Paid time off (PTO)

What Is Paid Time Off (PTO)?

Paid Time Off (PTO) refers to any time during which an employee is paid their normal wage or salary while not actively working. In Australian workplaces, PTO typically encompasses annual leave, sick leave, public holidays, compassionate leave, and other entitlements outlined by the National Employment Standards (NES), modern awards, or enterprise agreements.

Although “PTO” is a term more commonly used in the United States, Australian employers and HR software platforms (like Microkeeper) often use it as a catch-all phrase to describe paid leave categories available to employees under Fair Work guidelines.

Fair Work – Paid Leave

Types of Paid Time Off in Australia

Paid time off in Australia is regulated under the NES and includes several distinct leave types:

1. Annual Leave

• 4 weeks of paid leave per year for full-time employees (pro-rata for part-time)
• Accrues gradually and can be carried over year to year
• Used for holidays, rest, or personal time

2. Personal/Carer’s Leave (Sick Leave)

• 10 days per year for full-time employees (pro-rata for part-time)
• Covers personal illness/injury or caring for an immediate family/household member

3. Compassionate Leave

• 2 days of paid leave per permissible occasion
• For serious illness or death of a close family or household member

4. Public Holidays

• Employees are entitled to be absent from work on public holidays, with pay (unless reasonably requested to work)

5. Parental Leave

• Up to 12 months unpaid leave (with possible extensions), but eligible employees may access Paid Parental Leave (PPL) funded by the government

6. Family and Domestic Violence Leave

• As of February 2023, 10 days of paid leave per year for eligible employees experiencing family or domestic violence

7. Long Service Leave

• Paid leave granted after a long period of continuous service (generally 7–10 years), varies by state and territory

Why Paid Time Off Matters

PTO isn't just a benefit, it plays a key role in promoting:

• Employee wellbeing and mental health
• Work-life balance
• Increased productivity and focus
• Staff retention and job satisfaction

In today’s employment landscape, offering flexible and transparent PTO policies can be a competitive advantage for attracting and retaining talent.

How PTO Accrues and Is Managed

Paid time off accrues differently based on the type of leave:

• Annual Leave and Sick Leave: Accrue progressively with hours worked
• Public Holidays: Paid on a per-occurrence basis
• Long Service Leave: Accrual depends on jurisdictional laws

Employers are required to:

• Track leave balances accurately
• Provide payslips with up-to-date leave information
• Approve or decline leave requests reasonably
• Record leave taken for auditing and compliance purposes

Note: Casual employees generally do not accrue most types of paid leave, except for paid family and domestic violence leave.

PTO vs. Unpaid Leave

It’s important to distinguish between:

• Paid Leave: Time away from work while receiving regular pay
• Unpaid Leave: Time off without pay, which may be granted in some cases such as extended parental leave, special circumstances, or sabbaticals

Some employers offer “leave without pay” at their discretion, but it is not always an entitlement under Fair Work.

Managing PTO with Microkeeper

Microkeeper’s HR software makes it easy to manage Paid Time Off:

Leave accrual tracking based on hours worked and award conditions
Employee self-service for submitting and viewing leave requests
Manager approval workflows with notifications
Automatic application of public holidays and loading
Award-compliant leave calculations for payroll accuracy
Reporting and analytics to monitor leave balances, liabilities, and usage trends

FAQs About Paid Time Off (PTO)

Do casual employees get PTO?
Casual workers are generally not entitled to most types of paid leave, except for paid family and domestic violence leave.

Can unused annual leave be cashed out?
Yes, under certain conditions. The award or agreement must allow it, and the employee must retain a minimum balance.

Is leave loading included in PTO?
Often, yes. Many awards include annual leave loading (usually 17.5%) on top of base pay during annual leave.

Do PTO days expire?
Some leave types may have expiry periods, but annual leave typically carries over unless otherwise agreed. Employers should encourage leave-taking to reduce liability.

Legal and Compliance Considerations

Employers must comply with:

• Fair Work Act 2009
• Modern awards and enterprise agreements
• State/territory-specific long service leave laws
• Record-keeping obligations under ATO and Fair Work rules

Failure to manage PTO entitlements correctly can lead to underpayment claims, Fair Work audits, and penalties.

Final Thoughts

Paid Time Off is a cornerstone of employee entitlements in Australia. It supports health, motivation, and retention, while ensuring workers are treated fairly and protected under national standards.

For employers, automating leave tracking and streamlining the approval process with tools like Microkeeper ensures compliance and gives both managers and staff full visibility and confidence in how leave is managed.

_{Disclaimer: This content is for informational purposes only and does not constitute legal or financial advice. Please consult Fair Work or a legal professional for specific guidance.}