How to Write a PTO Policy for Small Business (What to Include)

Updated May 31, 2026

A good PTO policy answers the questions employees and managers actually ask, in writing, before they come up. This guide covers every section to include, the three common PTO structures, and how much time off is typical for small businesses.

What every PTO policy should specify

At minimum, your policy should answer each of these clearly:

Eligibility — full-time vs. part-time, and any waiting period for new hires.

How PTO is earned — accrual rate or a lump-sum grant, and when.

Request process — how to request, and advance-notice expectations.

Approval — who approves, and how requests are decided.

Carryover — whether unused PTO rolls over, and any cap or expiry.

Payout — what happens to unused PTO when someone leaves (check your state).

Holidays & weekends — how they interact with PTO calculations.

The three common PTO structures

Pick the model that matches how you want time off to work:

Accrual-based — employees earn PTO gradually (e.g. per hour or per pay period). Fairest for hourly and part-time staff.

Lump-sum / fixed grant — the full annual allotment is granted on a set date. Simple, but front-loads liability.

Unlimited — staff take what they need with approval. Low admin, but needs a strong culture and clear norms.

How much PTO is typical?

For US small businesses, a common starting point is 10–15 days of combined PTO in year one, often increasing with tenure, plus 6–10 paid public holidays.

Before you finalize anything, check whether your state or city has a mandatory paid-sick-leave law — that can change how you separate sick time from vacation.

Make it easy to follow

A policy only works if people can act on it. Include the last-revised date, and tell staff exactly how to request time off and check their balance — ideally a self-serve tool rather than emailing HR.

Once your policy is written, Orvella enforces it for you — accruals, carryover caps, approvals, and balances — so the rules actually run themselves.

Frequently asked questions

What should a PTO policy include?

Eligibility, how PTO is earned (accrual or lump-sum), the request and approval process, carryover rules, payout on termination, and how holidays/weekends are handled — all in writing with a revision date.

How much PTO should a small business offer?

A common starting point is 10–15 days of combined PTO in the first year plus 6–10 paid holidays, often increasing with tenure. Check your state's paid-sick-leave law too.

What are the main types of PTO policy?

Accrual-based (earned over time), lump-sum/fixed-grant (granted up front), and unlimited (take what you need with approval).