Is Unlimited PTO the Right Fit for Your Company?

What is Unlimited Paid Time Off (PTO)?

Providing unlimited paid time off (PTO) is about giving employees time off at full pay for whatever they need it for, without specifying a specific number of days they can take out of their annual allowance. It may be in connection with illness, holiday, death or other forms of leave. This is a concept that many employers may have difficulty with, and there is reason to fear that some employees may take advantage of it. So, should you use unlimited PTO as part of your HR strategy?

Can unlimited PTO make employees more productive?

Unlimited PTO is somewhat controversial. It requires a trusting culture where managers give employees full control over their own workload, and that they want to do a good job. It has been widely discussed that some employees can even become more productive if they work up to 20% fewer days or hours, which means that your company can have reduced costs (due to reduced use of various equipment, electricity and premises) and increased productivity. According to Forbes and The Guardian, there is also a possibility that some of the employees will take less time off, and some companies also force the employees to take out a minimum amount.

The argument about trust

It can be debated whether you think it's good or not, but giving the individual the opportunity to manage the workload throughout the year and at the same time facilitate a self-selected balance between work and leisure is definitely a sign of trust that will increase employees' commitment. Employees who are truly committed to their career and company values are much less likely to take advantage of this opportunity. If the employees are committed to the business and want to continue working, there is an argument to be made that you should let them manage their time as efficiently as possible.

For the younger generations, a balance between work and leisure is one of the most important perks you can offer, and if you as a company give your employees the opportunity to take paid leave when they need a break, you show that your employees' well-being is high on your company's agenda. Both of these points will make the company more attractive to new employees.

Unlimited does not actually mean unlimited free time

But "unlimited" obviously cannot mean that every single employee can take 365 days off a year and still get paid! You still need to ensure full coverage for specific projects, sales and support teams, especially during busy periods, which may be around holidays or school holidays, depending on your business, meaning your staff may feel they are missing out on important holiday times if several people request time off. Therefore, the company's policy on unlimited PTO must be clear and unambiguous with regard to any restrictions, i.e. ensure that the company's documents on unlimited PTO are easily accessible and clear enough for everyone to understand and accept them.

How to ensure fair use

And finally, how can you ensure that individuals are not abusing the unlimited PTO policy? This requires tracking paid time off in a leave management software. This means that the employees still have to request time off, and that they must get it approved by the relevant managers before they confirm the leave request.

At the end of the day, employees must still do their job and meet their performance goals to keep their position in the company. If you believe that your employees need unlimited PTO to be able to relax and recharge at their own pace, it may be the right strategy for you. However, it can be difficult to manage, so make sure you have the right absence management software in place so you can track your time off and make sure your unlimited PTO policy is easily accessible to everyone.

In conclusion, deciding if unlimited PTO is right for your company involves balancing trust, productivity, and fair usage. Implementing the right absence management software, like IceHrm, ensures smooth tracking and accessibility.