Unlimited paid time off is in high demand — both by employers and their employees. In fact, 72% of employees surveyed by Metlife in 2019 were interested in unlimited PTO above all other emerging benefits.
Under unlimited PTO, employees can request as much time off as they want. It’s a radical shift away from traditional PTO policies, where workers accrue time off based on tenure and have a limited amount of vacation days each year. For employees, unlimited PTO helps provide greater flexibility, increase work-life balance, and fight burnout. For employers, unlimited PTO increases employee productivity, saves costs, and eliminates the logistical nightmare of tracking PTO usage across the organization.
However, since it’s still a somewhat novel concept, many companies don’t know how to manage unlimited PTO. If you choose to offer unlimited PTO, you need to have a solid policy in place that accommodates everyone’s needs. You can avoid both underuse and overuse of unlimited PTO by enforcing a minimum number of days off and tracking time-off requests. Ultimately, though, every company’s unlimited PTO policy should be tailored to their unique needs.
Document and share your unlimited PTO policy
Unlimited PTO doesn’t mean that employees can just wake up and take a vacation whenever they feel like it. But unless you have a clear policy in place that says otherwise, your employees might think that’s how unlimited PTO works. You need an unlimited PTO policy to clarify exactly how employees can take time off.
Even if you offer an unlimited amount of days off, you still want to know for planning purposes when employees will be out of the office. Establish a process for how workers should request time off. Then document that process so that employees know exactly what they need to do when requesting their PTO. Include screenshots and step-by-step explanations of how to submit PTO requests in your HR system or tools. Or link to relevant support pages, like this one for Pilot’s time-off feature.
Create guidelines on unlimited PTO usage that ensure that your teams can continue to function effectively while employees are on vacation. Can employees take time off during busy seasons? Do they need managers to approve their requests before taking time off? Consider establishing a maximum amount of time off that employees can request at a time; otherwise, you might end up understaffed for weeks to months on end, with everyone falling behind on their work.
Be careful, though: There’s a fine line between guidelines that make sure the business stays on track and guidelines that make it too difficult for employees to take time off. If you set too many restrictions, those limitations could prevent employees from taking their hard-earned vacation time.
Your unlimited vacation policy guidelines should incorporate input from leadership. For example, how many weeks’ notice is necessary for managers to plan and arrange coverage for out-of-office employees? What do managers need from their team members before they take time off? Do employees need to complete their in-progress projects or achieve certain KPIs before they go on vacation? Document the answers to these questions in your unlimited PTO policy so that everyone can align on expectations.
Not all paid time off is the same. While employees should request most time off in advance, that's not always the case. Company-provided paid leave like sick days, holidays, and company-wide shutdowns can give employees more breathing room outside of their requested days off. In addition, new parents need time off to care for their family. Make sure to document any parental leave that's available to employees, including how long it lasts and whether or not it's paid. You should also clarify whether you offer job-protected unpaid leave, like time off for family or medical reasons, as guaranteed by the Family and Medical Leave Act (FMLA).
Planning is everything. The more prepared your team is when someone takes time off, the more likely it is that operations can continue as usual. Outline how employees should communicate and plan for their PTO — for example, have employees offload their responsibilities to a designated point person before leaving. Ask them to set an out-of-office vacation responder and update their Slack statuses and calendars to reflect their vacation dates. These measures help ensure that employees fully unplug during their time off and can come back from their break well-rested.
Communicate with employees so that they fully understand how to make use of their unlimited PTO. The earlier, the better — your recruiting team can tell candidates how unlimited PTO works at your company before they even sign an offer. And you should explain it again during onboarding as new hires learn about their employee benefits. Last, make your unlimited PTO policy easily accessible and available in your employee handbook, as well as in any internal docs and knowledge wikis you have.
Enforce a minimum amount of paid time off
Despite having the freedom to take as much time off as they want, employees might actually take less time off under unlimited PTO than traditional PTO. A 2017 study by Namely found that employees with unlimited vacation available to them took an average of 13 days off. Compare that to the 15 days on average requested by employees with traditional PTO. But if your team members take less PTO throughout the year because they feel like they shouldn’t go on vacation, you’re more likely to lose great employees to burnout. Avoid underuse of PTO by requiring or highly recommending that employees take a minimum number of days off, either per year or by a certain deadline.
“Mandatory time off” can sound a bit harsh. For that reason, some companies prefer to recommend a minimum amount of time off. Consider sharing the average amount of PTO that people take every year as a basis for the recommended minimum time off. This gives your workers a better idea of how much time off they should take.
You can’t force people to take time off. But then, how do you encourage employees to actually request the recommended amount of days? If you have the budget available, you could pay them to go on vacation. Evernote, one of the early adopters of unlimited PTO, provides an annual vacation stipend of $1,000 to any employee who takes five days in a row off of work.
Consider supplementing your unlimited PTO to allow employees to take company-approved days off. Summer Fridays and company-wide shutdowns, whether for a day or a week, can give employees much-needed flexibility — without them feeling self-conscious about requesting additional time off. For example, LinkedIn takes a company-wide break annually during the last week of December.
Ninety-six percent of American workers say that using their paid time off is important to them. When your company culture not only preaches the value of taking PTO but also actively encourages it, you show your employees that using their PTO is also valuable to you. It’s also crucial for employee morale that managers lead by example. If executives and managers don’t take time off, how can employees feel empowered to do so? Make sure that your mandatory time off or minimum PTO policy applies to everyone, from the C-suite to your most recent hire.
Comply with international labor laws
Companies that hire international employees should factor local labor laws into their leave policy. While the US doesn’t have laws requiring companies to give their employees a minimum amount of vacation, other countries do.
Make sure to research minimum time-off regulations that exist wherever you hire employees, as they can differ from country to country. For example, employees in Argentina are entitled to 12 public holidays and up to 35 days of annual paid leave. Your unlimited PTO policy will stay in compliance with these laws if you offer employees at least their federally required time off per year.
Keep track of unlimited PTO requests to plan ahead
Turn a former administrative burden into a strategic planning tool for human resources by tracking your time-off requests. However, don’t keep track of PTO requests to punish people who take more time off than average. Instead, use your insights to uncover trends in the ways that people are taking time off, which you can use to improve your unlimited PTO policy.
Company-wide metrics can tell you about things like the average number of vacation days requested per employee. If that number is below the recommended amount of days off, it’s time to do some research. What factors are causing employees to take less time off? When you find out why, you can then plan how to fix those problems and make it easier for employees to take time off.
Learn what times of year you’re likely to receive more time-off requests and help managers and employees plan for coverage in advance. For example, if you know employees are more likely to take time off during the winter holidays, remind your team to start planning their time off during the fall.
You can also track PTO to make sure people are taking time off appropriately. This can help you enforce your required or recommended minimum PTO policy. You might notice if an employee is requesting an unreasonable amount of vacation — such as four weeks every three months — and be able to investigate what’s going on.
Embrace flexibility in your process
Just like the name implies, unlimited PTO is without limits. What your company policy looks like is ultimately up to you. You don’t have to adhere to any specific rules if they don’t serve your business’ and your employees’ needs. Be receptive to feedback from your employees about how your unlimited PTO policy is working — if it isn’t, be open to changing it. In order to really make unlimited PTO a high-value perk, make sure that your processes actually enable employees to reap the benefits.
⚖️ Legal Disclaimer: The information contained in this site is provided for informational purposes only, and should not be construed as legal advice on any subject matter.
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