By: Helios on February 3rd, 2014

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Pros Vs. Cons with Unlimited PTO Policies

Risk Management | Benefits | Best Practices | Employee Relations

At Helios, we have had a number of clients implement Unlimited Paid Time Off (PTO) policies. This approach to leave is a growing trend for innovative companies working in all industries. Numerous companies are utilizing unlimited PTO to encourage a culture of freedom and responsibility.

Pros of Unlimited PTO

The benefits they have seen from this policy include:

  • Better morale and increased retention: Offering unlimited days off is one way to show employees they are trusted and respected.
  • Improved recruiting efforts: One of the best ways to gain the interest of potential job candidates is to offer flexibility at work and advertise the organization’s innovative and competitive benefits.
  • More engaged and productive employees: Allowing employees to take time off when they need it encourages a more productive work environment. Instead of working when they are burnt out or their thoughts are elsewhere, employees will be able to give the company their full attention. Employees at companies with unlimited PTO are at work because they want to be.
  • Financial savings: Employers do not need to carry unused PTO hours on their balance sheet as a liability, and in the event that an employee separates from the company, there are no unused PTO hours that need to be paid out to the employee.
  • Easing the administrative burden: Organizations who implement an unlimited PTO policy no longer need to track how many PTO hours an individual is accruing.

Even though this benefit is “unlimited”, there is still a need for policies, processes and guidelines to be put into place to limit abuse and ensure proper coverage within teams. In addition to the need for policies and procedures, there are a few aspects that employers should consider before moving to an unlimited plan.

Cons of Unlimited PTO

  • No incentive to stay: With an unlimited PTO plan, employees won’t be rewarded with increased vacation days for their tenure, so there will need to be other rewards and recognition put into place to acknowledge employee service.
  • Not taking time off: With such a flexible policy, employees may be afraid to take PTO at all. Managers need to coach their employees on the new policy and assure them that taking a reasonable amount of pre-scheduled PTO to reenergize and distress is completely acceptable. The leadership culture also needs to reflect trust and responsibility and set the example by taking a day or two to re-energize as well.
  • Abuse: Employees need to understand that this is a flexible paid time off policy, not freedom to never come to work. Usage will need to be monitored, approval guidelines put into place, and general education for employees will be needed.

While a policy of this nature has many benefits, it is certainly not a fit for all companies. If you are considering moving to unlimited PTO, we encourage you to carefully weigh the pros and cons and consider them against the culture of your organization. The ideal candidate for this kind of leave plan is an organization that has a culture of trust and responsibility with autonomous employees who can effectively and independently manage their time to produce high-quality work.