Understanding PTO vs vacation

The benefits that a job offers to you are a literal benefit to accepting the job offer. When looking at potential employers, one benefit that many applicants typically consider, right after pay, are vacation days and how many you can take in a given year. Sometimes, this is used interchangeably with the term PTO, but are they the same? Let’s find out!

What is paid time off (PTO)?

Paid time off, or PTO, is exactly what it sounds like. It is time that you take off yet get paid for, so you’ll request the time off and your employer will compensate you for it without you having to work. For example, let’s say you request a date off from work, and you are paid for those hours at the same rate you would receive if you actually worked them. 

There are a few types of PTO offered, including the following: 

• Unlimited PTO: Your company allows you to take as much time off as you need as long as it does not interfere with the completion of your work responsibilities. 
• Accrued PTO: You collect your time off over time. This is a standard type of PTO. For example, some employer accrual plans can be four hours of PTO per month or two hours for every 40 hours worked, but it all depends on your specific employer. 
• PTO bank: A PTO bank is a situation in which you have a set amount of PTO that you can use on an annual basis. The time might not transfer over from one year to the next, but whether it does or not is dependent on your specific employer. 

What is vacation time?

Vacation time and PTO tend to be used interchangeably, but they are not necessarily the same thing. Vacation time is when employers assume that the employee will be off and out of the office for an extended amount of time. A vacation can be anything from a staycation to an international trip, but the assumption is that this is time to rest and recharge while you’re out of the office. 

The difference between PTO and vacation 

Your vacation days could be subtracted from the total number of paid time off hours that you are allowed every year, which is why the terms are often used interchangeably. PTO is the total amount of time that your employer allows for paid time off, meaning doctor appointments, family emergencies, and sometimes even sick time can fall into this category. Some employers will count sick time as a separate bank of time, typically with fewer days. Even though vacation time might come from your PTO bank, it is typically used for more extended days off. 

How are PTO and vacation time accrued?

Each employer can have their own method for accruing PTO and vacation time. Some typical ways are accrued PTO or a PTO bank. The accrual process means a set amount of time per pay period. Sometimes this time can keep accruing over your time at your job. 

There is also the PTO bank method of accruing time. This means you start with a previously discussed amount of time and when you use your PTO or vacation time, you take the time from the bank. Keep in mind some employers consider sick time in the PTO bank or even when accruing time. It is usually listed separately so you can keep track of all your time easily. 

Is there a cap on earning PTO and vacation time?

When you hear of a bank you think of saving, but this might not be the case when holding on to your vacation time. Some employers will limit the number of hours you can earn through PTO and vacation time. This is usually done to encourage employees to take time off. This lose it or lose it policy can be tough because you have earned your time, so make sure you take advantage of it. 

Advantages of PTO

PTO is yours to use, it is a benefit from the company. There are quite a few advantages to using your PTO. 

Flexibility 

PTO offers flexibility. You can use this time regardless of the reason. This means if it is for a doctor’s appointment for yourself, your kids, or if you just need the day off for personal reasons, you can use your PTO. For example, sick time is reserved for when you are sick. Depending on your employer’s requirements, you might need to provide proof that you were sick like a doctor’s note, this isn’t the case with PTO. 

Diversity

You can use your PTO bank to take time off at any point in the year. This comes in handy, for example, if you need holiday accommodations that your employer does not recognize or even a family event. Keep in mind some employers might have black out dates during certain seasons but otherwise your PTO can be used whenever.  

Privacy

PTO offers you a certain degree of privacy. It allows you to use your time without having to discuss why you are taking time off. 

Equality

The great thing about a company policy is that you know it applies to everyone. PTO policies are no different. This means that everyone accrues time off the same way and that no one is getting extra time or special treatment with their requests. Sometimes companies will give you additional time once you hit certain milestones with the company (e.g. promotion or benchmark years) but again this will be a known policy. 

Potential rollover hours

PTO typically expires but in some cases companies will let the time roll over. This provides the potential to use your unused hours into the next year. This is great if you want to plan a long vacation or anticipate the upcoming year to be busier. Carrying over time is a great advantage of having PTO. 

Use your time 

Paid time off and vacation time are not the same, but it is important to use your time. This is your time to either take a vacation, handle personal business, or even just sit at home and do nothing. 

You are entitled to this time through your employer and you should use it. Each employer is different so your PTO might be in the form of a bank of time or accrued time. Once you figure that part out, use your time as you’re able to and enjoy!  

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