Unlimited paid time off (PTO), also known as unlimited vacation and sick leave combined, has been gaining more and more traction, especially over the past half-decade. An unlimited PTO policy, in its most basic form, states that employees are allowed to take off as much time as they would like, so long as they do two things:
- Fulfill their job responsibilities.
- Get approval from their manager prior to the time off.
This policy may have begun with a handful of small startup tech companies, but it has now been adopted by countless organizations, including some organizations that have been around for quite some time with thousands of employees. And, with employees valuing flexible schedules more than ever, these policies are likely to stick around for the foreseeable future.
However, some employers are beginning to realize unlimited PTO isn’t for all fields of work; and even when it is well-suited for a particular organization, the addition of some parameters and guidelines to an unlimited PTO policy has the potential to make it much more impactful to employees and employers alike.
Fact or Myth: “Employees Will Misuse Unlimited PTO”
This is still the first question asked by many employers who have not adopted an unlimited PTO policy – and rightly so! After all, instead of heading to work every day, who wouldn’t prefer to soak up the sun on a beach and still get paid?
While some employees do end up misusing the policy, surprisingly, most organizations who adopt unlimited PTO find that the majority of their employees not only don’t misuse the policy, they actually take less PTO as compared to an earned or accrued PTO policy.
Joanna Sammer, a New Jersey-based business and financial writer, states, “A more common problem with unlimited vacation is that employees may end up limiting the amount of time they take off, sometimes taking far less than the average two weeks most employers offer” (4 Lessons About Unlimited Vacation). Furthermore, Jennifer Loftus, founder and CEO of SwingSearch, an Oakland, California-based recruitment agency, cites that “Studies show that people actually take less vacation time when there is an unlimited PTO policy in place.” Too often, “the flexibility that most employers intend to create isn’t actually used” (Making Sure Unlimited PTO Is Done Right).
Time and time again, the idea that employees will misuse unlimited PTO has the same tiny grain of truth as the idea that employees will never have the same level of productivity if allowed to work remotely – it does happen, but it’s not the norm.
Unlimited PTO, with Parameters
To ensure unlimited PTO is used as intended, some employers are beginning to put into place some guidelines.
When employees need some encouragement to use more time off, and thus avoid burnout, Danielle Tabor, Chief People Officer at Emburse, suggests, “providing employees and managers with an average vacation range, including a minimum expected — or even required — level” (Making Sure Unlimited PTO Is Done Right).
To combat the issue of the typically few employees that might misuse unlimited PTO, Matthew Burr, an HR consultant at Burr Consulting in Elmira, NY suggests employers “Carve out language in your policy around how excessive use of PTO will be reviewed on a case-by-case, consistent basis” (Unlimited vs. Limited PTO). Moreover, Jonathan Wasserstrum, founder and CEO of SquareFoot, a commercial real estate and technology firm, adds, “If they are performing well, we don’t care. If they are not performing well, we need to have a conversation” about vacation use.” (4 Lessons About Unlimited Vacation).
Performance, Not Attendance
At the end of the day, most employers care more about performance than attendance. Obviously, an employee performing at their highest potential will of course get much more accomplished in a day’s work when compared to an employee that’s burned out. “I see a noticeable difference in my team when they return from vacation,” cites Heather Kelly, CEO of Next PR, a public relations agency. “It doesn’t matter if they go on an extravagant European trip or take a day to focus on self-care — it’s incredibly important for teams to be able to walk away from their desks and focus on themselves” (The Pros and Cons of Open Leave and Set Vacation Days).
Summary
One big lesson learned from unlimited PTO is that time off work should be designed in such a way as to promote and sustain employee wellness. Farrah Fielder, executive vice president of Engage PEO says, “If employees feel they have a good work/life balance, that will result in lower turnover, less burnout, higher productivity and stronger morale in the workplace” (Unlimited vs. Limited PTO).
Employees aren’t choosing countless weeks on the beach even when unlimited PTO is available to them. Instead, it’s clear the goal of any well-designed time-off policy, unlimited or otherwise, is all about helping employees to manage their lives outside of work effectively to enable them to perform at their highest potential while on the job.
For additional information regarding which leave policies are best suited for your organization and how to effectively implement those policies, please contact us at www.newfocushr.com.
Updated by: Jason Love, SHRM-CP, CLSSGB
HR Consultant
5/2/2023
