Everything You Need To Know About Unlimited PTOReading Time: 4 minutes
Unlimited PTO, in theory, sounds like a wonderful idea.
You can take all the time off you want, whenever you want to. There’s no need to justify your actions or reasoning to anyone — not even your boss or HR.
An unlimited vacation policy allows employees to take time off when they need it, eliminating the risk of burnout and presenteeism at the workplace. What’s more, taking vacations actually improves your productivity (in some cases upto 80%) and also reduces risk of having stress, depression, or getting a heart attack. What’s not to like?
The idea of unlimited PTO is one that seems simple enough when considering the benefits it can give to employees. However, when you start to delve deeper, there is a whole lot more to this than meets the eye.
Buffer, a social media management company, thought the same thing. Their goal was to improve work/life balance within their company and attract top talent using an unlimited PTO policy. Things, however, did not exactly go as planned.
Two years after implementing the policy, the leadership at the company noticed that despite their best efforts, employees had barely taken any holidays. So, what exactly went wrong?
The cons of an unlimited PTO policy
For starters, an unlimited vacation policy is a somewhat controversial topic.
Having an unlimited PTO policy can either drastically improve a company’s productivity—or negatively affect it. It basically resembles two sides of the same coin, where the good side increases work/life balance in employees and reduces burnout, and the bad side is that staff wrongly abuse the policy, in turn creating a culture of mistrust in their work environment.
According to HR executives and company leaders, the biggest drawback of this policy is that it is primarily intended to attract talented candidates to job applications. Unlimited vacation time is sure to draw some eyes to a job posting. Most times, it makes for an effective marketing tactic.
Is it just a ploy, after all?
“People think unlimited PTO is something that should be desired. In reality, people who have an opportunity to take as many vacations as they can end up taking fewer days off than those with a limited amount of days off in a year. In a nutshell, the unlimited PTO policy is a marketing trick that is supposed to lure people into applying for the job,” says Branka Vuleta, the founder of the website LegalJobs.io.
“For companies, the unlimited PTO policy comes with perks. It’s a cost-saving solution, as companies aren’t obliged to pay their employees for their unused vacation days. Furthermore, they’re less liable, since they don’t have to track it and abide by the same rules as companies with a limited vacation policy,” she continues.
Many also fail to take into account the variations from employee to employee while taking time off. There are times when a worker may not take enough time off because his coworker does not. Other times, it may be the opposite. Employees who take an unlimited vacation may feel guilty that they aren’t working when their colleagues are. It all boils down to the company culture and work environment of your organization.
Thus, unlimited vacation time is, in many cases, just an unspoken understanding between employers and employees that the former will be available in some capacity while “on vacation.”
The pros of an unlimited PTO policy
How your employees feel about your company directly impacts their engagement with the company and in turn, their productivity.
Trust is an all-important factor in employee engagement, and it’s integral that employees see that the company they are working for is trustworthy. If your company is serious about employee well-being, then an unlimited PTO policy would be a great way of showing this.
Regardless of how you structure it, vacation time is incredibly valuable. It’s not only good for the preservation of employee well-being — whether that’s mental and physical — it can also lead to higher retention rates, and it can be a great way to recognize talent and develop employees. Furthermore, employees who are free to take personal time off may also feel less stressed at work and are more productive.
Unlimited vacation doesn’t mean that you won’t ever have to return to work again. The idea is that you’ll take as much time as you need, or want, to refresh and recharge your batteries. And then, you’ll head back to work a changed person.
How you should implement it
When introducing an unlimited PTO policy, the key is in how you adopt it. Or get it right.
Let’s go back to Buffer’s story, shall we?
After instituting the policy and witnessing its rather disappointing outcome, leadership at the company decided to take an entirely new approach. They set a minimum number of days everyone must take off during the year, while the unlimited PTO policy was still in place.
Your company’s policy on unlimited personal time off needs to be transparent. Ensure that your unlimited PTO policy is easy to read and understood, and also includes any potential restrictions. Clearly outlining your policy will save you tons of hassle in the long run. And when it comes to tracking it, Vacation Tracker is your best friend. This leave management app can track up to 25 custom leave types, help you set up multiple departments in different locations worldwide, and also comes at only a price of $1 per user.
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