Overview: Time off policies help businesses balance employee wellness with operational efficiency. In this guide, we’ll walk through what a time off policy is, why it matters, and what to include, along with a few examples to help you build your own.
Important! This article is only intended to be used as a guide. Please consult with an expert for more information or guidance on creating a Time Off Policy.
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What is a Time Off Policy?
A time off policy outlines the rules and procedures for employees to request and take time away from work. This may include vacation days, sick leave, personal time, holidays, parental leave, and other types of leave.
A clear policy helps ensure fair access while keeping business operations running smoothly.
Why a Time Off Policy Can be Beneficial for Your Business
A well-crafted time off policy provides structure and clarity for both employers and employees. Here are a few key reasons to implement one:
Compliance with Laws: Helps you stay aligned with labor laws, such as the FMLA, state-mandated sick leave, and local regulations.
Boosts Morale and Retention: Employees are more likely to stay engaged and satisfied when they have fair, transparent access to time off.
Reduces Scheduling Conflicts: A structured process prevents last-minute absences and ensures coverage during busy times.
Encourages Healthy Work-Life Balance: Demonstrates your company’s commitment to employee well-being.
What to Include in Your Time Off Policy
Whether you're creating a one-pager or a more detailed handbook, here are the essential elements to include:
1. Purpose
State why the policy exists—emphasize the intent to promote well-being, ensure fairness, and maintain productivity.
2. Types of Time Off Covered
Outline which types of leave your policy. Some examples may include:
Vacation
Sick leave
Personal time
Holidays
Bereavement
Jury duty
Parental/maternity/paternity leave
Volunteer or mental health days
3. Eligibility
Clarify which employees qualify based on employment status (e.g., full-time, part-time, contract) and tenure.
4. Accrual vs. Allotment
Explain how time off is awarded:
Accrual: Earned over time (e.g., per pay period or month)
Allotment: Granted in full at the start of the year or after a probationary period
Unlimited PTO: Outline expectations and approval requirements if you use this model
5. Request Process
Describe how to request time off, including:
How much notice is required
How to submit a request (e.g., app, form, manager email)
Who approves time off
Blackout dates or busy periods when time off may be limited
6. Approval Guidelines
Explain how overlapping requests are handled (e.g., first come, business needs) and any priority rules (like seniority or rotating schedules).
7. Carryover & Expiration
If employees can carry over unused time, include:
How much can be carried over
If/when it expires
Whether unused time is paid out at the end of the year or upon termination
8. Interaction with Other Leave Laws
Include how your policy works regarding time off for special circumstances such as:
FMLA or state family leave laws
Mandatory sick leave
Other protected leaves (e.g., disability)
9. Handling Absences & Emergencies
Define the process for calling in sick or handling last-minute absences, including who to contact and when.
10. Manager Responsibilities
List expectations for managers to:
Approve or deny requests promptly
Ensure team coverage
Model healthy time-off habits
11. Time Off Abuse
Outline what constitutes abuse of the time off policy and how it will be addressed:
Examples include frequent unscheduled absences, patterns (e.g., repeated Mondays or Fridays), or misuse of sick leave for non-health-related reasons
Remind employees that misuse of time off may result in disciplinary action, up to and including termination
12. Termination & Final Payout
Clarify what happens to unused time off when employment ends:
Whether unused vacation or PTO is paid out upon termination (as required by company policy or state law)
Any restrictions (e.g., only accrued and not advanced time is paid out)
How final balances are calculated and when the payout will be issued
Whether sick leave is paid out (typically it is not unless required by law)
13. Policy Acknowledgment
Ask employees to sign or electronically acknowledge the policy to confirm they’ve read and understood it.
Time Off Policy Examples
Time off policies can vary widely depending on your organization's size, industry, and workforce needs. Below are a few examples across several sectors to help you craft a policy that aligns with your team’s structure and values.
Industry | Example |
General | |
Tech/Startup | |
Consumer Goods/Beverage | |
Finance/Consulting | |
Healthcare/Social Assistance | |
Construction | |
Church/Non-Profit Organization |