Is it Time for Your Company to Offer Unlimited PTO?

While unlimited paid time off (PTO) has a number of perks on paper, the most important thing is to know it’s the right PTO policy for the people you work with. Here are some questions to start with.

Only a few years ago, if you’d suggested the idea of unlimited paid time off for all employees, your boss would have laughed you out of the door.

Fast-forward to 2020—which has been chock full of surprises and challenges—and suddenly, the concept isn’t so crazy.

A relatively new trend in the working world, unlimited PTO means you don’t have an allocated number of paid holidays. Instead, you take as many trips, sick and personal days as you like.

In a world where people are more aware of work/life balance, unlimited PTO has become a way for your team to be more responsible for their own time management.

Sounds great, right? But what are the real repercussions of unlimited time off? How does it impact your business? And how do you know if it’s suitable for your company? Well, don’t rush into anything. This is a big decision and before committing, there are some big questions to ask:

1. How Can Unlimited PTO Benefit My Company?

Perhaps unsurprisingly, studies show that 72 percent of workers have an interest in unlimited time off. But what are the perks for the company?

For one, it helps create a culture of trust between you and your employees. It also gives your business a competitive edge when it comes to recruiting the best candidates. Not to mention, in an age where remote work is popular (and during the COVID-19 pandemic, often required), and happiness is a huge part of working life, unlimited time off seems like a natural next step.

Likewise, it can lower the chance of burnout in your team. The more rested and flexible people can be with their time off, the more likely they’ll be productive when they’re on the clock.

Naturally, however, many employers worry that the unlimited model could be abused, and that people will constantly be on holiday. To prevent this, it’s important you test the policy across a small group of people for a short time before fully applying it. Remember, “unlimited” doesn't mean boundaries can’t be put in place—if your company has a big event, a deadline, or a high season, you can let people know holiday requests won’t be accepted during that time.

2. What Do People Think of the Current Policy?

Knowing what people think of your current policy is probably the most important step—observe and learn from your colleagues.

Start with managers and team leaders. Ask them how internal operations are running for them at the moment. When are their busy periods? Seasonal dips? When can they cope with fewer staff and when do they need all hands on deck?

Ask them about the operational side of things. Does the current way of registering time off work? Be thorough with your questions and note every detail. Not only is this a time to get a sense of people’s expectations, it also shows you value their input.

Afterwards, speak to the teams. Ask them what makes the existing policy good and what makes it bad. Send out anonymous surveys for feedback, encouraging opinions around alternative policies. Gather information about how many days people take at a time, when they take holiday time, and what they do during their time off.

The last question may seem a little odd at first, but by hearing what people do with their time off, you can predict how much time people typically would request off in an unlimited policy. For example, if the majority of employees are flying overseas, they’d probably ask for more holiday days than if they were attending a local event.

Once you’ve collected all the feedback, be transparent with the next steps. You may find unlimited PTO is well overdue in your office. Alternatively, you may find it’s not the answer, and, in fact, a few tweaks to your existing policy would work wonders for your team’s happiness and well-being.

3. What PTO Policies Do Your Competitors Have?

Looking at what your competitors are doing is always a good way to check that you’re on the right track. Do some digging to find out if your counterparts have unlimited policies. You might even discover your employees have already done the comparison and are thinking, “But if they have unlimited PTO, why don’t we?”

If your competitors aren’t using unlimited time off, talk to your management and discuss the idea of pioneering a new trend. Being the first company in your sphere to have unlimited PTO could do wonders for your branding and attracting new hires.

Also check out how it impacts productivity and what the potential downsides are. Look at these stats alongside your company targets and determine if the policy would help or hinder your progress. There are a number of online blogs, surveys, and case studies about the impact of unlimited PTO, so devote some time to doing your homework.

4. What Tools Are Needed for Unlimited PTO?

If it does seem like the right decision for your business, ask yourself what equipment you would need to manage it effectively. It’s going to affect everyone in a company, so it must be seamlessly implemented, and the reasons clearly laid out from the beginning.

You’ll need a way to track absence, make sure people are taking sufficient time off, and are spreading their days throughout the year. Consider the number of employees working with you, consider your budget, and consider who will be in charge of the policy.

Will a spreadsheet do the trick? Is it time for an internal dashboard? Or does an HR system better suit your company?

Making a Decision

Interestingly, some companies, such as Kickstarter, adopted an unlimited policy but removed it because employees were taking less time off. Confusion around how to use the seemingly too-good-to-be-true perk meant people felt it was inappropriate to request so much holiday.

Likewise, other companies are reluctant to use unlimited PTO because it removes the option to give employees extra time off as a reward.

So while unlimited PTO has a number of perks on paper, the most important thing is to know it’s the right PTO policy for the people you work with. Spend a few weeks getting a feel for attitudes towards holiday leave, checking out the market, and finding the best tools. With a little researching and reviewing, you’ll know if it’s right for you. 

Gary Bury is the founder of Timetastic, a super-simple staff leave planner for modern companies. He started Timetastic in 2014 to help team well-being and company productivity.

Training magazine is the industry standard for professional development and news for training, human resources and business management professionals in all industries.