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HR Glossary

PTO (paid time off)

United States · United States employment
What is PTO?

PTO (paid time off) is the US umbrella for paid vacation, personal and often sick time, usually pooled into one bank. No US federal law requires paid vacation or sick leave: PTO is set by employer policy, with about 21 states plus DC now mandating paid sick leave specifically.

The no-mandate baseline and what fills it

The US is the only country in this glossary with no statutory paid annual leave. Market practice fills the gap unevenly: salaried professionals commonly receive 15 to 25 PTO days plus holidays, while large portions of the hourly workforce receive little or none. The state layer is growing fast on the sickness side specifically, with around 21 states plus DC mandating accrued paid sick leave by 2026, each with its own accrual rates and carryover rules, and dozens of cities on top.

The rules that bite on exit

Whether accrued PTO must be paid out at termination is state law: California, Colorado, Montana and Nebraska treat accrued vacation as earned wages that cannot be forfeited (capping accrual is allowed; use-it-or-lose-it is not), while other states let policy decide. Multi-state PTO policies that ignore this distinction misstate liabilities on every balance date and get corrected, expensively, at exits.

Unlimited PTO, honestly assessed

Unlimited PTO removes the accrual liability and markets well, and the data pattern is consistent: without norms and manager modelling, employees under unlimited policies often take less leave, not more, while losing the payout an accrued bank would have owed them. If the goal is rest and retention, minimum-usage expectations and visible leadership behaviour matter more than the policy label. If the goal is balance-sheet hygiene, say so internally and design accordingly.

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Statutory holiday entitlement (UK)

UK workers are legally entitled to 5.6 weeks of paid holiday a year, 28 days for someone working five days a week, which can include bank holidays.

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Holidays Act 2003

The Holidays Act 2003 is the New Zealand statute setting minimum leave entitlements: four weeks of annual holidays, ten days of sick leave, bereavement leave, family violence leave and twelve public holidays.

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FMLA

The Family and Medical Leave Act (FMLA) is the US federal law giving eligible employees up to 12 weeks of unpaid, job-protected leave a year for serious health conditions, a new child, or qualifying family care, with health benefits maintained.

Read the definition →Related term

Vacation pay (Canada)

Canadian vacation entitlements are set by each jurisdiction and expressed as both time and pay: Ontario provides 2 weeks at 4% of wages, rising to 3 weeks and 6% at five years' service, while federally regulated employees receive 2, 3 and 4 weeks at 1, 5 and 10 years.

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Every definition, with the local rules, rates and thresholds attached.

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Common questions

Is there any federal paid leave requirement in the US?

No general one. The FMLA protects unpaid leave; paid sick leave exists only where states and cities mandate it, and paid family leave only through the state insurance programs.

Must unused PTO be paid out when someone leaves?

Depends on the state. In payout states (California most prominently), accrued vacation is earned wages and must be paid; elsewhere policy governs. Sick-leave banks are usually treated differently from vacation.

This page is general information, not legal advice. We check figures annually and update them on a best-efforts basis, but employment rules change and we cannot promise everything here is current or complete. Before you act on it, confirm the detail with the US Department of Labor (dol.gov) or your own adviser. Last reviewed July 2026.