PTO vs. Sick Time: What's the Difference?
Get Ahead by LinkedIn News
We talk about leveling up, about geting ahead in your career and about excelling where you are right now.
Paid time off (PTO) is what employees use to take time away from work and still receive regular pay. Paid sick leave is paid time off that an employee may need if they are ill or experiencing short-term health concerns. Companies use different PTO policies, including bank, accrual and unlimited, to tell employees how they may use their paid time off.
With over 130 million full-time employees in the U.S., benefits and job perks are vital to retaining top talent in any industry. Offering time off is just one instance where companies may help employees have better work-life balance and feel more positive about their workplace.
Work-life balance is a top priority for job seekers. People want flexibility and support from their employers. Companies that create policies promoting time off show current and future employees they genuinely care about their workers’ well-being.
And companies should know that employees with a healthy work-life balance also benefit the organization. Promoting a healthy employee work-life balance will encourage:
Employers with time off policies stimulate work-life balance by encouraging employees to take time away from work for other obligations.
However, not all time off is the same. There is paid time off (PTO), sick time, holiday time and parental leave… the list goes on. However, two of the most commonly confused types of time off are paid time off and paid sick leave.
What is Paid Time Off (PTO)?
PTO refers to the time that employees may use to take time off from scheduled work hours. Even though they aren’t working, employees still receive compensation for this time.
Employers provide PTO to employees under company-specific programs, so every company has its policies. However, many companies measure PTO in hours under categories like:
Although a PTO program encompasses many situations, it doesn’t account for all instances where an employee receives payment while not working. For example, FMLA and parental leave types do not fall under a PTO policy. These are separate programs with their rules based on company or state-specific regulations.
PTO vs. Vacation Time
Vacation time is a specific kind of PTO, meaning all vacation time is PTO.
Employees should use vacation time to take a break from work. Rob Kim, a career strategist, explains that he uses his vacation time to take paid vacations with his family, which is a luxury that not all positions offer. For example, an employer may specify how many hours employees may use for vacation within the PTO plan. Taking advantage of this precious time will help employees create a healthier work-life balance.
PTO vs. Sick Time
Sick time refers to specific PTO used when addressing health issues or illnesses.
Like vacation time, companies may allocate a set number of “sick days” for employees. This encourages employees to be honest about how they use their time off and discourages people from working when ill.
PTO Accrual Types
PTO policies usually fall into accrued or discretionary categories. For PTO use, employees may have:
Bank Policy or Set Number
Under this policy, a company tells employees how many available hours they have for PTO within a certain period. This means the employee receives their total PTO hours upfront and may use them as needed before the next period begins.
Example: Employees receive 150 hours within one calendar year for personal, sick, volunteer or vacation time. Employees must take at least 80 hours of PTO, with the remaining hours being eligible for a payout if not used before the next year begins.
Accrual Policy
This is a type of PTO policy where employees earn PTO hours over time. As they earn PTO, they may use it based on their availability and when their employer allows it. Depending on the company program, employees may earn PTO on a set basis, such as:
Recommended by LinkedIn
Employees may also earn additional PTO hours if they have tenure at the company.
Example: Employees with 0-2 years at the company earn 2.5 PTO hours per pay period. Employees with 2-4 years at the company earn 4.5 PTO hours per pay period. Employees may roll over up to 30 hours of unused PTO to the next calendar year and hold up to 200 hours of PTO availability at a time.
Unlimited (Open) Policy
Unlimited PTO policies allow employees to take time off as much as they need. There are no set amounts or requirements for taking PTO under this program, as employees may request as many days off per year as they’d like.
Example: Employees may request as much PTO as necessary. Employees must take at least 40 hours of PTO per year for personal or vacation time. Employees should plan to ensure PTO does not compromise their performance or job responsibilities. Employees will not receive compensation for unused leave.
Benefits of an Open PTO Policy
The key benefits of an open PTO policy include the following:
Employers may rest assured that employees taking increased days off won’t hurt their bottom lines. Companies may save money by not having to pay for unused PTO.
Additionally, unlimited PTO doesn’t mean “unlimited.” Employees must still maintain their work performance and finish all their job-related tasks to take time off. In most cases, unlimited PTO policies require supervisor approval for specific days off so that team members know who will be available on what days.
For an effective unlimited PTO policy, companies should:
Austin Belcak, the founder of Cultivated Culture, makes clear that ”reports will hesitate to use PTO” if managers don’t use it first. Promoting a positive, supportive culture goes a long way in the success of an unlimited PTO policy.
Other Types of Time Off
Some of the common types of time off that paid sick leave and PTO don’t cover include:
While certain types of leave are up to the employer's discretion, the government legally mandates others. Additionally, some types of leave are only available as unpaid rather than paid. When creating company-specific requirements, employers must know their national, state and local laws surrounding time off policies.
Final Thoughts on Paid Sick Leave vs. Paid Time Off (PTO)
Sick leave and PTO are often used interchangeably as general “time off” from work, but companies don’t typically treat them the same.
A paid sick leave policy is often a separate policy that offers paid time off for issues related to health or illness. A PTO program will usually package a variety of leave types, such as vacation, holiday, parental and personal leave, into one policy. While paid sick leave may be part of a PTO policy, not all PTO is sick leave.
Top Takeaways
PTO vs. sick leave: what’s the difference?
(Reporting by NPD)