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Managing Unlimited PTO: The Struggles and Solutions for HR

4 min read

Let’s face it, we all need a well-deserved break from time to time. In fact, some studies highlight the importance of workers taking the odd day off or the occasional week or two. The average PTO in the USA for workers is 10 vacation days per year, depending on the company policy, with sick and personal days on top of that. Yet, a new vacation policy recently gaining momentum is the adoption of an unlimited PTO policy.

Slowly grabbing more attention worldwide, unlimited PTO policy is popular among tech company startups and newer businesses. Getting away from the office allows an employee to de-stress, clear their minds and come back with renewed energy and improved productivity.

It all may sound too good to be true, right? You’re probably wondering how does paid time off really work and why is it beneficial to an employer. Take a read through our post for this and more!

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What is Unlimited PTO?

Essentially, unlimited paid time off or unlimited vacation is similar to normal PTO and personal time off. However, with unlimited vacation, employees do not have a maximum amount of days off work. This means that the company permits them to take as many vacations, sick and personal days off as they like. Yet, they are still expected to meet their performance goals. 

As with flexible time off and floating holidays, there are certain expectations and guidelines that staff must follow for unlimited paid time off. For instance, employees are not able to simply book a holiday and disappear for two weeks without telling managers first. It is a good practice, regardless of company policy, that employees should make managers aware of and in many cases seek permission for, their planned time off before taking it. 

A surprising number of companies have adopted a limitless time off policy, including Netflix, LinkedIn, and Everbrite. So, if these successful companies are using it, does that mean that unlimited PTO is good? Let’s take a look at some of its advantages. 

Unlimited PTO Pros and Cons

It sounds too good to be true right? Well, it must be said that there are a number of gray areas that make managing this time off difficult for HR managers. Here are some of the good and bad outcomes that HR managers face while implementing an unlimited PTO policy.

It Encourages Workers to Use Paid Time Off

You may be asking why employers give unlimited paid time off. Well, the main reason for this practice, and consequently its advantage, is that it encourages employees to take a break and come back de-stressed and fresh. Although hard to believe, a company culture of “all work and no play” has swept across the Western world.

As a result, there is actually a lot of unused vacation time within companies. This causes stress and pressure for employees, whose personal and professional lives often suffer from a lack of balance as a result. Therefore, offering unlimited PTO encourages staff to take time off and ultimately improves their work-life balance in the process. 

Unlimited Vacation Can Be Efficient

Employees don’t have to wait for accrued vacation time before they take a much-needed holiday. They are expected to manage their time efficiently, and so if they are on top of their tasks, they can make the personal decision to take days off without panicking about getting into trouble. Ultimately, this gives them the responsibility and the choice of managing their own time.

Unlimited PTO Abuse

When employees hear the words “unlimited vacation time” their eyes naturally light up. They begin to think about that holiday to Rome they’ve always dreamt of, but never had the chance to take. And who wouldn’t feel tempted to take as much time off as they possibly could? Obviously, implementing this policy means that there is the potential for employees to abuse it.

One solution to this is to establish and regularly review performance goals. So, if workers are not meeting their targets and completing tasks on time, there could be a presumption that they’re taking advantage of this time off and their work is suffering as a consequence. 

Unlimited Vacation Can Be Too Much of a Good Thing

When we’re given an unlimited amount of something whenever we want it, it starts to lose its appeal and we appreciate its worth less and less, in this instance, unlimited vacation time. It gradually loses its effectiveness as a motivator and thus the incentive of being rewarded with extra PTO for working hard, as is the case in many companies, is lost. Therefore, it is essential that managers find another system of reward in order to foster loyal, hard-working, and motivated employees. 

It is Difficult to Manage Unlimited Paid Time Off

As a result of having fewer regulations in place to carefully manage proceedings, logistically speaking, keeping track of the actual amount of time workers have had off could be a nightmare. Putting in place a vacation tracking software would help keep records up to date and time off managed much more easily. 

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How to Manage Unlimited PTO

Using a paid time off tracker is vital to ensuring that proceedings run smoothly. For example, PTO leave not only includes vacation time but also time off needed for bereavement leave, paid sick leave, parental leave, and disability. Using tracking software simplifies the logistics of having to keep track of exact hours and reasons for time off. This software presents the data through tables and calendars. This display makes it easy to visualize vacation time and time off requests for individuals and multiple teams simultaneously.

As a result, the process of vacation management is sped up, making it much more efficient and streamlined for management. It also means that HR managers have their entire team at their fingertips.  Therefore, they can make sure employees are not abusing this advantageous system. 

Unlimited PTO Policy

A surprising number of companies adopt an unlimited time off policy. Yet there are some considerations to take into account when creating your own. Typically, a policy like this works well when:

  • Employee performance and goals are tracked, checked and rewarded before implementing this policy. 
  • Paid time off management software is in place in order to keep track of paid time off requests, as well as minimizing the likelihood or impact of abuse of this system. 
  • Employees take time off that is pre-approved by managers in order to keep tabs on movements. This also ensures staff absences do not compromise the operational requirements of the businesses. 

To sum up, unlimited PTO can be a good practice to implement within a workplace, especially where standard paid time off allowances in the USA are only 10 days per annum. It all depends on how well the policy is set up and managed. If steps are followed correctly and PTO tracking software is used, then it could be very beneficial to an employer and employee. 

Manage Unlimited Paid Time-off with Ease, all thanks to Factorial’s Management Software – Try it for Free!

Contributed by Charlotte Stace; Edited by Tanya Lesiuk

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