Unlimited PTO: Effective Management Strategies

Unlimited paid time off sounds like a big perk. Combined with flexible working hours and location independence for remote teams, employees should theoretically be able to live their lives the way they want.

Theoretically.

The truth is, even well-meaning companies don't always implement unlimited PTO policies correctly. Research shows that employees with unlimited PTO often take fewer days off than with more structured arrangements.

Done right, unlimited PTO offers employees an incredible opportunity to maintain the perfect work-life balance while ensuring your company thrives through an engaged, effective workforce every day of the year. Make sure your unlimited PTO policy is on the right side of the line by following some basic, often overlooked rules.

Do not list points.

Only record employee absences for official reporting purposes, which is required in some countries. Track performance metrics based on actual productivity, regardless of hours spent in the office. Not only do studies show that employees who work long hours are more likely to suffer from health problems such as heart attacks and strokes, but also that working longer than 55 hours does not correlate with increases in productivity.

IceHrm's unlimited PTO policy doesn't keep track of which employees take the most days off. Our “tell, don’t ask” policy gives our team members the benefit of the doubt. We simply ask that anyone who decides to take time off notify others in advance using our unavailability calendar.

Set a minimum.

Set a minimum number of vacation days that employees must take, both for individual periods and for the year as a whole. We require a minimum of 20 days off per employee per year. While we expect most team members to take more, we insist that they take at least as much vacation time to maintain their own well-being and productivity at work.

Encourage your employees to take an extended break from work at least once a year and make special arrangements for important life events. For example, our parental leave policy requires a minimum of 14 weeks of leave for new parents.

If employees don't take enough vacation time, you shouldn't try to compensate with cash bonuses or other compensation. Some employees in the company take as little vacation as possible in the hope of receiving a big check at the end of the year. Instead, work with managers to ensure team members take regular breaks from their work. At IceHrm, we follow the general rule that every employee should always have an upcoming time off on our unavailability calendar.

Identify and eliminate bottlenecks.

Nothing highlights a problem in your company like a shutdown because one person takes a week off. If your company can't handle an employee's absence, that's not the responsibility of the person who took the leave - you need to ensure that no single person holds the keys to your company's growth.

Companies that are still in their early stages cannot afford to have many employees doing double duty. Such companies may only have one designer, one marketer, one IT manager, or one sales representative. In these cases, employees taking time off should communicate early and often to keep others informed about upcoming projects and events.

For the same reasons, we advocate asynchronous work and careful documentation. When everything is public to others in the company (we use Notion for this) and no one feels obligated to work in specific time frames, everyone can read the documentation and pick up where others left off without the need for catch-up meetings that only take up time anyway rob.

Respect personal and cultural differences.

Employees should communicate whether they want to take time off for a holiday, but cultural differences are not limited to days off. Some employees may feel comfortable doing a little work on their days off, even if their managers assure them it's not necessary. Others delete Slack from their phone, turn off all email notifications, and head to the mountains to get away from the world for a while.

Both approaches are fine. If a person feels comfortable answering emails in the evenings and doesn't feel pressured to work through every vacation, then respect that decision. However, if another person falls off the grid, you shouldn't hold them to the same standards as your more connected colleagues.

People view their vacation time differently. This is particularly true for international borders. Respect the differences in how your team members handle their PTO. Just make sure they take enough of it.

Make unlimited PTO a perk, not an excuse.

With traditional PTO, employees accumulate time in a bank and are entitled to a payout of the value of that bank when they leave the company. Unlimited PTO is an ongoing benefit, meaning it's an ongoing benefit. Employees do not accrue hours and therefore receive no payout when they leave the company, regardless of how much (or how little) time off they took during their employment.

Don't view unlimited PTO as a savings measure during exit interviews, but instead work proactively to ensure that both parties benefit from the benefit while the employment relationship still exists. Discuss your unlimited PTO policy regularly in team meetings and remind employees who don't have days off on their calendar to schedule some. At the end of the employment relationship, employees should feel like they accomplished a lot during their time with the company, not like they missed out on a farewell payday.

Your employees need time off to function well during work hours and to live their best life as human beings outside of work hours. The most successful companies are made up of happy, productive employees who are satisfied with their work and don't feel burnt out. Unlimited PTO can help create this positive reality, but for it to work, you need to proactively build a culture that promotes a healthy work-life balance.

Elevate your company culture with IceHrm's Unlimited PTO strategies. Foster balance, productivity, and employee well-being effortlessly.