Companies need to keep pace if they want to attract and retain the best and brightest.
Along with salary, and healthcare benefits, one of the perks they use to remain competitive is vacation time. Top talent considers Paid Time Off (PTO) a significant factor when deciding whether to accept a job offer. Employers also use PTO as a means of generating staff loyalty. The longer you work for a company, the more yearly vacation you accrue.
Even before the pandemic, companies began reevaluating employee benefits, including how to allocate PTO. Larger tech-based firms like LinkedIn, Netflix, and Hubspot started moving to an unlimited PTO model in 2015.
The idea is that organizations give their employees as much time off as they want so long as staff members meet their productivity targets. Since then, the popularity of an unrestricted vacation policy has been gaining steam, especially in the face of recent staffing shortages and changing expectations among Millennial and Generation Z job seekers.
For employees, it may sound too good to be true. But what are the pros and cons of unlimited PTO? Let's examine how an unrestricted time off policy can improve productivity, boost feelings of engagement with work, and, most importantly, foster a healthy work/life balance.
What is an unlimited PTO policy?
An unlimited PTO policy allows staff members to take as much paid vacation as needed. Most policies rely on staff to complete their work ahead of time or organize who will cover for them in their absence.
Many early adopters in the tech industry had a flexible working culture that allowed them to lead the charge. Their success and the Great Resignation are causing the more traditional companies to consider how business culture and employees’ work-life balance affect retention. That focus has more companies evaluating and embracing the concept of unlimited leave.
Some employees would even prefer PTO over a 10% raise, according to a Deloitte report. The added flexibility makes it easier for employees to manage their work-life balance. To match fears of employees taking fewer days since they aren’t required, some companies are enforcing minimum vacation to limit burnout and up productivity.
Positives and negatives of unlimited PTO
As with anything, unlimited vacation leave has advantages and drawbacks for both employers and employees. It’s best to be aware of them before basing a job acceptance on PTO.
Pros of unlimited PTO
A generous vacation policy has long been a sought-after perk for employees. UnlimitedPTO offers many benefits that include:
- Increased productivity. You’ll likely come back to work rested and recharged after vacation — meaning you’re better able to tackle your regular tasks. The downtime will invigorate your brain, improving problem-solving and giving you a new perspective to innovate within your role.
- Improved morale. Companies with unlimited PTO policies depend on open communication and a high level of trust between management and staff. You’ll feel more engaged with the company and have greater autonomy. Trust, communication, and autonomy work together to improve your attitude and overall performance at work.
- Time off when you need it. If something unexpected comes up, like a wedding or family emergency, you won’t need to try to juggle your priorities to accommodate everything. Keeping up with work throughout regular periods will make it easier for you and your team to adapt when you need time. Unlimited PTO also covers most personal leaves and sick days — not just proper vacation time.
- No more unpaid vacation days. Life happens, and the last thing you need is to take a financial hit when coping with the unexpected. With unlimited PTO, that’s one less worry you’ll have to deal with during a stressful time.
- Preserve your sick days. Having an unlimited number of days for vacation means you won’t have to sacrifice your sick days to get a little extra time off when you need it — or worry about running out of sick days. You’ll be able to use each type of leave to fulfill its intended purpose.
- Flexible work environment. If you’re on a hiring team, you know how hard it can be to win over the perfect candidate. But a company that offers unlimited PTO, flexible hours, and a work-from-home or hybrid model will stand out. Many have come to appreciate and expect this fluidity in scheduling — enough to accept or reject an offer.
Cons of unlimited PTO
An unlimited vacation policy isn’t without its downsides. Knowing potential pitfalls that come with a seemingly limitless amount of time off can help you better manage your expectations.
- Scheduling conflicts. Unlimited PTO isn’t as free-wheeling as it would seem. Work still needs to get done, and conflicting vacation requests amongst team members are bound to happen. Communicate with your coworkers about tentative vacation plans, so you’re aware of any potential issues and negotiate coverage. Be flexible and request or book your time off early. Never finalize plans before your vacation is approved.
- Fear of using. For some people, their ability to work without needing time off is a badge of honor. It can lead to a sense that someone needs to avoid vacation to appear equally as productive as their peers. If the company culture doesn’t align with its vacation policy and doesn’t establish a minimum amount of leave time for everyone, this behavior can ultimately result in employee burnout.
- Inability to use. If employees are willing to use their PTO, they might be unable due to company structure and workloads. Sometimes the fear of using vacation days is overpowered by the stress of an insurmountable workload — which would only grow during vacation. This resistance might lead to workers taking less vacation than they would if days were guaranteed.
- Potential for abuse. If a coworker’s constant absence results in more stress and work for you and your teammates, that’s a problem. Constantly scrambling to cover their tasks can result in the burnout the policy was designed to alleviate. If this sounds familiar, be honest with HR and management about the impact of these constant vacation requests, so they can adjust the policy and take steps to prevent abuse from recurring.
- No vacation payouts. With traditional PTO, employees who leave their position receive a cash payout to compensate for unused vacation days. With an unlimited PTO policy, you can’t bank your unused PTO, so you aren’t entitled to these funds as part of your severance package.
How to use unlimited PTO
So how does unlimited PTO work? While it may seem simple on the surface, if your HR department has decided to implement an unlimited PTO policy, you need to follow the established steps for requesting vacation time. Just follow these steps:
1. Understand the policy
Take the time to learn the rules and processes for requesting vacation leave. Knowing the policy will make it easier to log a request and keep you in good standing with the HR team. If you need clarification on how unlimited PTO works, get the answers directly from your reps.
2. Give advanced notice
Talk with HR, management, and coworkers well ahead of your vacation. Communicating your plans will allow senior staff to prepare for your time off and give you an idea of what needs doing before you leave. It also gives you time to loop in anyone covering your role and help them fill in for you seamlessly.
3. Get organized
You need to be responsible when it comes to unlimited PTO. Plan and organize your schedule so that time-sensitive tasks and projects will be out of your hands before leaving. You should also coordinate with another team member to manage any unexpected jobs that surface during your absence.
Depending on your seniority, you might be expected to submit a plan detailing who will take over your tasks — which will help you give notice and get organized all at once.
4. Just do it
Once HR approves your PTO, you must ensure you perform to your usual high standard. Communicate regularly with your coworkers and supervisors to ensure no surprise tasks require your attention before you leave. Don’t leave a job unfinished or expect the rest of your team to pick up the slack while you’re gone.
Take off to better work-life balance
The idea of working to live instead of living to work holds true when your company implements an unlimited PTO policy. You’ll be able to access the employee leave time you need to maintain a healthy outlook on your job. At the same time, management will benefit from improved employee engagement and a productive work environment.
Regardless your company’s vacation model, make sure you’re taking advantage of it. Any type of rest is crucial for helping you work toward being a better you.
