people discussing policies

Company Leave Policies: Know What Details to Include in Writing

Posted October 5, 2017 by Kristin Hoppe in Running a Business 101
Learn about the important details you should include in a company leave policy, such as paid time off accrual rates and employee eligibility.

Whether for vacation, sick leave, or an unexpected illness in the family, all employees will need time off from work at one point or another.

If your business is small, it may be tempting to address these times of absence on a case-by-case basis. But having company leave policies in place will actually help both you and your employees plan for the unexpected.

Unfortunately, creating leave policies for your company isn’t as simple as assigning a certain number of paid days off for vacation and sick leave — there are many different factors to consider. And once you’ve done your research on leave laws and insurance such as workers’ comp insurance and disability insurance, it’s important to communicate leave policies in your company handbook.

In this post, we’ll explore how to determine your company’s approach to leave policies, additional considerations, and adding important details such as waiting periods for accruing and using leave.

Want the whole guide? You can download our eBook on How to Create Company Leave Policies here.

Creating Your Company Policies

Determining Approach

Many modern workplaces choose to provide more flexible time off. That is, time off that can be used for a variety of reasons, such as vacation, illness, or personal reasons.

Policies that only allow employees to take time off for specific reasons, such as only illness or vacation, are less flexible. Employers should determine whether they should have a separate vacation/personal leave and paid sick leave policies or an all-inclusive paid time off (PTO) policy. That may be influenced by:

  • Company size/organization
  • Local/industry practice as to the amount and type of expected paid leave
  • State/local laws on how paid leave is administered
  • We’ve written in previous blog posts about the various required leave laws you’ll need to know when writing leave policies, such as jury leave, military leave, or time off to vote. Below are some of the most staple considerations.

    Additional Considerations

    • Vacation days - The Fair Labor Standards Act (FLSA) has no law that requires paid time off for vacation. However, some states or cities may have different requirements. And offering additional PTO is a great way to recruit talent and keep your employees from burning out.
    • Paid holidays - Consider whether you will pay for time off for all employees during major holidays such as New Year's’ Day or the Fourth of July.
    • Parental leave - Parental leave laws vary greatly by state and local policy. For example, New York State will soon require 12 weeks paid family leave, and many companies are increasingly offering generous paid parental leave packages to retain talent.
    • Sick Leave – Many state and local governments are passing sick leave entitlements. Make sure you’re in compliance with applicable sick leave laws.

    Get your simple guide on how to create a company leave policy.

    Download Now

    Pinning Down the Details

    Your written policy should address the following components:

    • Employee eligibility
    • How much leave is offered, and whether the leave is paid or unpaid
    • Employee obligations (i.e., notice, pre-approval, return upon completion of leave)
    • Coordination with other leave policies
    • Contact person for questions or leave-related communications

    Lastly, when you’re drafting a leave policy for your company, remember to include descriptions and explanations for the following elements, taking into consideration the requirements of applicable laws:

    • Flexibility
    • Paid vs unpaid leave
    • Waiting periods for accruing and using leave
    • How and when leave is earned
    • Accrual rates and methods
    • Carryover of unused leave
    • Payout leave upon termination


    Creating a leave policy is a complex undertaking. It’s best to contact an employment attorney to understand all the applicable federal, state, and local laws.

    Additionally, take the time to consider what will work best both for your business and your employees. Flexible PTO packages are a great way to recruit and retain talent — and an effective way to show that you care about your employees’ well being.