Free Vacation & PTO Policy Generator
Answer a few questions and get a ready-to-use vacation or PTO policy in seconds — formatted, legally aware, and customized for your company.
We'll flag relevant legal requirements in your policy.
What should a PTO policy include?¶
A PTO policy should say who is eligible, how time is earned or granted, how employees request it, and what happens to unused balances. Define sick leave separately enough that managers can apply its rules correctly. Include an effective date and an owner who can answer questions about the policy.
Write for the new hire asking for a day off and the office manager who also handles payroll. Both should be able to find the answer without asking the founder to interpret a sentence. This generator turns your choices into a draft; the useful work is making those choices consistent.
| Policy section | Why it matters | What goes wrong without it |
|---|---|---|
| Eligibility and employee groups | Defines who receives the company benefit | Part-time vacation arrangements are guessed at |
| Allowance and leave year | States the amount and when the cycle resets | People confuse calendar-year and anniversary allowances |
| Accrual or grant method | Explains when time becomes available | A hire assumes the whole allowance is available immediately |
| Hire dates and waiting periods | Separates earning time from permission to use it | A new hire receives conflicting answers |
| Requests, notice and reviewer | Gives each request a decision owner | Approval stays buried in a message |
| Sick leave and protected uses | Distinguishes the sick-leave process | A manager treats illness as a vacation scheduling conflict |
| Carryover and balance caps | Explains the treatment of unused time | Year-end balances change without an explanation |
| Payout at exit | Records the company's approach and applicable requirements | Payroll improvises at the final paycheck |
| Effective date and policy owner | Makes the current version easy to identify | Employees follow different versions |
Be specific about your units. If an allowance is expressed in days, explain how a day relates to the employee's schedule. Put company closure dates in a separate calendar so they are easy to distinguish from time charged against a leave balance.
Choose accrual, lump sum or unlimited PTO¶
Start with the structure your team can administer consistently. For most small teams with someone already running payroll, accrual per pay period is a practical default. A lump-sum bank works when simpler availability matters more than gradual earning. Unlimited PTO needs managers who can support time away consistently across the team.
| Team situation | My recommendation | Rule to settle before rollout |
|---|---|---|
| Small team with a regular payroll process | Accrual: earn time as each pay period closes | State the rate, first credit and treatment of new hires |
| Small team wanting a predictable bank available upfront | Lump sum: grant the allowance at the start of the leave year | Define the mid-year hire grant and when people may use it |
| Salaried team with established coverage habits | Unlimited: use clear expectations instead of a fixed vacation balance | Name the approver and make taking time off practical |
Choose a structure before tuning the number of days. Then walk through a new hire's first request, an employee booking next year, and a person leaving the company. If any answer depends on who happens to be reviewing it, the wording needs another pass.
Keep an existing accrued balance visible when changing plans. An unlimited label does not decide every payout question: the McPherson appellate opinion examined what a purported unlimited plan actually provided. Treat that as a reason to review both the wording and the practice, rather than a blanket rule about every unlimited policy.
For a fuller comparison, read Accrual vs. bank vs. unlimited PTO.
Sick leave: combined PTO or a separate bank?¶
Choose a combined bank when its rules can cover both ordinary time off and applicable sick-leave requirements. Choose a separate sick bank when different notice, use or carryover rules would make a shared balance harder to explain. A separate bank keeps those rules visible; it is not automatically a legal requirement.
| Generator choice | What it means | What to check |
|---|---|---|
| Combined with PTO | Sick absences use the same fixed bank as vacation; unlimited plans include sick time in their PTO arrangement | The combined plan's rules as well as its total allowance |
| Separate sick leave bank | The company grants the entered sick days at hire and each January 1, with unused days carrying over | Whether applicable requirements provide greater rights |
| State and local requirements | Sick leave follows the most protective requirements that apply at each work location | The actual local rules; the choice does not calculate an entitlement |
Many states and localities have paid sick-leave laws, as the Department of Labor's paid-leave resource explains. Those rules are why a shared bank can need more than a generous headline allowance. Review covered uses, notice, carryover and recordkeeping alongside the amount of leave.
For example, California's paid sick leave guidance allows a combined PTO plan that meets its requirements. Keeping sick time separate is an administrative choice that can make different rules easier to apply, rather than proof that the law always demands another bank.
The Separate option also makes a specific company promise: no doctor's note for an absence of three days or less. That is the template's chosen benefit, not a nationwide legal threshold. Longer absences still follow applicable documentation limits. Keep medical information in the appropriate private process, with only the absence details needed for scheduling in a shared calendar.
Check employee coverage independently of your vacation benefit. New York's sick leave guidance, for example, includes private-sector part-time employees. A full-time-only vacation policy should not be used as a shortcut for deciding statutory sick-leave coverage. Review each employee's work location and the applicable rules before setting up the bank.
Roll out a policy people can actually use¶
Set the effective date, review the draft, and teach managers the request process before sending it to the team. The rollout is complete when the written rules and the recorded balances agree. One current policy, a clear owner and a simple request channel give people a dependable place to start.
- Review the draft against actual work locations. Confirm who is covered and which rules need a location-specific addition. Keep the underlying source links and review date with your internal policy records.
- Reconcile starting balances. Identify existing earned time and carryover before switching rules. Check the opening balance with the person who handles payroll; explain any correction to the employee.
- Brief managers first. Walk through ordinary vacation, a same-day illness and a request received while the usual approver is away. Give each situation a named contact and an expected response.
- Publish one dated version. Put it in the handbook or another agreed location, send the link, and tell employees where to ask questions. Archive the superseded version so it stays distinguishable from the current policy.
- Check the first requests. Confirm that deductions, carryover treatment and decisions match what you published. Schedule a review at least annually and when the team or work locations change.
Put the policy to work in Slack or Microsoft Teams¶
Once the policy is settled, configure the leave types, accrual methods and carryover rules you chose. Cabana supports policies scoped to the organization, location, department or employee, so your admin can assign the relevant rules.
With PTO tracking in Slack or PTO tracking in Microsoft Teams, employees request time off and check balances where they work. Managers approve or deny from the message, and approved requests appear on the team calendar. You configure the rules; Cabana records the requests and balance changes.
Explore PTO tracking software for small teams when you are ready to put the written policy into daily use.
US-focused general guidance, not legal advice.
FAQ
Vacation & PTO policy generator — frequently asked
- How does a vacation policy generator work?
- You answer a few questions about how your company handles time off — accrual vs. lump sum, how many days per year, carryover rules, payout on separation, and which states you have employees in. The generator assembles a complete, formatted policy document from your answers in seconds, including notes for states with their own PTO laws.
- Is this a free company vacation policy generator?
- Yes. Building your policy is free and doesn't require a credit card. We ask for your email to send you the finished document and to add you to our occasional newsletter for small-team operators — you can unsubscribe anytime.
- What's the difference between a vacation policy and a PTO policy?
- "Vacation" traditionally refers to time off for rest and travel, while "PTO" (paid time off) is the broader term — it usually bundles vacation, personal days, and sometimes sick time into one bank. Most small businesses today use PTO as the umbrella term, which is why this generator covers both.
- Is the policy this generates legally compliant for my state?
- The generator includes specific notes for states with unique PTO laws — including California, Colorado, Montana, Oregon, Washington, and others — covering things like use-it-or-lose-it restrictions and mandatory payout on separation. That said, it produces a starting template, not legal advice. Have it reviewed by an employment attorney before you roll it out, especially if you have employees in multiple states.
- Can I edit the policy after I generate it?
- Yes. The document is yours — copy it into your handbook, HR system, or offer letters, and edit any section to fit your business. Nothing about it is locked.
- Does this replace a PTO tracking tool?
- No — this generator produces the written policy, not a system for enforcing it. Once your policy is set, you still need a way to track requests, approvals, and balances day to day. That's what Cabana does, right inside Slack.
- Should sick leave be included in PTO or tracked separately?
- Either approach can work. A combined bank needs to satisfy applicable sick-leave requirements as well as your vacation rules; a separate bank makes different use and carryover rules easier to manage. California's paid sick leave guidance explains how a combined plan can qualify. Choose the structure you can administer consistently and review work-location requirements.
- Can I use this PTO policy template for part-time employees?
- The generator's company-provided vacation and personal PTO scope is full-time. Add part-time vacation eligibility and any proration in writing before using it for those employees. Statutory sick-leave coverage is a separate question: New York's sick leave guidance includes private-sector part-time employees. Check the applicable work-location rules instead of treating the vacation eligibility clause as a sick-leave exclusion.
- How often should I update my PTO policy?
- Review it at least annually and whenever work locations, employee groups or the way you grant time off change. Check whether managers still apply the written process and whether balances match it. Before changing accrual, carryover or payout terms, review existing earned balances and applicable requirements. Publish a dated replacement, explain the changes and archive the old version.
- Does unlimited PTO mean there is no payout when someone leaves?
- A non-accruing plan has no fixed vacation bank, but the unlimited label alone does not settle payout. Applicable law, written commitments and how the plan operates matter. The McPherson appellate opinion illustrates that distinction. Keep any earlier accrued balance separate and review its treatment before changing policies.
Want more detail first? Read our guide to vacation policy generators →