Configure paid time off (PTO) policies #

Overview #

Use PTO policies to define who receives time off, how balances are earned, whether unused hours carry over, and how rules change after employees complete additional years of work.

This guide explains:

• Unlimited, fixed, and hourly policies
• Every setting in the policy wizard
• Accrual frequencies and qualifying-hour categories
• Waiting periods, carryover rules, and balance limits
• Levels based on years of work
• Employee assignment and starting-balance options
• Editing, deleting, and troubleshooting policies

This guide covers Premium plan PTO policy configuration. If you do not see the settings described here, contact a company Admin or Support.

Who can configure PTO policies #

Company Admins on a Premium plan can create and edit PTO policies. The Policies tab is shown only to Admins.

Employees and contractors can still open Time Off to submit and track their own requests. Approving or declining company-wide requests is Admin-only.

Unlimited vs limited policies #

In this guide:

• An unlimited policy does not track an hour balance.
• A limited policy tracks earned, used, requested, and available hours, and can include accrual, carryover, and balance limits.

Before you begin #

Prepare these decisions before creating a policy:

1. Policy category: Vacation, Sick, Paid Time Off, or another available category.

1. Balance type: Unlimited or limited.

1. Accrual method: Fixed or hourly for a limited policy.

1. Accrual schedule or rate: For example, 10 hours monthly or 1 hour for every 30 qualifying hours.

1. Carryover rule: All, some, or none.

1. Limits: Maximum annual accrual, carryover, and total balance, as applicable.

1. Years-of-work levels: Whether employees receive different benefits after a specified number of years.

1. Recipients: Everyone or selected employees.

1. Opening balance method: Retroactive calculation, start today, manual balance, or a specific past date.

Changing employee assignments later can delete balance history for removed employees. Confirm the recipient list before saving.

Open the Policies page #

Open Time Off Policies

1. In the left navigation, select Time Off.

1. Select the Policies tab.

1. Review the Active Policies section for existing policies.

1. In the create-policy section, select a policy category.

1. Select Create policy. Depending on the screen size, you may instead select the category and then select New Policy at the top of the page.

Choose a policy category #

The category determines how the policy is grouped and which icon appears in the app. The available categories are:

• Holiday
• Jury Duty
• Learning and Development
• Paid Time Off
• Parental Leave
• Personal Day
• Sick
• Volunteer
• Weather
• Vacation
• Other

You can give the policy a custom name in the next step. Choose the category carefully. You cannot change a policy’s category after it is created.

Understand the policy wizard #

A limited policy uses four steps:

1. Policy Details

1. Settings

1. Levels

1. Employees

An unlimited policy uses a shorter flow:

1. Policy Details

1. Employees

Use Continue to move forward. Use Go back to return to an earlier step, or Cancel from the first step to leave without saving.

Step 1: Enter policy details #

Choose a policy name #

Enter the name employees and administrators will see throughout the app.

• The selected category supplies the initial name.
• You can replace it with a more descriptive name, such as Vacation — Salaried Employees.
• A name is required.
• Keep the name concise. Names longer than 45 characters may not save.

Describe what this policy is used for #

Optionally explain the purpose or intended group. For example:

Four weeks of vacation for full-time salaried employees.

Keep the description short and distinguish policies with similar names.

Is there a limit as to how many hours an employee can take off? #

Select:

• No to create an unlimited policy.
• Yes to create a limited policy.

Unlimited policy #

An unlimited policy:

• Does not accrue hours.
• Does not require carryover or balance-limit settings.
• Does not require policy levels.
• Does not require a starting balance.
• Can be assigned to everyone or selected employees.

After entering the details, continue directly to Employees.

Limited policy #

A limited policy tracks earned, used, requested, and available hours. Continue by choosing either a fixed or hourly accrual method.

Choose how hours accumulate on a limited policy #

Fixed accrual #

Choose Fixed when employees earn a set number of hours on a recurring schedule.

Enter:

• Employees will earn: The number of hours added each period.
• Hours per: The accrual frequency.

Available fixed frequencies:

• Calendar Year: Adds the fixed amount once per calendar year. Calendar-year processing occurs on January 1.
• Anniversary: Adds the fixed amount on each employee’s work anniversary.
• Quarterly: Adds the fixed amount at the start of each calendar quarter.
• Monthly: Adds the fixed amount at the start of each month.
• Weekly: Adds the fixed amount once per week.

Example:

Enter 10 hours per Monthly to provide 120 hours over a full year.

For fixed policies, the app calculates the annual maximum represented by the rate:

• Weekly: fixed hours × 52
• Monthly: fixed hours × 12
• Quarterly: fixed hours × 4
• Calendar Year: fixed hours × 1
• Anniversary: fixed hours × 1

Hourly accrual #

Choose Hourly when PTO earned depends on tracked work or paid-time categories.

Hourly accruals are calculated using:

Qualifying hours × (PTO hours earned ÷ qualifying hours in the configured rate)

Example:

If the policy grants 1 PTO hour per 30 qualifying hours and an employee records 80 qualifying hours, the employee earns 2.67 PTO hours, subject to the policy’s annual and balance limits.

Hourly policies add hours when payroll is approved for that pay period. Employees need supported time tracking, and the company needs to run payroll in Friday.

Which hours qualify for PTO #

Select one or more categories:

• Work: Regular tracked work hours.
• Lunch: Tracked lunch hours included by the time report.
• Overtime: Tracked overtime hours.
• Paid Time Off: PTO hours already recorded in the period.

When Hourly is first selected, Work and Overtime are selected by default. Lunch and Paid Time Off are not selected by default. Select Select All if all four categories should count.

Choose an accrual rate #

Enter:

• The number of hours earned.
• The number of qualifying hours required to earn them.

For example, 1 hour earned per 30 qualifying hours.

Step 2: Configure policy settings #

The Settings step appears only for limited policies.

Waiting period #

The setting asks:

Do new employees go through a waiting period before their accrued time off becomes available to use?

Select:

• No if accrued hours should be available without a waiting period.
• Yes to enter a waiting period in days.

When a waiting period applies, the employee’s PTO balance is labeled Pending, and the employee view shows a calculated availability date.

The current implementation does not stop scheduled accrual calculations or prevent an employee from submitting a PTO request during this period. Administrators should apply the organization’s waiting-period rules when reviewing requests.

Example:

Enter 90 days for a 90-day waiting period.

Carryover policy #

The setting asks:

Are unused PTO hours carried over to the following year?

Select one:

• All hours carried over: Unused hours continue into the next policy year, subject to the maximum balance.
• Some hours carried over: Unused hours continue only up to the carryover limit you enter.
• No hours carried over: Unused hours do not continue into the next policy year.

For an anniversary policy, carryover is processed at the employee’s anniversary. For calendar-year, quarterly, monthly, and weekly policies, carryover is processed at the calendar-year boundary.

If an employee ends the policy year with a negative balance (more hours used than earned), that deficit carries forward in full under All hours carried over and Some hours carried over. The carryover limit and maximum balance cap unused hours; they do not reduce a negative balance.

Example:

If an employee ends the year with −8 hours, the next year starts at −8 hours. New accruals first offset that deficit.

Under No hours carried over, unused hours do not continue, and a year-end deficit is not carried forward as a carryover amount.

Carryover limit #

This field appears only when Some hours carried over is selected.

Enter the maximum unused balance that can move into the next policy year. The carryover limit cannot exceed the policy’s maximum balance.

Example:

If an employee ends the year with 36 unused hours and the carryover limit is 24 hours, up to 24 hours carry over.

Maximum hours accrued per year #

This field appears for hourly policies.

Enter the annual accrual ceiling for the level. During the policy year, remaining accrual room is the yearly maximum minus net hours already accrued this year (hours earned minus approved hours used). Using PTO can therefore allow additional hours to accrue later in the year, up to both this yearly maximum and the maximum balance.

For fixed policies, this value is calculated from the fixed amount and frequency.

Maximum balance #

Enter the largest total PTO balance an employee can hold under the level.

Once an employee reaches this balance, additional accruals are limited until the balance has room again.

The maximum balance:

• Must be high enough to support the intended accrual and carryover rules.
• Limits manually entered starting balances.
• Limits manual balance changes made later.
• Acts as the ceiling when all unused hours carry over.

For a fixed policy with no carryover, the app calculates this value from the fixed accrual rate and does not display the field.

Cashing out outstanding PTO at termination #

The setting asks:

Are outstanding PTO hours automatically cashed out when an employee is terminated?

Select Yes or No according to your organization’s termination-payout policy. The choice is saved and displayed in the policy summary. Friday does not automatically create or process a termination payout from this setting. Coordinate the actual payout with your payroll process owner or Support.

Step 3: Configure levels by years of work #

Levels let the policy rules change after an employee completes a specified number of years of work. Levels are available for limited policies.

Starting level #

Every limited policy begins with Level 1 — Starting.

The starting level:

• Applies from zero years worked.
• Uses the accrual method selected in Policy Details.
• Includes the accrual rate, carryover rule, and applicable limits entered in the first two steps.
• Cannot be removed.

Add another level #

1. Select Add level.

1. Enter the level’s accrual rate.

1. Configure its carryover rule and limits.

1. Select Add.

1. In the level summary, enter the number of completed years after which the level begins.

The app initially places a new level one year after the previous level. You can change the threshold to any whole number of at least 1.

Example:

• Level 1 — Starting: 10 hours monthly.
• Level 2 — After 3 years of work: 12 hours monthly.
• Level 3 — After 7 years of work: 15 hours monthly.

An employee uses the highest level for which the employee has completed the required years of work.

Level rules #

• Each years-worked threshold must be unique.
• Additional levels inherit the policy’s overall accrual method: fixed or hourly.
• Each level can have its own rate, carryover rule, and limits.
• For fixed policies, anniversary-based levels cannot be mixed with calendar-based frequencies in the same policy.
• You can edit or delete any level after the Starting level.

Review every level before continuing. The level cards summarize qualifying hours, accrual rates, carryover limits, annual accrual limits, and maximum balances.

Step 4: Assign employees #

Choose who receives the policy #

Select:

• Everyone: Assigns the policy to all currently eligible employees. New hires also receive the policy automatically.
• Select Employees: Lets you choose individual eligible employees.

The selection list includes active employees and contractors who are eligible for PTO assignment. Dismissed employees and administrative-only users do not appear.

For Select Employees:

1. Use the search field to locate an employee.

1. Select the employee to add them.

1. Repeat as needed, or select Add all.

1. Remove an employee from the selected list by selecting the remove icon.

The wizard requires at least one employee before the policy can be created.

For an unlimited policy:

• Selecting Everyone saves the policy immediately.
• Selecting Select Employees opens the employee list. Choose employees, then select Continue.

Limited policies continue to a starting-balance choice.

Choose how starting balances are calculated #

This choice appears for limited policies.

Start Retroactively #

Select Start Retroactively to calculate each selected employee’s opening balance from the employee’s recorded start date.

• Fixed policies calculate elapsed fixed accrual periods.
• Hourly policies calculate from recorded qualifying hours through the latest completed pay period.
• Years-of-work levels, carryover settings, annual limits, and maximum balances apply to the calculation.

Use this option when the policy should reflect PTO the employee would have earned before the policy was entered in the app.

If you assigned Everyone, selecting Start Retroactively saves the policy immediately. If you chose Select Employees, choose the employees and then select Continue.

Start from Today #

Select Start from Today to begin with a zero-hour opening balance and accrue under the new policy going forward.

Use this option for a new benefit that should not grant time for prior service.

If you assigned Everyone, selecting Start from Today saves the policy immediately. If you chose Select Employees, choose the employees and then select Continue.

Manually #

Select Manually to enter an opening balance for each selected employee.

• A starting balance is required for every selected employee.
• The value must be zero or greater.
• The value cannot exceed the employee’s maximum balance under the applicable years-of-work level.

Use this option when importing known balances from another system or correcting a policy’s initial setup.

Start Date #

Select a specific past date for the policy to take effect. Opening balances are then calculated from that date using the policy’s accrual rules.

• The date must be earlier than today. Today and future dates cannot be selected.
• Use this when the policy became effective on a known date that is later than some employees’ hire dates.

If you chose Select Employees, finish choosing employees before you save.

Save and verify the policy #

1. Complete the final employee or starting-balance selection. Some Everyone choices save immediately; otherwise, select Continue.

1. Wait for the confirmation message:

– Successfully created policy, or
– Successfully updated policy.

1. Return to Time Off > Policies.

1. Select the policy card.

1. Review the Overview tab:

– Policy Details
– Policy Settings
– Levels

1. Open the Employees tab and confirm the employee list and balances.

For hourly policies, balances can remain at their opening values until qualifying time is included in an approved payroll.

Common policy configurations #

Unlimited vacation #

Use:

• Category: Vacation
• Limit question: No
• Recipients: Everyone or selected employees

No accrual rate, carryover, levels, or starting balances are required.

120 hours per calendar year #

Use:

• Limit question: Yes
• Accrual method: Fixed
• Fixed amount: 120 hours
• Frequency: Calendar Year
• Carryover: According to your organization’s policy
• Maximum balance: At least the largest balance employees are allowed to hold

Choose a starting-balance method based on whether employees should receive a prorated or historical balance.

10 hours per month with a 40-hour carryover limit #

Use:

• Accrual method: Fixed
• Fixed amount: 10 hours
• Frequency: Monthly
• Carryover: Some hours carried over
• Carryover limit: 40 hours
• Maximum balance: A value of at least 40 hours that also supports the intended ongoing accrual

The app calculates the fixed annual accrual amount as 120 hours.

Anniversary-based policy #

Use:

• Accrual method: Fixed
• Frequency: Anniversary
• Fixed amount: The annual grant
• Carryover: All, some, or none

Accrual and carryover are evaluated on each employee’s work anniversary rather than January 1.

Hourly accrual based on hours worked #

Use:

• Accrual method: Hourly
• Qualifying categories: Work, plus any other categories your organization counts
• Rate: For example, 1 hour per 30 qualifying hours
• Maximum hours accrued per year: Your annual cap
• Maximum balance: Your total balance cap
• Carryover: Your year-end rule

Hours are added when payroll is approved for the pay period.

Vacation that increases after years of work #

Use multiple levels, for example:

• Starting: 80 hours per calendar year
• After 3 years of work: 120 hours per calendar year
• After 7 years of work: 160 hours per calendar year

Set each level’s limits and carryover rules to match the benefit that applies after those years of work.

Import balances from another system #

Create the policy with the intended ongoing rules, select Manually, and enter each employee’s verified opening balance.

View an existing policy #

1. Go to Time Off > Policies.

1. Select an active policy card.

1. Use:

– Overview to review policy details, settings, and levels.
– Employees to review assigned employees and balances.

Edit policy rules #

1. Go to Time Off > Policies.

1. Open the policy card’s actions menu.

1. Select Edit.

1. Update the applicable wizard steps.

1. Select Continue until the policy is saved.

You can also select the edit icon on a section in the policy’s Overview sidebar to open that section directly.

You cannot change the policy category while editing. Before changing an accrual rate, frequency, level, or limit, decide how the change should affect balances already earned. Review employee balances after saving.

Add or remove employees #

From the policy #

1. Go to Time Off > Policies.

1. Open the policy card’s actions menu.

1. Select Employees.

1. Add or remove employees.

1. For a newly added employee on a limited policy, enter the starting balance when prompted.

1. Select Continue.

From an employee profile #

1. Open the employee’s profile.

1. Open the Paid Time Off tab.

1. Select Add to existing policy.

1. Select a policy.

1. For a limited policy, enter a starting balance.

1. Select Add.

Important: removing an employee deletes policy accrual data #

When you remove an employee, the app warns:

Accrual data for removed employees will be deleted.

The employee’s accrual ledger for that policy is deleted when the update is completed. Existing PTO requests are not deleted by this action. Record any required balance or audit information before removing the employee.

After acknowledging the warning, select Continue again to complete the update.

Adjust an employee’s current balance #

Use a balance adjustment for a correction that does not require changing the policy rules. Balance adjustment is available only for limited policies.

1. Open the employee’s Paid Time Off tab.

1. Open the applicable policy.

1. Select the edit icon on the Available balance.

1. In Edit Policy Balance, enter the New Balance.

1. Optionally enter a reason. If left blank, the system records Manual balance change.

1. Select Submit.

The new balance cannot exceed the maximum balance for the employee’s current level. Enter a reason that clearly explains the adjustment for future review.

Delete a policy #

1. Go to Time Off > Policies.

1. Open the policy card’s actions menu.

1. Select Delete.

1. Confirm Yes when asked whether you are sure.

The policy is removed from the active policy list. The app does not provide a restore action, so confirm that the policy is no longer needed before deleting it.

Validation messages and how to resolve them #

required or Required #

A required field on the current step is empty. Review all visible fields, including fields inside an additional level.

Cannot have multiple levels with the same years worked #

Two levels begin after the same number of years. Assign each level a unique years-worked threshold.

Cannot exceed max balance. #

The carryover limit is greater than the maximum balance. Reduce the carryover limit or increase the maximum balance.

Max balance: [number] #

A manual starting balance is above the employee’s applicable maximum balance. Enter a value at or below the displayed maximum.

Cannot create policy with no employees #

No eligible employee is assigned. Choose Everyone or add at least one employee.

Invalid starting balance #

The starting balance entered while adding an employee is not a valid number. Enter zero or a positive number.

Starting balance cannot exceed policy max balance of [number] #

Reduce the starting balance to the displayed maximum or review the policy’s current level and maximum-balance setting.

You may not exceed the policy maximum balance of [number] hours #

A manual balance adjustment is above the employee’s current maximum. Enter a lower new balance or review the policy rules.

Failed to update or create policy #

Review the required fields and level rules, then try again. In particular, confirm:

• Every limited policy has a valid starting level.
• A fixed policy has both fixed hours and a frequency.
• An hourly policy has both parts of the accrual rate.
• Each level has a carryover rule and the required limits.
• Anniversary frequency is not mixed with calendar-based frequencies.
• At least one employee is assigned.

If the error continues, contact Support with the policy name and the step where the error occurred.

Glossary #

Accrual #

PTO hours added to an employee’s balance according to policy rules.

Accrual frequency #

How often a fixed policy adds hours: calendar year, anniversary, quarterly, monthly, or weekly.

Carryover #

Hours moved from one policy year into the next. Unused hours may be capped. A negative balance (more hours used than earned) carries forward in full when carryover is All or Some.

Fixed accrual #

A set number of PTO hours added on a recurring schedule.

Hourly accrual #

PTO calculated from selected categories of tracked time when payroll is approved.

Limited policy #

A policy that tracks earned, used, and available hours, as opposed to an unlimited policy.

Maximum accrual #

The yearly ceiling applied to remaining net accrual room during a policy year.

Maximum balance #

The largest PTO balance an employee can hold at one time.

Policy level #

A set of accrual and balance rules that begins after a specified number of years of work.

Premium plan #

The Friday plan that includes PTO policy configuration, including limited policies with accruals.

Qualifying hours #

Tracked hours included in an hourly policy’s accrual calculation.

Starting balance #

The balance assigned or calculated when an employee first joins a limited policy.

Tenure #

Another way to refer to an employee’s years of work. In the app, levels use After [N] years of work.

Unlimited policy #

A policy that does not track an hour balance.

Waiting period #

The period after an employee starts during which the app labels accrued time as pending and displays a calculated availability date.

Years of work #

The time since an employee’s start date used to determine which policy level applies.