What You Need to Know About Unlimited Paid Time Off

Lately, there has been a lot of talk about progressive employers offering unlimited paid time off (PTO). While unlimited PTO sounds attractive, especially to an employee, organizations should conduct a true analysis of the potential impact prior to implementing an unlimited PTO policy.

 

What It Is

Unlimited PTO provides employees a break from PTO banks and traditional vacation policies. With this innovative practice, employees are given the freedom to decide when and how much paid time off they will take. The only requirements are that their work is completed and the absence will not adversely impact business. Currently, only 1% of companies nationwide have adopted this practice but the number is steadily growing.

 

Pros:

1. Employee retention – employees appreciate the trust and flexibility given to them by management to administer their own schedule in a way that serves their personal needs.
2. Increased productivity – mental fatigue can create stress and poor performance. Research shows that taking meaningful breaks away from work increases productivity.
3. Candidate attraction – unlimited PTO can provide your organization with a competitive advantage when recruiting for top talent.

 

Cons:

1. Culture of workaholics – with no specific amount of vacation time, employees may feel pressured to minimize time away from work or to always be “on”. According to the U.S. Travel Association, there are already 40% of us that leave paid vacation days unused.
2. Not always applicable – this type of policy works well with small, results-driven organizations but likely would not apply to organizations with a high percentage of hourly workers or those in manufacturing or production-focused environments.
3. Hard to implement – as with any policy change, employers should proceed with care. There are company culture impacts, potential employee relations concerns, and compliance risks related to wage and hour regulations and unfair treatment.

 

When considering a change in PTO and vacation plans, it is important to consider many factors, including your organization’s culture, operational structure, staff make-up, and customer needs. If a new policy is applied, setting expectations and continuously communicating them to employees are critical to ensure success.

 

Our team of HR professionals is available to answer your PTO questions, analyze your current offering, develop new policies, and help manage the change. Contact a team member at EctoHR by calling 810.534.0170, or by email to hr@ectohr.com