Paid time off is time an employee is paid for without working: vacation, sick leave, and public holidays.
It is a cost carried by the billed hours
Two weeks of vacation is around four per cent of the year paid with nothing invoiced against it. Added to public holidays and sick leave, it is commonly six to eight per cent.
That cost is spread across the hours actually billed, which is why it belongs in labour cost and in utilisation. A rate built on wages alone does not recover it.
Accrual and what it obliges
Where leave accrues, the employee earns it as they work, and an unused balance is money the business owes.
In some jurisdictions accrued leave must be paid out when someone leaves, whether or not it was taken. Where that applies, an unused balance is a liability sitting on the books that many small businesses never record.
A balance allowed to build over years becomes a significant obligation, which is why caps and carry-over limits exist — though both are regulated in some places and cannot be set freely.
Sick leave
Increasingly mandated by state and local law, with rules on accrual rate, permitted use and carry-over that differ by jurisdiction and are not optional.
Unlimited policies
Common in office settings and a poor fit for field work, where the work is tied to scheduled appointments and someone not there means a job not done.
Coverage
In a small field team, one person on leave is a material share of capacity. Leave that is scheduled ahead is planned around; leave taken at short notice is absorbed by the rest of the team.
Recording it in one place is what makes that visible — see time off.