4 lessons from companies to implement unlimited PTO policy

Unlimited PTO has been the rage for some time now. It has become a trending phenomenon, with almost 3 out of 4 employees looking forward to it, making it an emerging preferred employee benefit. It gives employees the autonomy to use their time off and establish a work-life balance without worrying about micromanagement. 

Do not mistake it for a 365-days paid vacation though! With unlimited time off, companies trust their employees to act responsibly. Startups like Netflix, Hubspot, Buffer have implemented this successfully by regularly optimizing their policy, analyzing the usage trends, and understanding the employees’ perspectives. But before we get into the challenges of implementing an unlimited PTO policy, let’s briefly understand what unlimited PTO is and identify if you need one.

What is unlimited PTO? Is it a good idea?

Unlimited PTO policy lets your employees take as many days off as they need. Employees are not offered a predetermined amount of casual, sick, or vacation time, unlike limited PTO policy. 

Also known as flexible time off, it gives the employees the flexibility to take time off for any number of days as long as it does not impact their work goals.

Millennials and GenZs prioritize work-life balance and prefer working for companies where they can achieve it. Unlimited PTO attracts talented candidates and helps them achieve the work-life balance they seek, making you a sought-after employer. It helps them rejuvenate, boosts their morale, and come back with more vigor and productivity.

Companies like Indeed have experimented with unlimited PTO in 2017 and saw a record increase in productivity, along with low attrition rates and high engagement. That said, unlimited time off certainly does not encourage long unplanned absences or impromptu leaves (unless in case of emergency). Most companies have a procedure for applying time off that helps plan for the employees’ unavailability. The idea behind introducing Unlimited PTO is to treat employees as responsible adults who can make the right decision. 

As Reed Hastings, CEO of Netflix, puts it, “Most important, the freedom signals to employees that we trust them to do the right thing, which in turn encourages them to behave responsibly…. We’d found a way to give our high performers a little more control over their lives, and that control made everybody feel a little freer.”

Challenges faced while implementing Unlimited PTO 

While unlimited PTO removes the limit on the allotted time off, employees are often confused and don’t know how it works, what is acceptable and what is frowned upon. Here are a few roadblocks that companies faced while implementing unlimited PTO and how they tackled them efficiently

  • Challenge 1: How much is too much?

When the PTO cap is removed, employees are left wondering how much vacation is allowed at all? Regular PTO policy provides that clarity to stick within the limit. Most companies have a PTO policy template that contains all the specifications. Employees don’t know if the limit has been increased or reduced with unlimited PTO. 

How was this handled?

By introducing a mandatory leave policy. 

There is a lot of criticism around unlimited PTO, calling it a nobody-takes-vacation policy. 

To ensure that people take the necessary amount of rest they need, the Instant messaging app, Kik pushes employees to take at least one week off every four months. As a result, employees return rejuvenated and are at their productive best. 

Buffer, the social media management tool, also has a minimum three-week leave policy, letting employees know that three weeks of refreshing time off is recommended for productive work life. 

  • Challenge 2: Am I the only one taking time off while everyone is working?

Employees sometimes feel guilty while taking a long-planned vacation, especially when the rest of the team doesn’t do it. They feel uncertain about taking time off, constantly worried about how the rest of the team will perceive it. It can lead to employee burnout, low morale, and increased attrition. 

How was this handled?

  • By encouraging leaders to set an example.

How an employee feels in a company is a testament to the company culture. If the employee feels uncertain about taking a refreshing time off, it is time to revisit the way your company culture is conveyed. Discuss with the leadership team, and encourage them to set an example of a healthy working atmosphere. That’s what Netflix did. Whenever they saw an employee working without taking time off, they talked to them and communicated the importance of rest days. It helps improve the productivity of the employee and makes you walk the talk on company culture.

  • Offering Vacation stipend

What if you were paid $1000 to take a week off from work? Well, that’s what Evernote does when their employees take some time off from work extending to at least a week. FullContact does something similar by offering to fund an employee’s trip up to $7500 as long as they go somewhere away and do not use their phone. By doing so, employees are incentivized to do something good for themselves and will come back happier and looking forward to working.

  • Challenge 3: What if everyone takes time off at the same time?

In the absence of a defined time off policy, there’s a chance that people might take long vacations simultaneously. If this happens, the company goals go for a toss. 

How was this handled?

  • By setting up a shared calendar for the team.

Akamai Technologies does this with their IT team. They do not have a time off tracking system, but everybody updates their availability on a shared calendar. This helps managers plan their goals better. 

  • Using time off management tools

With time off tracking software, employees can apply for time off with the click of a button. With flexible approval workflows, customizable time off policy, holiday calendar, and time off analytics, You get everything you need to stay on top of managing time off for your company. 

  • Challenge 4: Where do I read more about the company’s unlimited PTO policy?

While unlimited PTO policy removes the cap on the PTO allotted, companies often fail to prioritize having a written policy for reference. They assume that since the limit is removed, PTO ceases to be something that needs to be monitored. This can leave the employees confused, particularly the new hires. They may either end up taking too many leaves or not taking any at all.

How was this handled?

Having a written PTO policy. Period.

Removing the PTO limit does not eliminate the planning or procedure required for taking time off. Employees need to know how to plan for their holidays, the recommended time off, whom to approach for longer holidays, and so on. A written PTO policy can be used as a reference whenever employees have questions, eliminating confusion.

What started off as a recruitment hook to attract talent has grown to become an almost indispensable employee benefit. With the job market becoming increasingly candidate-centric, this benefit is likely to stay. If you have already implemented Unlimited PTO policy in your organization, do share your experience with us. Did you face any challenges not mentioned above, do let us know in the comments below.