Unlimited PTO vs Limited PTO - things to consider
Capping on the number of days
Unlimited PTO: As the name suggests, there’s no limit to the number of PTOs allotted to the employees. However, there would still be a procedure associated with applying PTO which is unique to the company. This excludes the public holidays and mandatory leaves as prescribed by the government.
Limited PTO: Companies usually provide a fixed bank of PTOs or have the traditional PTO policy wherein there is a fixed number of sick leaves, casual leaves, adoption leave, etc which are either accrued over the year at a certain frequency or given at the beginning of the year.
Measuring the efficiency of the PTO policy
Unlimited PTO: It is difficult to account for the lost time, productivity, and time off trends as there’s no limit to the number of PTOs an employee can take unless companies use the time off software that can handle unlimited PTO policy.
Limited PTO: It is easier to stay on top of time off trends in your company and measure the cost-effectiveness of the time off policy.
Unlimited PTO: There’s no scope for incentivizing unlimited PTO.
Limited PTO: Companies can boost employee morale by incentivizing their good work with an extra PTO.
Application across industries
Unlimited PTO: Not applicable to all industries, particularly those where the employee is accountable for critical tasks, such as factory employees, scientists, medical workers, etc.
Limited PTO: Can be applied across industries.
Encashment of PTO
Unlimited PTO: Does not allow encashment of leaves, thereby reducing the burden on the organization at the time of job termination.
Limited PTO: Although not mandatory, most companies allow encashment of leaves that have been accrued over time, or at the time of resignation.
Abusing the PTO policy
Unlimited PTO: The likelihood of employees abusing unlimited PTO is high since it is quite difficult to track the PTO trends.
Limited PTO: Since it is easier to track PTO in a limited PTO policy, employees tend to adhere to the rules effectively.
Productivity and mental well-being
Unlimited PTO: Unlimited PTO policy helps boost employee morale because it provides a sense of authority and autonomy, thereby increasing employee happiness and productivity. That said, without any clarity on PTO best practices, employees sometimes feel pressured to work more and take less time off.
Limited PTO: Employees have to stick to the PTO allotted by the organization. Some companies have a use-it-or-lose-it policy that encourages employees to use their time off before the year ends and take the much-needed time to rejuvenate themselves.