PTO policy template for small business

1. Purpose

[Company] gives paid time off so people rest, handle personal matters and come back to work that was covered while they were away. This policy sets how much time off each person gets, how to ask for it and how the work is covered.

2. Who this policy covers

This policy covers [all full-time employees / employees in these locations or roles: list them]. Paid time off can be used from [your first day / the end of your first 90 days].

• Part-time employees: [covered, with the allowance reduced in proportion to scheduled hours / covered by a separate policy].
• Contractors and temporary workers: not covered unless their agreement says otherwise.
• Where local law or an employment contract gives someone more paid leave than this policy, that rule applies.

3. How much time off

Each person gets [15] working days of paid time off each [calendar year / policy year from Month 1], rising to [20] days after [5] years of service.

• The full allowance is available at the start of the year. [Or: it builds up evenly through the year, at [1.25] days a month.]
• If you join partway through the year, your allowance is [the yearly allowance multiplied by the full months left in the year, divided by 12, rounded to the nearest half day].
• Partial days come out of the allowance as part of a day: [a half day counts as 0.5].
• Company holidays, sick leave, parental, family or medical leave, bereavement leave and jury duty are separate and don’t use the allowance.

4. Requesting and approval

Request time off in [tool or channel] before you book anything you can’t change. You don’t need to give a reason.

• One day or less: [2 business days’] notice.
• Two to four days: [2 weeks’] notice.
• Five or more days: [4 weeks’] notice.
• Your manager replies within [2 business days]. Approval depends on coverage and deadlines.
• If dates don’t work, your manager suggests other dates in the same reply.
• When requests overlap, [the first request approved stands / the manager agrees a fair rotation].

5. Coverage and handoff

Before any absence of [3 or more] working days, the person going on leave and their manager agree how the work is covered.

• Each responsibility that needs attention has one covering owner who has agreed to take it on.
• A written handoff lists the next action, deadline, where the documents are and who decides urgent questions.
• Covering owners confirm they can open the files and systems they need before the absence starts. Passwords never go in a handoff.
• The team keeps at least [minimum number of people] available on each working day.
• Set an out-of-office reply that names your return date and who can help.
• People on leave are not expected to read or answer work messages.

6. Unused days and carryover

Up to [5] unused days carry over to the next year and must be used by [March 31]. [Or: unused days don’t carry over.]

• Managers check in [each quarter] with anyone who hasn’t booked time off, so days aren’t left to the end of the year.
• Where the law where you work doesn’t allow unused days to be lost, that rule applies.

7. Sick leave

Sick leave is separate from paid time off. Each person gets [5] paid sick days a year, or more where the law where they work requires it.

• Sick days can be used for your own illness, medical appointments or caring for a family member.
• Tell your manager as soon as you can. No notice is needed in advance.
• [Company] asks for a doctor’s note only where the law allows it and only after [3] consecutive sick days.

8. Holidays

Company holidays are listed in [link or location] and published each year by [date].

• For people in different countries or states: [each person observes the public holidays where they work / each person picks [10] holidays from a published list].
• If you work on a holiday because the business needs you to, take another day off within [30] days.

9. Leaving the company

Unused paid time off is [paid out at your final rate of pay / not paid out], except where the law where you work requires payment.

Rules on paying out unused vacation at the end of employment differ by state and country. Check the law where each person works, or ask an employment lawyer, before you rely on this section.

• Time off during the notice period: [approved as normal / by agreement with your manager].

10. Questions and changes

Questions about this policy go to [name or role]. [Company] reviews this policy every [year] and gives at least [30] days’ notice of changes. Approved time off stays approved if the policy changes.

Policy owner: [name or role]. Effective date: [date]. Last reviewed: [date].