Most small businesses don't have a written PTO policy for hourly employees — they have a vague understanding that people can ask for time off and managers will try to accommodate. That ambiguity costs you more than you think.
Without a clear policy, every time-off decision becomes a negotiation. Employees compare what they got approved versus what a coworker got. Managers make inconsistent calls under pressure. Resentment builds. People start calling out instead of requesting time off properly because they assume the answer will be no anyway.
A good PTO policy eliminates most of this. Here's how to write one.
Decide what you're actually offering
Before you can write a policy, you need to decide what time-off benefits you're providing. For hourly employees, the main options are:
No formal PTO, just unpaid time off. Employees can request time off, it's unpaid, and coverage is their responsibility to arrange or yours to find. This is common in restaurants and retail, especially for newer employees.
Accrued PTO. Employees earn paid time off based on hours worked — a common model is 1 hour of PTO per 30–40 hours worked. This rewards tenure and is increasingly common as a recruiting and retention tool.
Fixed days. Employees get a set number of paid days per year (e.g., 3–5 days after 90 days of employment). Simple to administer and easy for employees to understand.
Be aware of applicable state and local laws. Several states and cities require paid sick leave for hourly employees regardless of employer policy. Check the rules in your jurisdiction before finalizing.
Set clear request rules
Your policy should specify:
How far in advance requests must be submitted. One week is a common minimum for non-emergency requests. Two weeks for weekends and holidays is reasonable.
How requests are submitted. Through your scheduling system, not via text or verbal request. Written requests create a paper trail and prevent disputes about what was approved.
How quickly you'll respond. Employees shouldn't have to wonder if their request was seen. Commit to responding within 48–72 hours.
Maximum concurrent time off. In most positions, you can't have more than one or two people out at the same time. State this clearly so employees understand why a request might be denied even if they gave plenty of notice.
Define your blackout periods
Every business has periods where it's simply not operationally viable to have high time-off volume: holiday weekends, your busiest season, annual events. Write these down explicitly.
For example: "Time-off requests during the period of November 15 – January 5 are subject to stricter limits due to seasonal volume. Requests submitted during this period will be approved on a limited basis and require 30 days advance notice."
Known blackout periods, communicated clearly in advance, are much easier for employees to accept than arbitrary denials during busy times.
Use a fair approval system
The most common complaint about time-off policies is inconsistency — one employee got a weekend off that another employee was denied. You need a clear tiebreaker system when multiple people request the same time off.
First-come, first-served is the simplest and most defensible. The first request submitted for a given period gets approved, up to your operational limit. This incentivizes employees to plan ahead.
Seniority-based is an alternative — employees with more tenure get priority. This rewards loyalty but can frustrate newer employees.
Whatever system you choose, write it down and apply it consistently. Inconsistency is what turns a manageable policy into a morale problem.
Handle emergency and sick leave separately
Emergencies and illness don't come with two weeks' notice. Your policy needs to address these separately from planned time off.
Write a clear process for same-day callouts: who to contact, what number, how far in advance (even one hour of notice is better than none). Be explicit that sick leave and emergency leave are separate from accrued PTO and subject to different rules.
If you want to discourage abuse without punishing genuinely sick employees, consider a system where excessive absences trigger a conversation rather than automatic discipline. Document every unplanned absence so you have data if a pattern develops.
Put it in writing and make sure everyone signs it
Once you've drafted the policy, document it. One page is enough — it doesn't need to be a legal contract. Cover:
- What time off is offered (paid or unpaid, how much)
- How to request time off (process and lead time)
- How approvals work (timeline, tiebreaker system)
- Blackout periods and holiday rules
- Callout procedure for emergencies and illness
Have every new employee sign a copy during onboarding. Keep a copy in their file. Review and update annually.
The goal isn't perfection — it's consistency
You won't write a policy that satisfies everyone. There will still be denied requests, disappointed employees, and difficult conversations. But a written, consistently-applied policy dramatically reduces the number of those conversations and makes the ones you do have much easier.
Employees are far more accepting of "no" when they understand the rules, believe the rules are applied fairly, and trust that the same standard applies to everyone.
ShiftsLine lets employees submit time-off requests directly through the app, and managers can approve or deny from their dashboard in one click. Approved requests block that time from scheduling automatically. Start for free — no credit card required.