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The Empuls Glossary

Glossary of Human Resources Management and Employee Benefit Terms

Visit Hr Glossaries

Paid Time Off

Paid time off refers to benefits offered to employees to take time off from work and continue to receive regular pay; that is a form of leave provided to employees to acknowledge the importance of rest, relaxation, and obligations.

What is a paid day off?

A paid day off is a specific day on which employees are granted time off from work and receive their regular pay for the day. It is considered as a form of compensation for the time away from work.

Listen, recognize, award, and retain your employees with our Employee engagement software  

Are paid holidays considered PTO?

Yes, paid holidays are considered a part of paid time off (PTO). It includes vacation days, personal time off, sick days, and holidays. When employees are granted paid holidays, they receive their regular pay while staying away from work and are predetermined and are not considered against an employee's allocated PTO balance or vacation time.

It also depends on the company's policies, whether they have fixed holidays or flexible for employees based on preferences or cultural and religious observation.

What are paid time off benefits?

Besides freedom and flexibility, PTO offers several benefits for employees. Some of the benefits are as follows:

  1. Reduced stress
  2. Work-life balance
  3. Reduce absenteeism
  4. Retention of talent
  5. Diversity in the workforce and inclusivity
  6. Better teamwork
  7. Better employer branding

1. Reduced stress: Paid time off and taking regular breaks help the individual reduce stress and relax, rejuvenate and recharge and eliminate stress, resulting in improved mental well-being.

2. Work-life balance: Employees can address their needs, spend time with family and pursue certain hobbies that they acquire that help them balance their life besides work leading to overall satisfaction.

3. Reduced absenteeism: Paid time off helps to reduce absences as employees have access to PTO, and they are more likely to schedule time in advance, allowing work quality and reducing the frequency of employee absences.

 4. Retention of talent: Offering various benefits can enhance retention and foster loyalty is likely to stay with companies that value their time and well-being. In this competitive market, benefits can attract job seekers and attract/retain top talent.

5. Diversity in workforce and inclusivity: PTO supports a variety that accommodates employees with diverse backgrounds and religions which helps to take time off for important holidays or events.

6. Better teamwork: PTO can foster a culture of teamwork amongst the members, and employees have the opportunity to recharge and spend time away from work and, when they return ready to collaborate effectively with co-workers with improved productivity.

7. Better employer branding: PTO policy can foster an employer's positive reputation as they prioritize employee well-being and work-life balance through benefits and are seen as desirable employers.

What are the policies for paid time off?

Paid time off includes various policies such as:

  1. Working hours
  2. Type of leave
  3. Request process for PTO
  4. PTO blackout periods
  5. Violation of policy rules

1. Working hours: Define the expected working hours in a week and clock in/out time procedure to ensure employees meet the desired requirements.

2. Types of leaves: Mentioning paid or unpaid leave option, whether the company has an unlimited PTO policy, explaining it in a clear description that an individual can accrue.

3. Request process of PTO: Mention the details of how an employee should request and obtain approval for PTO and outline the designated channel for submitting the request in advance.

4. PTO blackout periods: Specify when PTO requests may be restricted due to business needs or high demands. These blackout periods may include specific projects or predefined circumstances.

 5. Violation of policy rules: Repercussions should be mentioned if any employee is not adhering to the rules and guidelines of the PTO policy.

How is paid time off work?

Various components that work for paid time off are as follows:

  1. PTO accrual
  2. Balance
  3. Request time off
  4. Approval process
  5. Compensation
  6. Usage tracking
  7. Carryover and expiration

1. PTO accrual: Employees accumulate PTO over a specific period based on the factors like service length, working hours, or predetermined accrual rate.

2. PTO balance: Employees have a balance that represents the amount of time off have been accrued and yet not used. The balance may be tracked in hours, days, or any other unit of measurement.

3. Requesting time off: When employees want to use their accrued balance PTO, they submit a request to the manager, supervisor, or designated department. The request usually includes desired dates or time duration.

4. Approval process: the employer reviews the request and considers factors such as business needs, staffing levels, and conflicting requests. After approval, the employee is notified, and the PTO balance is adjusted.

5. Compensation: During approval of PTO, employees receive their regular pay or salary as if they were working. The compensation structure remains the same as when they are actively working.

6. Usage tracking: Employers maintain records of PTO usage for each employee, including data taken during and adjustments to PTO balance.

7. Carryover and expiration: PTO policies may have rules regarding carryover and expiration of unused PTO; some employees are allowed to carry over a portion of           their unused PTO in the next year.

How to calculate paid time off?

The steps to calculate PTO are as follows:

  1. Understand accrual method
  2. Determine the rate of accrual
  3. Calculate the accrued PTO
  4. Adjustments
  5. Track and update

 1. Understand accrual method: Understand the PTO accrual method used by the company based on the factors such as length of service and working hours.

2. Determine the rate of accrual: Identify the rate at which PTO is earned.

For instance, the rate of accrual is 1.25 days/month; employees can earn 1.25 days of PTO every month.

3. Calculate the accrued PTO: Multiply the accrual PTO by the number of months or hours worked to calculate the total accrued PTO.

In the given example, if an employee worked for ten months with an accrual rate of 1.25 days per month, the accrual PTO would be 12.5 days.

4. Adjustments: Account for any adjustments or notifications based on the company policies that may also include limitations on the maximum amount of PTO that  can be accrued and adjusted.

5. Track and update: Keep track of PTO balance by deducting the used PTO request to ensure accurate tracking.

Employee pulse surveys:

These are short surveys that can be sent frequently to check what your employees think about an issue quickly. The survey comprises fewer questions (not more than 10) to get the information quickly. These can be administered at regular intervals (monthly/weekly/quarterly).

One-on-one meetings:

Having periodic, hour-long meetings for an informal chat with every team member is an excellent way to get a true sense of what’s happening with them. Since it is a safe and private conversation, it helps you get better details about an issue.


eNPS (employee Net Promoter score) is one of the simplest yet effective ways to assess your employee's opinion of your company. It includes one intriguing question that gauges loyalty. An example of eNPS questions include: How likely are you to recommend our company to others? Employees respond to the eNPS survey on a scale of 1-10, where 10 denotes they are ‘highly likely’ to recommend the company and 1 signifies they are ‘highly unlikely’ to recommend it.

Based on the responses, employees can be placed in three different categories:

  • Promoters
    Employees who have responded positively or agreed.
  • Detractors
    Employees who have reacted negatively or disagreed.
  • Passives
    Employees who have stayed neutral with their responses.

Is paid time off required by law?

Paid time off varies depending on the country's jurisdiction and labor laws. In many countries, it is provisionally mandated to provide paid leaves, like annual leave or public holidays.

For example, In the United States, providing paid vacations or paid leave for employees is not mandatory. Some states and cities still have their own laws regarding paid leave as sick leave or medical leave.

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