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What is paid time off?

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Paid time off (PTO) is a type of employee leave that is paid for by the employer and may include vacation time or other types of leave.

PTO policies vary from country to country. They’re generally considered a payroll liability and need to be handled correctly to avoid penalties and fees.

Other common terms for paid time off may include holiday pay and paid leave.

At times, PTO may be used to refer to personal time off. This type of leave differs from paid time off in that it can be taken for any reason and may or may not be paid, while “paid time off” is time away from work which is paid for by the employer and may include vacation time or other types of leave.

For the sake of this entry, we’ll use PTO to refer solely to paid time off.

How does it work?

PTO is considered a part of an employee’s benefits package. Specific rules and policies regarding PTO differ depending on the country in which the employee is located. As a general rule, the amount of paid time off an employee receives will largely depend on how many hours and/or days they’ve worked.

Difference between PTO and PPTO

While PTO refers to any type of paid time off, PPTO, which stands for protected paid time off, is a legal requirement for employers to offer.

For example, maternity and paternity leave is often an example of PPTO, while vacation is a type of paid time off that allows for more flexibility for the employer.

Different types of personal time off

Common examples of PTO include the following:

  • Parental leave
  • Vacation days
  • Bereavement leave
  • Sick leave
  • Jury duty leave
  • Military leave
  • Personal days

Managing personal time off for a global workforce

Each type of paid time off will have its own rules and restrictions. That’s doubly true when it comes to a global workforce, per various countries’ rules and regulations. On top of that, different cultures may view PTO types differently—another thing employers need to keep in mind when drawing up their employee contracts and benefits packages.

To figure out these complications, employers need to ensure they have access to local regulatory and cultural expertise. One way to do that is through partnering with a global payroll payments provider that knows how to navigate multiple payroll ecosystems – including PTO policies.

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