Human Resource Blog

PTO Payout

We currently have in our policy manual a statement stating we payout all accrued PTO to employees who leave the company. Does anyone have any suggestions on how to reword that so it is up to the discreation of the company? If we fire someone, we don’t want to pay them accrued PTO time.

Thank you,
Renee

We do not recommend that you leave this up to the companys discreation. If you pay accrued PTO to some employees who are fired, and not to others, that can easily lead to a lawsuit for illegal discrimination.

A better plan is to establish a policy that accrued PTO will never be paid to certain employees. Some sample wordings: “Employees who are laid off through no fault of their own, and employees in good standing who resign with two weeks notice, will be paid for accrued PTO upon termination. Employees who are fired for cause, or for gross misconduct, will not be paid any accrued PTO.” You can change the wording to suit your policy. For example, some employers would pay PTO to an employee who was terminated due to tardiness (fired for cause) but not one who was terminated for theft (gross misconduct.) Or, you could leave out the part about two weeks notice, and just include “employees who resign will be paid…”