The two terms, FTO and PTO, are terms Human Resources (HR) uses when employees request leave from work. PTO is an important benefit that allows employees to request leave from work but still get paid. No law requires companies to provide PTO to their employees, but it is a great benefit to entice prospective talent and more.
Since the law does not cover it, every company that provides PTO has its own set of procedures. Generally, each employee has a bankable number of hours that they can use as PTO over a period, which is usually a year.
It’s up to the company to set the ground rules regarding the following:
- The number of starting hours in the PTO
- How often the PTO is added to the employee’s bankable hours
- What happens if an employee doesn’t use their PTO
- Whether PTO may include or exclude certain types of absences
PTO is either a lump sum or accrued. In a lump-sum PTO policy, an employee receives some PTO days or hours at the start of the year. In the case of accrued PTO policy, an employee earns a number of days or hours at the end of every month.
FTO is less restrictive, and it does not have to be accrued. There is no limit to how many hours or days of paid time off a person takes as long as they produce expected work results.
Some call FTO a progressive HR practice.
Companies that offer FTO, sometimes called unlimited PTO, remove the policy on how it is earned. FTO is available any time the employee needs it. But to prevent abuse—employees may take months off of work, come back for a couple of days, and take off again—companies must be strict with deadlines and targets.