PTO Policy Template: A Free Copy-Paste Policy for Small Teams
A complete PTO policy template you can copy into your handbook today, with plain-English notes on every clause and the three decisions you have to make first.
Most small businesses do not have a PTO policy because writing one feels like it needs a lawyer and a week. It does not. A working policy is one page, answers seven questions, and takes about twenty minutes once you have made three decisions.
This page gives you the template, explains what each clause is doing, and flags the three places where copying someone else's wording will get you into trouble.
The three decisions to make first
Everything else in the template is boilerplate you can adopt as written. These three clauses are yours, and they are the ones that carry legal and financial weight.
1. How time is earned. Either the full year's allowance appears on day one (front-loaded), or it builds up over the year (accrued). Front-loading is simpler to explain and more generous-feeling; accrual limits your exposure if someone leaves in March having taken three weeks. See front-loaded vs accrued PTO for the trade-off in detail.
2. What happens to unused days at year-end. They carry over, they carry over up to a cap, or they expire. Expiry is restricted or banned in several states — use-it-or-lose-it rules covers where.
3. What happens to unused days when someone leaves. In some states, accrued PTO is earned wages and must be paid out. In others, your written policy decides. PTO payout laws has the state-by-state picture.
Get these three wrong and the rest does not matter
The template
Copy everything below into your handbook and replace the bracketed values. Notes on each section follow.
Paid Time Off Policy Effective [DATE] · Last reviewed [DATE]
1. Purpose [COMPANY] provides paid time off (PTO) so employees can rest, travel, attend to personal matters, and recover from illness. We expect everyone to use it.
2. Eligibility All [full-time / full-time and part-time] employees are eligible from [their first day / after 90 days of employment]. Part-time employees receive a prorated allowance based on scheduled hours.
3. How much time you get Full-time employees receive [15] days of PTO per calendar year. Public holidays are separate and do not count against this allowance.
[Optional tenure ladder:]
| Years of service | Annual PTO |
|---|---|
| 0–2 | 15 days |
| 3–5 | 18 days |
| 6+ | 21 days |
4. How PTO is earned [Choose one:] Front-loaded: Your full annual allowance is available on 1 January, or on your start date if you join mid-year, prorated to the months remaining. Accrued: You earn [1.25] days per month of employment. Your balance grows each month and is available as soon as it is earned.
New hires joining mid-year receive a prorated allowance for their first year.
5. Requesting time off Submit requests through [SYSTEM] at least [10] working days in advance for absences of three days or more, and [2] working days in advance for shorter absences. Your manager will respond within [3] working days.
Sick leave does not require advance notice. Tell your manager as early as you can on the day.
6. Approval Managers approve requests unless there is a genuine coverage conflict. Where two people request the same period and only one can be released, the earlier request takes priority. Managers who decline a request will say why and help find an alternative.
7. Carryover [Choose one:] No carryover: PTO does not carry over. Unused days expire on 31 December. (Check your state — this is unlawful in several.) Capped carryover: You may carry up to [5] days into the following year. They must be used by [31 March]. Full carryover with an accrual cap: Unused days carry over. Your balance is capped at [1.5×] your annual allowance; while you are at the cap you stop accruing until you take time off.
8. Payout when you leave [Choose one:] Paid out: Unused accrued PTO is paid at your final rate of pay in your last paycheck. Not paid out: Unused PTO is not paid out on separation, except where state law requires it.
9. Public holidays The company observes [10] public holidays each year, published annually. These are paid and separate from PTO.
10. Questions Contact [NAME/EMAIL].
What each clause is actually doing
Clause 2 (eligibility) exists to stop the "does this apply to me?" conversation. Waiting periods reduce your exposure to someone taking two weeks and leaving, but they also make new hires nervous, and they are a poor fit for senior hires. Most small teams are better off with day-one eligibility and accrual.
Clause 3 should state whether the number is days or hours, and whether it includes sick time. If you run a single combined bank, say so here — the most common support question a small business gets is whether sick days come out of vacation.
Clause 5 is where policies most often fail. "Reasonable notice" means nothing. Give a number. The two-tier structure (long notice for long absences, short notice for a day here and there) matches how people actually work and stops the policy being ignored for single days.
The response-time promise in clause 5 matters more than it looks. An unanswered request is the single most common complaint employees have about time off, and it costs nothing to fix — see how fast you should answer a time-off request.
Clause 6 turns a fairness problem into a rule. Without a written tie-breaker, every clash becomes a judgment call the manager has to defend. First-come-first-served is not the only fair rule, but it is the easiest to apply consistently, and consistency is what employees actually notice.
Clause 7 is the one to check against your state. If you are in California, Colorado, Montana, or Nebraska, the "no carryover" option is not available to you. An accrual cap achieves most of the same effect legally — see PTO accrual caps.
Clause 8 is where money lives. In states that treat accrued PTO as earned wages, "not paid out" is unenforceable regardless of what your handbook says. Run your numbers through the PTO payout calculator to see what your current balances would cost you if everyone left tomorrow — it is usually a bigger number than people expect.
Worked example: a 12-person agency
Here is the same template filled in for a real-shaped company, so you can see what the decisions look like together.
The company: 12 people, all full-time, one office, in a state that permits forfeiture.
| Decision | Choice | Why |
|---|---|---|
| Allowance | 18 days | Slightly above the 15-day norm, used as a recruiting advantage |
| Earning | Accrued, 1.5 days/month | Limits exposure on early departures |
| Eligibility | Day one | Small team, senior hires, waiting periods felt petty |
| Carryover | 5 days, expire 31 March | Stops hoarding without punishing December bookings |
| Payout | Paid out | Chosen voluntarily; treated as a trust signal |
| Notice | 10 days / 2 days | Long enough to arrange cover, short enough to be realistic |
Their whole policy is 380 words. It has not changed in two years, and it answers every question anyone has asked.
Before you publish it
Four checks, in order:
- Read clause 7 and 8 against your state's rules. Every state where you employ someone, not just where you are headquartered.
- Check the numbers agree with your payroll system. A policy promising 1.25 days per month while payroll accrues 10 hours per period will produce two different balances and one very annoying conversation.
- Have someone outside the leadership team read it. If they can tell you how much notice they need to give for a Thursday off, it works.
- Date it. Undated policies get quoted years after they changed.
If you would rather answer questions than write prose, the PTO policy generator produces this same document from a short form, including the state-specific clauses.
Keeping the policy and the reality in sync
A written policy is a promise about how balances behave. The gap between the promise and what actually happens is where trust goes. Caps that are not enforced, carryover that quietly does not expire, accruals that keep adding past the ceiling — none of these look wrong in a spreadsheet until somebody checks, and by then the numbers have been wrong for months.
SimplyPTO enforces the policy you just wrote: accrual rates, caps, carryover expiry, and notice periods all applied automatically, with balances that stay correct without anyone maintaining a formula. Start free for up to 10 people and put your new policy somewhere it will actually be followed.
Frequently asked questions
What should a PTO policy include?
At minimum: who is eligible, how much time people get, how it is earned (front-loaded or accrued), how to request it, who approves it, what happens to unused days at year-end, and what happens to unused days when someone leaves. Everything else is refinement.
Can I just copy a PTO policy template?
You can copy the structure and most of the language, but three clauses must reflect your own decisions and your state's law: carryover, payout at termination, and accrual caps. Those are the clauses that create legal and financial obligations, so they cannot be inherited from someone else's handbook.
How long should a PTO policy be?
One to two pages. A policy nobody finishes reading does not set expectations. If you need more space, the extra detail usually belongs in a separate leave-of-absence or sick-leave policy rather than in the PTO section.
Does a PTO policy have to be in writing?
No federal law requires a written PTO policy, but several states will only enforce forfeiture or carryover limits if the policy was written down and communicated in advance. In practice, an unwritten policy is one you cannot rely on.
How often should I update my PTO policy?
Review it once a year, and any time a state you employ people in changes its sick leave or payout rules. Date the document and note the review date so employees can see which version they are reading.