Is PTO the same as vacation?

Not necessarily. PTO can mean one pooled bank covering every kind of paid leave, or it can be the name of the vacation bank alone. Both usages are common, so it is worth asking which is meant.

Should sick days come out of the PTO allowance?

In a consolidated bank they do by definition. In a separate structure they usually do not. Separate buckets are the safer default wherever paid sick time is regulated in its own right.

How many leave types should a small team have?

Enough that nobody has to record something dishonestly, and few enough that everybody remembers them. Vacation, sick, public holiday and unpaid covers most situations, with bereavement and jury service added as they come up.

Do public holidays come out of the allowance?

In most policies, no. They are excluded from day counts, so a week off containing one costs four days. Some countries include public holidays inside the statutory entitlement figure instead, which is a different arrangement worth checking locally.

PTO vs Vacation vs Sick Leave

The words get used loosely. The policies cannot afford to. What each term covers, what comes off the allowance, and why sickness gets its own column.

Last reviewed 17 Aug 2026

The words, and what people mean by them

Paid time off, or PTO, is the American umbrella term for paid leave of any kind. Vacation is time off taken by choice and planned in advance. Sick leave is time off because somebody is unwell, which nobody plans. Outside the United States the vocabulary shifts: annual leave or holiday in place of vacation, with sick leave keeping its name.

The confusion is not really about the words. It is that PTO describes two different structures. In some companies PTO is one pooled bank covering everything. In others it is the name of the vacation bank while sickness sits beside it. Ask which one somebody means before answering a question about a balance.

One bank or several

The consolidated bank

One number covers vacation, sickness and personal days. The employee decides what to spend it on and nobody has to give a reason. It is simple to administer, it treats adults as adults, and it removes any incentive to describe a holiday as a sick day.

The cost is that sickness competes with holiday. Somebody with a bad winter loses the trip they were saving for, and somebody ill with three days left comes to work anyway. It also complicates compliance where paid sick time is mandated separately, because a pooled bank has to be shown to meet that minimum on its own.

Separate buckets

Vacation, sickness and anything else each hold their own count. It costs slightly more setup and it makes the sickness pattern visible, which is the point. A person's holiday stops depending on their health.

What actually comes off the allowance

The useful question about any leave type is not what it is called. It is whether it reduces the vacation allowance. That single switch decides how everything else behaves.

Common treatment rather than a rule. Practice varies by company and by country, and your own policy decides.
Leave type	Comes off the vacation allowance	Notice expected	Usually tracked on its own
Vacation or annual leave	Yes	Yes	No
Sick leave	Usually not	None possible	Yes
Public holiday	No	Not applicable	Yes
Bereavement	Usually not	None possible	Yes
Jury service	No	When the summons arrives	Yes
Parental leave	No	Yes	Yes
Unpaid leave	No	Yes	Yes

Every row still needs recording. A leave type that does not deduct is not a type you can ignore: somebody is still not at work, it still counts toward whether the team has cover that day, and it still belongs in the record you may need later.

Why sickness is usually tracked separately

Three reasons, and none of them is suspicion.

Balances stay honest. Sickness is not a choice, so charging it against a holiday allowance means somebody's ability to take a break depends on how healthy their year was.
Patterns become visible. Six single days spread across a year read as nothing in a month by month view and read as a conversation worth having when the whole year sits on one line. That conversation might be about a chronic condition, a caring responsibility or a workload, and none of those improve for being invisible.
Compliance is easier. Where paid sick time is mandated, being able to show sick days on their own is the difference between a five minute answer and an afternoon of reconstruction.

Sensitivity cuts the other way too. Sickness records are among the more personal things an employer holds. Keep the detail out of any shared calendar, keep the diagnosis out of the record entirely, and limit who can see the pattern. Everything in this site's tracker stays in the browser it was entered in, which is one way to keep that circle small. The sick leave tracker is the same tool with sickness already set up as a non deducting type.

The other categories worth having

Most companies end up with more than three. Bereavement, jury service, parental leave, unpaid leave, study or exam days, and a compassionate category for the situations nothing else fits. Each one needs three decisions and no more: a name, whether it deducts, and who approves it.

Resist the urge to invent a type for every situation. A dozen categories nobody can remember produces worse data than five people use correctly. Add a type when the existing ones force somebody to record something dishonestly, and not before.

Setting it up so the numbers stay right

Whatever tool you use, the setup is the same. Create one leave type per category. Turn the deduction switch on for vacation and off for everything else, unless your policy genuinely charges sickness to the allowance. Give each type its own colour so a year reads at a glance. Then keep public holidays out of the day counts entirely, because a week off across a public holiday costs four days, not five.

If you run a single pooled bank instead, one type deducts and the rest are labels on it. That works too, and the guides on accrual methods and carryover apply to a pooled bank exactly as they do to a vacation only one.