What is PTO?
So, what is PTO Leave? PTO, or paid time off, is a period that an employee can take away from work while still receiving their salary. It covers annual leave, sick leave and other types of absence, depending on company policy. PTO is regulated under UK employment law, which sets out minimum entitlements for leave and pay during absences.
Paid time off is closely tied to statutory annual leave entitlements, but many employers go beyond the legal minimum to provide additional days. The aim is to ensure that employees can rest, recover and manage personal responsibilities without worrying about losing income. This makes PTO both a legal requirement and a strategic tool for supporting productivity.
What are the different types of PTO in the UK?
There are several different types of PTO in the UK, and understanding them helps employers to build fair and flexible policies. Let’s look at how each type works in practice.
Statutory annual leave
Statutory annual leave gives UK employees the legal right to take a minimum of 28 days off each year if they work full time. This includes bank holidays if the employer chooses to count them towards the entitlement. While being a legal requirement, annual leave is also important for preventing burnout and maintaining performance.
Bank holidays
Bank holidays are public holidays in the UK, such as Christmas or Easter. Employers aren’t legally required to include them in statutory leave, but many choose to offer them as additional paid time off to boost employee satisfaction and morale. Whether they’re included in employees’ annual leave entitlement is at the employer’s discretion and should be outlined in all employment contracts.
Sick leave
Sick leave is time off taken when an employee is unwell. Employees may be entitled to Statutory Sick Pay (SSP), which provides a minimum level of income support, or enhanced benefits such as occupational sick pay (OSP) if offered by the employer. Companies with generous sick leave policies often create fairer systems that reduce stress during illness, increasing employee wellbeing and engagement overall.
Parental leave
Parental leave covers maternity leave, paternity leave, and shared parental leave. In the UK, employees can choose to split leave between parents, providing flexibility for families. Employers play an important role in supporting new parents by offering clear entitlements and ensuring that their policies reflect the diverse needs of the workforce.
Compassionate leave
Compassionate leave, sometimes called bereavement leave, is offered when employees need time away following a personal loss or serious family issue. While not a legal requirement in the UK, many employers provide it at their discretion. Offering compassionate leave shows care and respect, which can help to build a loyal workforce.
What are the different PTO structures?
The way that PTO is structured can affect how employees use it and how managers plan for absences. Different models suit different organisations, depending on culture, industry and resources. Let’s explore some of the most common approaches.
Set number of days
Most businesses offer a set number of PTO days per year, which employees can use for holidays, sickness or personal reasons. This approach makes it easy to track and ensures consistency. Tools for managing staff annual leave can be useful to prevent scheduling conflicts and to make sure that all coverage and operational needs are met.
Accrued time off
Accrued time off means that employees earn leave gradually based on the hours or months they’ve worked. Some companies also allow a limited number of days to carry over to the next year, known as accrual carryover. This system ensures flexibility while guaranteeing that employees don’t miss out on time off that they’re entitled to.
Unlimited PTO
Unlimited annual leave allows employees to take as much time off as they need, as long as their work is completed. While it sounds generous, it relies heavily on trust and clear expectations to ensure that business operations run smoothly and that employees take leave responsibly. Some companies offer unlimited PTO as part of their recruitment strategy, highlighting a flexible and employee-focused culture.
What are the benefits of PTO for employers?
Time off clearly benefits employees, but it also provides strategic advantages for businesses. By building effective PTO policies, employers can support performance, retention and workplace culture. Here’s how PTO can help organisations to thrive.
Boosts employee productivity and efficiency
Employees who take time off return to work recharged, with renewed focus and creativity that directly supports employee productivity. A thoughtful approach to leave also helps to prevent presenteeism, where employees show up but work at lower capacity, increasing overall output and efficiency.
Improves retention and reduces turnover costs
Offering competitive PTO policies is a cost-effective method of strengthening your employee retention strategy. By showing employees that they are valued, this approach helps to reduce staff turnover, minimising recruitment and training expenses while building a foundation of long-term expertise within the organisation.
Strengthens employer branding and recruitment appeal
Companies that promote generous and flexible PTO policies stand out in the hiring market. Prospective employees see it as a sign of respect and trust, as well as a commitment to work-life balance. Building it into your wider recruitment strategy improves appeal and strengthens employer branding.
Supports employee wellbeing and reduces burnout
Rest is essential for mental and physical health. By encouraging their staff to take regular breaks, employers help to reduce stress levels and prevent exhaustion. This supports overall wellbeing and helps to build a healthy workforce.
Encourages a positive and engaged workplace culture
When employees know that their wellbeing is valued, they’re more likely to feel motivated, engaged and connected to their workplace. Fair and transparent PTO policies help to build trust, foster a sense of belonging, and create a positive company culture where people feel supported.
How do you calculate PTO?
PTO entitlement depends on contract type, working hours and employment status. Let’s break down how UK law regulates paid time off across different categories of employees, giving you the information you need to calculate individual entitlement.
PTO for full-time employees
Per the UK’s working time regulations, full-time employees are entitled to at least 28 days of paid leave per year, with the inclusion of bank holidays at the employer’s discretion. This is the statutory minimum, but employers can choose to offer more generous packages if they wish.
PTO for part-time employees
Employees who work part-time hours are entitled to paid leave on a pro-rata basis. This means that the number of days off they’re allowed is adjusted according to the number of days or hours they work. This helps to ensure fairness and consistency across the workforce.
PTO for casual employees
Casual workers may not have fixed schedules, but they’re still entitled to paid leave. Holiday entitlement for casual workers is usually based on hours worked over a reference period, making it a more complicated calculation that requires careful record keeping.
PTO for zero-hours employees
Employees on zero-hours contracts are also legally entitled to paid leave. Like casual workers, their entitlement is calculated from previous hours worked to ensure fairness and compliance with employment laws.
How to create a PTO policy
A good PTO policy balances legal compliance with flexibility and ensures that both employees and managers know where they stand. Here are the key steps to building one that works.
1. Define your objectives and legal requirements
Start by clarifying what you want your PTO policy to achieve. Along with meeting your HR compliance obligations, you might want to focus on supporting wellbeing, improving retention, or boosting employee engagement. Aligning your PTO policy with your wider HR and recruitment strategies ensures consistency and reinforces your company culture.
2. Decide on accrual, usage and carryover rules
Next, define how and when PTO will be accrued, what it can be used for, and whether unused leave can be carried over. These rules should fit your company’s needs while remaining fair and compliant with the law. You should also clarify when your holiday year starts to make sure employees know when their allowance will expire.
3. Communicate the policy clearly to employees
Employees need to understand how the policy works and what the process is for requesting leave. Clear communication and well-written HR policies are vital for consistency, building trust and preventing confusion.
4. Review and update your PTO policy regularly
Businesses evolve, and so do employee needs. Reviewing your policy periodically ensures that it stays relevant and effective. Gathering feedback through an employee satisfaction survey can help you to assess how well your PTO policy meets the needs of your team.
Manage PTO effortlessly with PeopleHR
So now you know what is paid time off at work. Paid time off isn’t just a legal requirement; it’s a powerful way to boost efficiency, attract talent and build a healthier workforce. By understanding the types of leave, structuring them effectively and communicating policies clearly, employers can create systems that work for both staff and management.
PeopleHR’s absence management software simplifies every stage of leave management, from tracking entitlements to scheduling absences. With tools for reporting, approvals and analytics, it helps businesses to stay compliant while improving workforce wellbeing and efficiency.
To see any of our HR solutions in action, watch our demo today or contact our team and we’ll be happy to help.
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