What should a PTO policy include?

How much time off employees get and how it is granted (accrual or lump sum or unlimited), how to request and approve it, carryover and expiry rules, what happens to unused PTO at termination, how PTO interacts with sick leave and holidays, and any blackout periods. The edge cases (carryover, payout, approval conflicts) cause most disputes, so address them explicitly.

Is unlimited PTO better than accrued PTO?

Each has tradeoffs. Unlimited PTO reduces admin and payout liability and signals trust, but can lead to people taking less time off without a clear floor, and it removes a payable balance employees sometimes value. Accrued PTO is concrete and bankable but creates tracking and payout obligations. Whichever you choose, the policy must be specific, because unlimited especially fails when expectations are vague.

Do you have to pay out unused PTO?

It depends on jurisdiction. Some places require payout of accrued, unused PTO at termination by law; others leave it to company policy. This is one of the most important things to get right and to state clearly, because it is a frequent source of legal claims. Confirm your local rules.

How do you write an unlimited PTO policy that works?

Set a minimum expectation (encourage or require a floor of days taken), define approval and notice norms, clarify it is for vacation and personal time rather than extended leave, and have leaders model taking real time off. Unlimited PTO without a floor and without manager modeling tends to reduce time taken, which defeats the purpose.

Employee onboarding

How to Write a PTO Policy (With Template)

Sakha TeamJune 5, 20269 min read

A PTO policy sets out how much time off employees get, how they take it, and what happens to what they do not use. It sounds simple and generates a remarkable volume of disputes, almost all from the parts companies leave vague: carryover, payout at termination, and what happens when two people want the same week. This guide covers the models, a template, and the edge cases worth nailing down. (General information, not legal advice; payout rules in particular vary by jurisdiction.)

Accrued vs unlimited: the real tradeoff

The first decision is the model, and the popular framing (unlimited is modern and generous) misses the actual mechanics.

	Accrued PTO	Unlimited PTO
Employee gets	A concrete, growing balance	No fixed number
Admin burden	Tracking accrual and balances	Minimal
Payout liability	Often owes unused PTO at exit	Usually none
Common failure	Hoarding, big balances	People take less, with no floor
Signals	Earned benefit	Trust, but needs reinforcement

The counterintuitive finding many companies hit: unlimited PTO, without a stated minimum and without leaders visibly taking time, often reduces how much time people take, because nobody knows what is acceptable and the safe default is not enough. If you go unlimited, set a floor and have managers model it. If you go accrued, decide your carryover and payout rules deliberately, because those are where the disputes and legal claims cluster.

What a PTO policy should include

The amount and how it is granted, how to request and approve time, carryover and expiry, termination payout, the interaction with sick leave and public holidays, and any blackout periods. The two that matter most legally are termination payout (mandated in some jurisdictions) and accrual mechanics; the one that matters most for daily peace is a clear approval and conflict process.

A template

"[Company] PTO policy.

Employees receive [X days per year / accrue at Y per month], available [from start date / after a waiting period of Z]. PTO covers vacation and personal time. [Sick leave is separate, see policy] or [this is a combined PTO policy].

To request time off, [process and notice expectation, e.g. submit at least two weeks ahead for blocks longer than three days]. Approval depends on team coverage; conflicts are resolved by [method].

Carryover: [up to N days roll over / no carryover / unlimited]. Unused PTO at termination: [paid out / not paid out], in line with applicable law.

Questions: ask in [channel] or contact [name]."

The questions you will get forever

A PTO policy generates the same handful of questions on permanent repeat: how much do I have, how do I book it, can I carry it over, what about the holiday on Monday. Multiply by every employee, several times a year, and it is a meaningful tax on whoever answers. This is the case for not just writing the policy but making it instantly answerable, the same logic behind a real knowledge base and the rest of your handbook. For more PTO-adjacent policy examples, see employee handbook examples.

How Sakha helps

Sakha generates a clear PTO policy structured to your model and jurisdiction, flags vague carryover or payout language in an existing one, and publishes it straight into your knowledge base. The result: when an employee asks "how much PTO do I have left" (the balance you would point to your HRIS for) or "what is the carryover rule" or "do I get the Monday holiday too," Sakha answers the policy questions instantly in Slack, with the source, instead of routing every one to HR. New hires get the time-off policy explained during onboarding, so it is clear from week one. The policy stops being a document people cannot find and becomes an answer they can get in seconds.

Curious how Sakha runs onboarding inside Slack? See how it works.