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Unlimited PTO: Pros & Cons of Unlimited Vacation Benefits

February 18, 2020

Ty Gowen

Timer  Read Time: 6 minutes

Unlimited PTO policies have been a popular topic of conversation over the past several years as more and more organizations look for creative and affordable ways to attract and retain talent.

Though offering an ‘unlimited’ policy might sound great on paper, a well-executed program takes a lot more work than simply freeing HR of paid time off tracking and sending your workforce a quick email about the new initiative.

Before you pull the trigger on an unlimited paid time off policy, carefully consider these pros, cons and best practices.

 
 
 

Unlimited PTO Pros

So, what’s the big deal about unlimited paid time off? There are several reasons why adoption is on the rise.

Save Money

One of the primary (though often overlooked) benefits of providing an unlimited PTO policy is potential savings incurred through losing accrued paid vacation time on your company’s liability sheet. Accrued time off is time that will potentially need to be paid out in some form if and when employees leave. Eliminating accrued time eliminates this pesky line item from your balance sheet.

Increase Admin Efficiency

Eliminating the need to track time off will take this burden off the HR team. Even if HR is using an HCM solution that helps automate the process, the team is inevitably fielding and approving requests and questions about remaining days, how accrual works, etc. Eliminating this take will make HR more efficient and allow that team to focus on more strategic initiatives.

Support Recruitment and Retention

Paid time off is consistently ranked as one of the most in-demand employee benefits. In fact, a recent Glassdoor survey found that nearly 80% of employees would prefer additional benefits over a straight pay raise. Adopting and showcasing an unlimited PTO policy can be an appealing perk for recruits and a powerful policy that helps retain your top talent.

Boost Morale

Transitioning to an unlimited paid time off policy can boost employee morale and convey trust across the organization. Breaking down traditional barriers allows employees to control their own PTO destiny and take the time when they need it without the pressure of ‘use it or lose it’ policies or the disappointment of being a few days short for a holiday trip or vacation.

Prevent End of Year Vacation Sprees

Is your office a ghost town during the holidays? While this might not be a huge concern for some organizations, many companies struggle to juggle time off for employees that need to ‘use or lose’ their paid time off. It can be tricky to allow employees to take their hard-earned time off before they inevitably lose their days while also keeping your company up and running. Eliminate this concern with an unlimited policy—no need to worry about losing days if employees have the flexibility to take them when they actually want to.

Unlimited PTO Cons

Though unlimited PTO is appealing on paper, the concept does have its limitations. Carefully consider these potential roadblocks and prepare in advance for how to overcome issues.

Some Employees May Take Advantage

Though this is usually not the case (more on usage stats in a bit) there will always be a certain small percentage of the employee population that will try and abuse the system. Of course, you want employees to take time off, but you do need them actually working at some point. Having clear guidelines and processes for taking time off in place can help prevent system abuse.

Most Employees Take Less Time

Despite the initial purpose of encouraging employees to take more time off, unlimited vacation policies often have the reverse effect – employees take less time off, on average. Whoops. While some might file this in the ‘