The modern worker realizes that there’s more to life than just a job and a career. A flexible schedule, a work/life balance, a job that values them, and enough time to enjoy life outside of work are just some of the things that people want from their employer, especially in our post-pandemic world.
As such, the job market has become increasingly competitive and one of the ways that companies try to appeal to candidates is by creating unlimited paid time off (PTO) plans.
While unlimited PTO sounds like a dream come true, it definitely has its pros and cons.
What is unlimited paid time off?
The majority of companies offer their employees limited PTO, which combines vacation days as well as sick days. According to the U.S. Bureau of Labor Statistics, the average U.S. employee has just 10 paid vacation days after being with their company for a year. Sick days are provided as mandated by each state.
Unlimited PTO is exactly that – employees have no limits on their paid time off which means that they can take as many vacation and sick days as they need at their discretion.
The pros of unlimited paid time off
1. Increased employee wellbeing
With unlimited PTO, employees are able to take time off whenever they need it or feel like it. This means that they can enjoy time with their family and friends, take that vacation that they’ve always wanted to, or even pursue their hobbies and interests.
Sometimes time off doesn’t even mean that the employee is going anywhere or doing anything exciting; sometimes they just need a day to clean their living space, help out a family member, or simply take a mental health day.
Whatever it is, being able to take time off when it’s needed leads to a healthier work/life balance where employees can enjoy their time at work as well as their time out of it. The result is better mental, physical, and emotional health.
2. Increased productivity
The improvement in employee wellbeing that comes with having unlimited PTO actually makes employees more effective at their job.
This is because when employees know they can take time off whenever they need it, they don’t work constantly and end up burning themselves out. This way they not only enjoy their job more but can do it more effectively because they are functioning well and feeling good.
They can stay on top of deadlines, collaborate better, and never miss a thing.
3. Increased trust and respect for the company
Unlimited PTO is a great recruitment tool because who doesn’t want unlimited paid time off? But perhaps more importantly, it’s an amazing retention tool.
By having an unlimited PTO policy, a company shows its employees that they trust the employees to manage not only their productivity, but their time off as well – once employees adjust to the weird and wonderful concept of unlimited PTO, that is!
This trust is usually reciprocated by the employees only taking time off if they need it, but not because they have such a small amount of PTO, but because they also trust and respect their company. The result is an excellent employee-employer relationship.
The cons of unlimited paid time off
1. Policy abuse
For all of the good that unlimited PTO does, there is always the possibility that someone abuses the policy. The whole basis of unlimited PTO is that employees face no repercussions even if they take weeks or months off of their job, but there are multiple studies that show a large majority of employees in the U.S. don’t use all of their vacation time in a year even when it isn’t unlimited (World at Work and U.S. Travel Association).
It’s therefore not a likely outcome, and of course an avoidable one as long as there are honest conversations about what is and isn’t okay in terms of following the policy respectfully.
2. Vacation repercussions
When employees take time off whenever they choose, it affects their availability. Depending on their role within the company, it can have a knock-on effect on other people’s ability to do their jobs, make team collaboration difficult or impossible, and finally affect the team’s and even the company’s performance.
As a result, employees that are around might overwork themselves which can lead to unhappiness, burnout, resentment towards the company and the employee(s) on vacation, and sometimes even resignation.
3. Unclear boundaries
The issue with unlimited PTO is that it isn’t actually unlimited – of course employees still need to work, and they need to be working enough days to actually accomplish their goals and tasks and finish projects.
The question then is how much time is too much? There aren’t enough precedents or role models to ever really know for sure.
Sometimes workplaces with unlimited PTO even find that their employees don’t take any time off at all, just because they’re so worried about ensuring that they’re working enough. Workplaces can avoid this by putting certain policies in place that help to give employees a clearer idea of what they should do, like requiring a certain amount of days to give notice of days off, or only being able to take a certain amount of days off without prior notice.
With careful thought and planning …
Unlimited paid time off can absolutely be the dream come true that everyone thinks it is, but a lot is needed to execute it smoothly. Requirements include a strong sense of company trust as well as the right company culture, excellent management and a well-documented policy, and the ability to have conducive conversations between employees and higher-ups.
With time, planning, testing, and effort, unlimited paid time off can definitely be an excellent addition to company policies.