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Should You Create a Formal PTO Policy?


If you're running a small or midsized company, it may seem easier, and even kinder, to consider sick time and vacation requests on a case-by-case basis among your employees. After all, you may know each of them personally, and it makes sense to use your judgment when it comes to granting leave. But doing so on an ad hoc basis can leave your company open to accusations of favoritism and even wage and labor law issues.

While there are many great reasons to create standard vacation and sick leave policies, the following three reasons should convince you to take time now to write up a standard policy that can cover all your employees, from mailroom staff to vice presidents.

  1. Having a standard policy means no guesswork: It can be difficult to remember how you handled a request for sick time or vacation time last year. Having a written protocol and standard in place for your company means never guessing again, and no combing through old emails to figure out how you handled the same situation last year. Neither you nor your employees have to guess how the situation is handled today because you have a document you can review and share.
  2. You can cover all situations with a policy: Although requests for sick leave and vacation time are probably the most common requests that occur, other situations can arise. What about maternity leave? Jury duty? Time off to enter rehab or detox? Time to care for elderly or sick family members? Employees run into many situations that require time off. Having a written policy can account for most of them so that both you and your employees know what to expect.
  3. You can use paid leave policies as a recruiting tool: Paid time off can be a valuable part of an employee benefit package and one that appeals to people seeking jobs. You can use a written policy as part of your pitch during the interview process to attract great candidates to your firm.

Creating Paid Time Off Policies

You can draft your own paid leave policy or use one that is already written that can easily be adapted for your business needs. The BizFillings website has a template that you can download at no charge and customize for your needs so that you can anticipate many different reasons why people need time off and create policies to address them. It's a great time-saving tool and one that makes communications with your employees a lot easier.


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Our firm provides the information in this e-newsletter for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. The information is provided "as is," with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.
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