The MetLife survey revealed that 72% of employees would like Unlimited PTO. Moreover, the Vacation Confidence Index concluded that one in three Americans are willing to take a pay cut for unlimited vacation days.
Unlimited paid time off (PTO) has been grabbing attention across the world. From leading tech companies to startups, many organizations are implementing this policy to motivate their employees.
Is unlimited time off effective?
Should organizations adopt the policy?
What are the unlimited PTO pros and cons to consider?
Let’s explore the answers to all of these questions.
What is Unlimited PTO?
Before diving into the depth of unlimited PTO, let’s understand the fundamental meaning. It is a leave policy that has no restriction on the number of paid leaves for employees. They can take time off as and when they need it as long as it doesn’t come in way of their work commitments.
As unlimited PTO allows flexible leaves, employees are expected to adhere to certain guidelines and expectations. They must ensure to meet their project deadlines and coordinate with their team members so that their absence doesn’t affect the work. They are free to take off for health reasons, vacations, or any other personal reasons but without compromising on their performance goals. Also, they can’t show up for work anytime at their will because companies still have a few stringent rules for employees to request time offs.
There is surprisingly a slew of companies with unlimited PTO policies, some of which are leaders in the industry, including Everbrite, Netflix, and LinkedIn.
What Are the Different Types of PTO Options?
Companies Offer Distinct Types of PTO Options to Their Employees, Including:
Sick Leave
It lets employees take time off when they are sick or face any health issues. They can have a much-needed break from work and rest until they recover. Based on federal laws and company policies, employers can either assign a fixed number of sick leaves or request a medical certificate for long leaves.
Vacation Leave
If employees want to go on a holiday with friends or family, they must apply for vacation leave. They can also avail of this PTO to spend time with their loved ones or pursue a hobby amidst a hectic schedule. However, this particular unlimited PTO policy must define clear guidelines regarding when employees can request leaves, how early they need to notify their team manager, and how they plan to allocate and manage their share of work for off days.
Personal Leave
These leaves are allowed so employees can attend to their short-term personal work, such as attending a family function, doctor’s appointment, visiting a bank, looking after home renovation or vehicle repair, etc.
Optional Leave
As the name suggests, it’s an optional time off for days that are recognized as public holidays but are not officially granted by the company, From listed occasions, employees can choose to have to time off for a few of them. For example, if there are 10 special occasions, employees can request leave for 5 of those days.
Parental Leave
This unlimited paid time off is for employees who have recently become parents. It includes maternity leave that is for a longer duration, say 6 months or more, and paternity leave that a father can use as per his convenience, either in one go or every few days. It is also applicable when somebody adopts a child.
Study Leave
If any employee is pursuing a higher degree to upskill themselves, then they can avail of paid time off to study for their upcoming exams or attend the graduation ceremony. Employers can ask for proof or details before sanctioning study leave.
Leave to Cast Vote
Granting a leave on a day of state or national election is common these days. Companies pay for the hours they were not present, hence, allowing employees to fulfil their responsibility without any worries.
Volunteer Leave
This particular unlimited time off policy is for employees who offer the community and social services. Volunteer leaves promote other workers to give back to their society while supporting the choices of the ones who are already involved in such causes.
Compensatory Leave
At times, companies need a few employees to work on holidays or after office hours to meet tight deadlines. Hence, employers offer compensatory leaves, also known as time off in lieu (TOIL).
What are the Pros and Cons of Unlimited PTO?
Benefits of Unlimited PTO Policy:
Unlimited PTO Can Help Save Your Organization Money
Wondering how an unlimited paid time off policy can cut down additional costs for your company? When organizations offer a fixed number of paid leaves, employees can cash out unused leaves at the end of every financial year. This is applicable even for employees who quit their jobs, as they take money for the remaining leaves. However, unlimited PTO eliminates that expense as the policy doesn’t pay back any unused leaves.
Unlimited PTO Helps with Recruiting
To attract top talents and ensure quality hires, you need to have better company policies that work in their favor. Your offer should compel them to join your team without second thoughts. So, if their current employer is offering unlimited PTO and they have accrued around two months of PTO after working for five years, they expect similar or more benefits from their new recruiter. Thus, your offer should match their current PTO balance. Remember, that every company is putting its best foot forward to hire top candidates and there is no scope for negotiations. You need to overcome as many barriers as possible to acquire skilled applicants.
Unlimited PTO Builds Trust with Employees
Unlimited time off enables employees to take control of their time and spend it as they deem right. They enjoy flexibility, freedom, and liberty to use their productive time in the most efficient way. Also, it shows that their employers trust them and their dedication to work. Hence, they feel more responsible and committed to the company and their work.
Efficient Time Management
The primary condition to request unlimited PTO is delivering the work within the stipulated time while ensuring the best quality and top-notch results. Any delay or compromise in the quality would mean additional work for employees and no time off. Therefore, team members stay focused from the beginning and manage their time effectively to finish the given tasks within the promised date.
Increased Productivity
Professional life can take a toll on employees’ physical and mental health, which can hinder their performance and productivity. This is where unlimited PTO can come to the rescue by enabling them to take time off whenever they feel worn out. They can return to their work feeling fresh, motivated, and efficient. Furthermore, they can set new goals, achieve them on time, and stay ahead of deadlines.
Diverse Workforce
You want to create a positive work environment that invites people from diverse cultures to join you. Policies like unlimited time off help you make such an inclusive culture by allowing employees from minority communities to avail of leaves on their special occasions, which are often not included in the company’s holiday calendar.
Improved Workplace Relationship
Different types of PTO give freedom to employees, to be honest with employers while giving reasons for their leaves. Managers should appreciate this transparency and understand the gravity of the situation rather than be ignorant of their concerns. This mutual appreciation fosters enhanced workplace relationships and builds an open environment for employees to put forward their opinions.
Enhanced Brand Value
Your brand value is beyond the goods and services you offer. The company’s culture and employees’ reviews play a crucial role in employer branding. It builds trust among clients and potential employees who are interested to join you and work with you for years. Employees-oriented PTO policies can help you create a brand that is trusted by people already working for the company and also by job seekers.
Downsides of Unlimited PTO Policy:
Employees May Take Less Time Off
The idea behind unlimited PTO is ambiguous and employees can react to the policy in different ways. Some may abuse it while others may not take a single leave for the fear of coming to the notice of their managers. If their team members are not taking leaves, then they might also not, even when they are exhausted or unwell. Constant work without a quality break can affect the mental illness of workers and their performance too. So, make sure that you define the reason behind unlimited time off to avoid any confusion.
There’s a Risk of Unlimited PTO Abuse
Unlimited paid time off opens the door for employees to abuse the policy and they can take frequent leaves, which can hamper their work and overall results. Also, if two or more co-workers take leaves together, it can impede the productivity of other team members by increasing their workload. However, this drawback is quite rare as the ultimate power to approve leaves lies with the manager who always makes sure that no one is misusing the company’s policies.
Absent Coworkers
Scheduled time offs are completely fine but when employees are absent unannounced, it can make those days challenging for their colleagues. If a coworker is not available to provide information or updates on a project, it can ultimately affect the whole team and its efficiency.
Fear of Use
The most important condition for unlimited time off is getting work done within the committed time. However, some employees are not sure about delivering a project well before time and declaring that their schedule is free. This inhibition can prevent them to take even the standard two weeks off from their work.
Paid Time Off Can No Longer Be Used as a Reward
Many companies use paid time offs as incentives or rewards for performance. However, implementing unlimited PTO can create resentment among employees, especially those who believe that they deserve more perks and benefits for their higher productivity.
Maintaining an Employee Schedule Becomes Difficult
The policy has no defined scheduling or tracking system to know who is taking off and when. Different team members can take multiple leaves simultaneously. Hence, this results in reduced productivity, added workload, and missing deadlines.
Things You Should Consider Before Implementing Unlimited PTO
Wondering how to manage unlimited PTO? The listed three factors would help you streamline the policy:
The Policy Should Be Clearly Outlined to All Employees
An unlimited paid time off policy can create confusion and miscommunication among employees. Therefore, make sure to share a handbook with detailed rules and expectations. Share every point about how time off will work and the process to request it. Be clear about what is acceptable and what’s not and encourage open communication to answer all queries.
Systems Should Be in Place for Handling the Work of Employees Who are Taking Time Off
Whenever an employee takes extended time off, it shouldn’t interfere with the deadlines of the project or the productivity of coworkers. Managers should decide whether the employee will complete high-priority tasks before going on leave or if someone else will cover the pending work. Duties and responsibilities must be clearly defined to keep the workflow seamless.
Consequences of Policy Misuse Should Be Decided And Communicated
Be prepared that some employees may abuse the unlimited time off policy. Enlist what is expected of employees who take leaves often and set boundaries. You need to create a culture of trust, accountability, and transparency, and well-defined regulations will help you attain that efficiently.
Should You Offer Unlimited PTO?
After going through all the aspects of unlimited time off, there is still one big question to answer: ‘Is unlimited PTO good?’ The answer is ‘YES‘. Apart from being an excellent recruiting tool, it can work wonders to increase productivity. Of course, it would require a major cultural shift within the organization but if done right, the results can be amazing. Also, it would save the company a huge cost of paying employees for unused leaves at the end of the year.
However, companies need to assess their goals before implementing the policy because what works for others, may not work for you. Moreover, there must be clearly defined regulations and conditions to make sure that employees use the benefit efficiently.
