work due to a valid reason. 

Can I take off work for anxiety?

Yes, it is possible to take time off work for anxiety, but it may depend on the policies of your company and local labor laws. In some cases, doctors may recommend taking a mental health day or extended leave due to severe anxiety. It is essential to communicate with your employer and follow proper procedures when requesting time off. A more common term used in this situation is ‘stress leave.’

How do I take a leave of absence from work due to stress?

If you are experiencing stress and need to take a leave of absence from work, it is essential to communicate with your employer and follow proper procedures. This may include providing a doctor’s note or documentation explaining your situation. It is also essential to check with your company’s policies and local labor laws regarding taking time off for stress-related reasons.  If FMLA covers you, make sure you ask for approval 30 days ahead.

About the author

Syed Balkhi

Syed Balkhi is the founder of WPBeginner, the largest free WordPress resource site. 

With over 10 years of experience, he’s the leading WordPress expert in the industry. You can learn more about Syed and his portfolio of companies by following him on his social media networks.

Category: Management