Why Unlimited Leave is a Scam
It’s a heyday out there for job candidates.
This also includes getting creative with their paid time off (PTO) policies, such as by offering unlimited leave. While only a modest percentage (<5%) of companies offer this perk, that number is steadily increasing as businesses seek more ways of luring workers.
Sure, on the surface, unlimited PTO sounds like a great deal. Who wouldn’t want the freedom to take as much time off as they want while getting paid? Sounds too good to be true, right?
The truth is, these policies rarely work well IRL. So keep reading to learn more about why unlimited leave is often more of a nightmare than a dream come true for employees.
What Are Unlimited Vacation Days?
Unlimited vacation days are just what they sound like–a company policy that allows you to take as much vacation time as you want, without having to track or limit your days off.
While this may sound great in theory, the reality is that unlimited vacation days are often more complicated than they seem. In practice, these policies are often poorly defined and hard to take advantage of. As a result, many employees find themselves working more, not less, when they’re supposed to be entitled to their PTO.
You see, unlimited vacation days are not accrual-based. This means that your PTO will have zero value when you leave the company. On the other hand, when PTO is quantified, it’s more tangible. This means you can actually earn a payout when you move on to your next endeavor if you do not use up all your paid leave.
What’s more, most companies offering unlimited leave have complicated rules about when and how you can take your time off—more on that next.
The Biggest Snares With Unlimited Time Off
Yeah, an employee can technically request to take as much time off as they want, but to what end? Here’s the rub:
Imagine you just started your new job this year, and you’re trying to prove yourself. At this point, you think it’s a bad idea to take any of that “unlimited” time off, as you need to focus on keeping up with your work and impressing your boss.
What ends up happening by the end of the year? You forego taking any extra days off, even if you have them available to you because you don’t want to rock the boat. And nothing carries over to the next year. So all those undefined, infinite number of days you didn’t use? They mean nada, nilch, zero.
It’s also true that workers are often hesitant to take time off for fear of being seen as lazy or uncommitted. And with an undefined number of vacation days, it’s hard to know how much time is too much. Employees may feel pressured to work longer hours, even when they’re beat.
Plus, some businesses may require you to take your PTO in blocks or have blackout dates when you’re not allowed to take vacation at all. This isn’t sounding so glamorously unlimited after all.
Unlimited PTO is not only a ploy to reel in candidates—it’s also a way to appeal to investors by keeping the balance sheet looking good. In other words, by not having to pay out for vacation days, a company can show higher profits. And that’s why some companies are starting to offer unlimited PTO: as a way to boost their bottom line.
Are Those With Unlimited PTO Actually Using It?
A 2021 survey by Namely revealed that workers with unlimited PTO policies actually wind up taking less time off than their counterparts with traditional time-off policies. On average, unlimited PTO-ers only take 13 days off in a year. True, that number is still higher than the USA’s PTO average of 10 days (not including public holidays or sick days). But many companies offer more plentiful time-off policies than that. So what gives?
The problem with unlimited leave is that it’s often unspoken and therefore, ambiguous. Because there is no set allowance on how much time off employees can take, managers and employers don’t have a clear picture of what their team is doing. There’s a real fear that workers will take advantage of their freedom and slack off. So, instead of encouraging time off, managers sometimes stifle it.
Unlimited PTO also puts the onus on employees to keep track of their own time and use it sparingly. Unlike a time-off policy, workers can’t measure their days off in aggregate. Instead, they have to stay on top of how much individual time they’re taking off every week and month. This can lead to feelings of guilt or anxiety about whether or not they’re taking too much time off.
All of this is to say that unlimited PTO is not all it’s cracked up to be.
The Right Way to Offer PTO
If you want to offer your employees a competitive PTO policy, there are a few things you should keep in mind:
PTO should be accrued so that employees can earn and accumulate time off. This ensures that workers can actually cash in on their PTO when they leave the company. Employees will feel more comfortable taking time off, knowing that they can take a well-deserved break without sacrificing their earnings.
PTO should be flexible for workers to take time off on short notice or when they need it most. This will help you to retain top talent and keep your team happy and productive.
PTO should be generous to make employees feel valued and appreciated. A good rule of thumb is to offer above-average PTO, which will set you apart from your competitors and help to attract top talent.
PTO requests should be accepted unless there is a genuine business reason to decline them. This policy will show your employees that you trust them to use their time off wisely, fostering a culture of respect.
By following these guidelines, you can offer your employees a PTO policy that is truly competitive and beneficial to both your team and your business.
Real Perks > Phantom Perks
Unlimited vacation time sounds awesome. But in truth, this type of policy often does more harm than good for employees. Do you really want to offer a benefit that your employees can’t use? If you want to attract and retain top talent, it’s time to rethink your PTO policy.
If you’re looking for a truly flexible work environment, it’s better to focus on things like remote work and flexible schedules. Childcare and family benefits are also important to consider, as they can have a significant impact on an employee’s quality of life. And of course, don’t forget about the basics—like health insurance and a retirement savings plan. These are the types of perks that will make a real difference to your employees—and to your bottom line.
Keep your business and your employees accountable with an accrued, flexible, and generous vacation policy. This is the best way to show your team that you value their time and their contributions to your company. Speaking of accountability, a paid time off tracker can help you to keep track of your team’s vacation days and ensure that everyone is using their time off wisely. Check ours out for your business↓