What Is PTO? Definition and Types of PTO To Know More About

Many organisations offer PTO (paid time off) as a way to help employee morale and increase hiring and retention. Another reason your employer may offer PTO is to decrease the number of absences in the workplace and improve workplace productivity. Knowing how PTO works can help you make the best use of this employee leave policy. In this article, we discuss what PTO is, explore the different types of PTO and learn the advantages of this leave policy.

What is PTO?

PTO refers to paid time off for holidays, medical leaves and personal days that an employer provides to employees to use as they need or desire. This system typically encourages employees to take leave decisions responsibly without compromising on their overall productivity or affecting the abilities of the workplace to meet its goals.

For example, if you know you have a future engagement that you may need to take time off work for, you may use the paid time off hours your employer has provided to receive a normal paycheck. Knowing what your PTO schedule is ahead of time can also help an employer properly prepare for your absence. Your manager may adjust your coworkers’ schedules to compensate for when you are away from work so the office does not experience a pause in productivity.

Related: How To Write an Office Leave Application

How does PTO work?

Companies may grant employees a fixed number or a range of days of PTO. For example, one company may separate PTO into certain categories like five medical leaves, eight holiday days, two casual leaves and two personal days in a year. Alternatively, they may also group the entire period of absence as 17 days of PTO in a calendar year for you to use as you see fit. PTO policies usually fall into one of two categories:


With a limited PTO policy, the employer gives their employees a fixed number of days depending on the number of hours they work during a specific timeframe. Unused hours may carry forward into future periods or become void once the period is over, depending on the company’s PTO policies.

For example, a company may give each employee five days of PTO every quarter without carry-forward to the next quarter. This means that every three months, the employees have five days of PTO to use. Another company may have a similar policy, but with the ability to carry forward any unused PTO to the next quarter. This means that the employees can save their PTO hours and take 20 days of PTO toward the end of the financial year.


With unlimited PTO, an employer provides time off at their discretion. It is common for companies to review leave requests and approve them on a merit basis, meaning that employees who regularly perform their job duties correctly and on time can take PTO. An employer may also evaluate how the employee’s absence can impact normal work operations.

For example, an employer may choose to grant PTO to an employee who has already finished their year-end project. However, if their absence can affect the productivity of other projects, causing delays, a manager may decline the PTO request and suggest a different timeframe for the employee to take instead.

Are PTO and holiday the same?

While you may use PTO and holiday time interchangeably, there is a difference. PTO refers to all the time that you may spend away from work, including a holiday, sick time or personal days. Holiday time is a subset of PTO in many cases. When you take holiday time, you are probably using PTO, however, you may also use PTO for reasons other than an upcoming holiday.

Related: How To Write an Effective Leave Request Mail to Manager for Vacation

Is PTO better than holiday time?

Candidates tend to prefer companies that offer general PTO hours over those that separate holiday days, sick leaves and personal time off from work. This is because an employee can then take PTO for any reason, whereas having categories of PTO may limit how many days they can take for sick pay or holiday leave.

However, an employee who is regularly sick from work may appreciate having categories of PTO because this usually also means that once they have used the PTO they have earned for sick time, they may then use the benefits of a separate medical leave policy if the company offers one. PTO policies often offer a greater amount of flexibility to employees to choose how they want to spend their time away from work.

Types of PTO

These are the common types of PTO that companies offer to employees:

  • Public holidays: State and central governments often mandate public holidays and companies usually decide on certain days of the calendar as PTO in order to comply. Sometimes, this can also be an optional leave, where employees can choose to work on a public holiday so they can save the PTO they have earned for the future.
  • Personal leave: Employees can use personal leave when they have to attend to personal aspects of their life. This may include attending important functions, meeting family and other personal pursuits that may be important to them.
  • Medical leave: Employees may use their medical leave when they are too sick to come to work. Availing a medical leave may require that the employee produce medical documents, like a prescription or a doctor’s note, following the period of absence.
  • Holiday: Companies often provide employees with a certain number of days of leave as holiday time, during which they can go on holidays or trips. Employees typically use holiday time in bulk. It is common for employers to provide holiday PTO on a quarterly, half-yearly or yearly basis.
  • Bereavement leave: Employers may provide bereavement leave to employees during periods of grievance, like the death of a loved one.
  • Earned leave: Employees may earn leave on a merit basis, depending on company policy. If the employee chooses not to avail of it, they may collect the leave day salary as a bonus toward the end of the year or quarter.
  • Study leave: Companies sometimes grant study leave to employees in particular situations where they need to pursue an academic qualification related to their job.
  • Maternity or paternity leave: Companies may provide maternity or paternity leave to an employee when they become a parent. This type of leave is usually a long set of leave days an employee can take before or after childbirth.

Related: How To Write a Paternity Leave Application: Samples Included

Advantages of PTO

Here are some advantages of PTO:


PTO accounts for all different types of leaves that employees may require from work. When an employer does not separate holiday time, medical leaves and personal days, you may experience greater flexibility in planning your time off from work. With PTO, it is common for there to be no mandate that you must use a particular set of leaves for a specific purpose. Depending on the PTO policy where you work, you may be able to take longer holidays and can have more personal time off from work if you plan accordingly.


Companies typically provide the same PTO policies to employees in similar positions or who receive the same pay. Sometimes, an employee or a team of employees may receive additional PTO based on merit. PTO policies typically ensure that there is no display of favouritism in how many days off work an employee receives.


You may use PTO for a variety of reasons, which you usually do not have to disclose to your employer. This is important when you require leave for personal reasons, which you may not want to share in a professional setting. Even though you may have to specify which dates you plan on being away from the office for holiday, you can usually keep the details private of where you are going and what you are doing.

Rollover hours

Some companies may have PTO policies that account for rollover hours. This means that employees can carry forward any PTO they have not used from a particular quarter or year, into the next quarter or year. This allows employees to conserve their PTO and use it at a later time. Most holiday time policies do not have this advantage, meaning employees lose holiday time that they do not use within a defined time.

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