Unlimited PTO: Reality vs. Expectations

Higher productivity, better work-life balance, autonomy, greater engagement - these are just some of the benefits of unlimited paid time off (PTO), according to the initiative's proponents.

But what exactly is unlimited PTO? It's an approach that many companies take and allows employees to decide how much time they need for their own vacation and personal time as long as they get their work done. The key is that the employer does not set a cap on time off and does not require a definition of why an employee is not present.

Not only do employees benefit when companies offer unlimited PTO, but so do employers. According to a February 2022 survey, workers of all generations cited unlimited PTO as a top reason for starting a new job. Research from job platform Indeed shows that unlimited PTO policies increased 178% between 2015 and 2019 - a significant jump even before the COVID-19 pandemic triggered the Great Resignation.

IceHrm compiled a list of six facts and statistics about unlimited PTO, using research from numerous sources, including the Society for Human Resource Management and Justworks, to provide a perspective on using PTO, covering benefits, drawbacks, and of course focused on peace of mind.

Proper use of vacation time can improve performance

According to a Joblist survey, employees who have unlimited PTO programs are more likely to report having a healthy work-life balance. The survey found that 62% of employees with unlimited PTO programs reported having a good work-life balance, and 58% reported high job satisfaction.

Taking a break from work also means taking time to recover from the heavy workload. The longer workers were away from their desks, the more they benefited from their holiday, with health and well-being peaking after eight days. Employees then returned to work more refreshed than when they left.

Unlimited PTO can save 52 hours of management time

As attractive as unlimited PTO may be for employees, it also offers benefits for employers. At the top of the list are increased productivity, engagement and loyalty.

According to Jennifer Perrow, a small business growth consultant at Perrow Advisory Services, employee engagement is critical in a work environment. "When an employee feels seen and respected, there is more incentive to get involved in the team," she said. “Also, employees are reluctant to leave a company that gives them so much control over their time.

Unlimited PTO can also save businesses money. Tracking unused vacation that can be rolled over and saved can be a significant administrative burden. When examining how this varies among companies that offer unlimited PTO, approximately 52 hours of administration time per year can be saved. Additionally, an unlimited PTO structure reduces end-of-year pressure to use up or lose vacation time.

There are other benefits too. When job site Indeed switched to unlimited PTO, it gained new employees, expanded its offices, and increased monthly traffic to its website.

Unlimited PTO can be a great incentive for recruiting and retaining employees

As the U.S. workforce grapples with what “business as usual” means, many companies are reviewing various aspects of employment and office culture. This also includes the transition to hybrid work, a mix of telecommuting and office work. How will employees view unlimited PTO in this mix, considering team cohesion?

According to a Harris Poll survey from February 2022, flexible working hours are at the top of the list of wishes of employees who are looking for the best solutions for their lives in times of great resignation. The flexible scheduling goes hand in hand with the desire for unlimited vacation, which 65% of employees surveyed stated when they want to leave a company.

Unlimited PTO isn't really "unlimited

A common misconception about unlimited paid time off is that it equates to endless vacation days. Employees can use PTO in a variety of ways, including: B. to take a family member to the doctor or accompany a child to a school event. However, companies should establish a clear policy detailing what it is and how it will be used.

"Employees who are unfamiliar with unlimited PTO may not use it or may abuse it because they don't know exactly what it is," Perrow said. "As with other areas of the company, managers must clearly articulate PTO expectations and provide employees with the right support to meet the company's PTO expectations.

Employers should begin an application process and emphasize that PTO still needs to be approved. Establish communication needs between all team members, including how workload will be managed during an absence. Encourage all team members to use their PTO so no one feels like their work time is being taken for granted or their PTO is being neglected. Also make it clear that with an unlimited PTO policy, there are no vacation days that must be paid out when someone leaves their job.

Setting minimum vacation days can be the solution

When tech company Buffer started seeing problems with its unlimited PTO policy, it looked for solutions. Because the company's employees did not take enough vacation days, Buffer required its employees to take a minimum number of vacation days. The goal: three weeks per year. The hope: Employees would increase their vacation days to at least 15-20 days. The result: an average increase of 18.2 days. To achieve this, the company's executives led by example and regularly sent out "gentle reminders" about taking vacation days.

A Harvard Business Review article cites decades of research concluding that "the greatest competitive advantage in modern business is a positive and engaged brain" and emphasizes, "To be truly engaged at work, "The brain needs regular breaks to gain new perspectives and energy."

Unlimited PTO offers benefits like improved work-life balance but requires clear policies. IceHrm can help streamline PTO management.