Is Unlimited PTO Right for Your Company?

Writing a vacation policy. Granting sick time. Crafting a parental leave policy. Should we give unlimited time off? While each statement or question may seem like a simple task, the truth is, all of these can quickly become complicated.

There are many approaches to time off and many factors to consider as you make these decisions for your organization. Let’s break it down into a couple of categories:

  1. PTO (paid time off): One bank of paid time off
  2. Types of time off: Multiple types, including sick, vacation, personal, etc.
  3. Unlimited PTO: Who is it good for and what are the pros and cons of implementing it?

Types of time off

In the good old days, most companies defined time off into three buckets: sick, vacation, and personal.

While there may still be reasonable need for this, it can become cumbersome as it relates to administration of the policy. Likewise, employees may be tempted to use the time allotted for sick and personal as vacation and vice versa. According to the Mercer Survey on Absence and Disability Management, in 2010 38% of companies had moved to one bank of time off (PTO) and in 2015 63% of companies surveyed were using a bank of PTO. General PTO allows the employee to manage their time as needed, whether that be for sick, personal, or vacation time.

Unlimited PTO

Maybe you’ve made the move to a bank of PTO within your organization. The next BIG leap you could consider would be to implement unlimited PTO. While this approach might be the “sexy”one that gets talent through the door, take caution to consider the pros and cons of unlimited PTO before making the jump.

The Pros

  • Creates a sense of trust and cultivates ownership and responsibility for your time and your workload.
  • The company wouldn’t have to pay out unused time (depending on state law).
  • Increase productivity because, according to a Harvard Business Study, “spending less time at your desk forces you to waste less time.”
  • The term “unlimited PTO” sounds trendy and can definitely attractcandidates in the recruiting pipeline.

The Cons

  • The reality that the folks you need to take a break and recharge, will not take the time they need.
  • You could find that some employees abuse the freedom –this becomes less likely in a goals-driven environment rooted in accountability.
  • If you have shift work, trying to plan for coverage can be difficult with fluctuating vacation schedules.
  • Unlimited PTO and unmanaged PTO are not the same. For an unlimited program to work you must have managers and employees holding themselves accountable for the work that needs completed and taking time off when appropriate.

The moral of the story: Unlimited PTO is not for everyone or every organization. It works best for an organization that is goal-driven, has natural accountability, and really believes in work-life balance. Due to the increased activityaround remote work and the ability to be connected at all times, ensure your employees are actually taking time off and unplugging.

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