How many of us have dreamed of having unlimited vacation time? No PTO balance to manage, no accruals to wait for for that week away - perfect, right?
Of course, if you ask anyone what the biggest drawback is for an unlimited PTO policy, you’ll probably hear:
“But what’s to stop employees from taking off too much time and not getting their work done?”
In many workplaces, that may well be a legitimate concern. In practice however, the majority of organizations that have implemented an unlimited PTO policy have a completely different problem:
“Employees aren’t taking enough days off - they’re burning themselves out.”
How is this possible? To understand, we’ll look into:
the psychology behind vacations and productivity
why employees take (or don’t take) time-off
the potential benefits of an unlimited PTO policy (and how to actually reap them)
practical steps for tracking, measuring and understanding when employees most benefit from PTO.
According to a Harvard Business Review study, employees who take more vacation days are generally more productive than those who take fewer days.
The reason? “…it’s not that taking a break will refresh your brain and let you get more done; it’s that simply spending less time at your desk forces you to waste less time.”
Vacations help employees set deadlines and organise themselves - after all, no one wants to be answering phone calls while they’re relaxing on the beach. Vacations can, therefore work as a good motivator to just get things done in the lead-up to the vacation itself.
Beyond this, vacations can help make employees’ personalities more open, enhance their creativity and enhance happiness, stress levels and more. Many of these benefits can even occur before the vacation takes place, as the act of planning and looking forward to a break can be really powerful in itself.
Plus, most people like to take vacations - so long as they feel they’re allowed to (as we’ll discuss shortly) - and see vacation time as a reward for their work efforts.
If we look at the organizations most likely to have an unlimited PTO policy, like this list of 20 organizations from Glassdoor, you’ll notice most:
Are tech companies
Employ knowledge workers (e.g. office workers)
Are employers of choice, and thus hire top-performing employees
Tend to have a younger workforce (e.g. more gen z than baby boomers)
Looking at this demographic, it’s probably no surprise that most of these workplaces have issues getting their employees to take PTO. After all:
Tech companies have notoriously high workloads and rarely have “off” time. This can make it much harder to find the time to actually take some PTO.
Knowledge workers can generally work any time, anywhere, so many employees may feel pressured (whether that pressure is internal or from management/culture) to still work whilst on vacation, reducing their perceived value of PTO.
Top performing employees have to work extremely hard to become top-performers. They’re naturally more likely to become workaholics!
Younger employees are always concerned for job security, as they’ve typically had to work in more competitive job markets. As such, they’re unlikely to take a vacation if they feel it will jeopardize their job or career prospects.
So, maybe it’s not the “unlimited” part of the PTO policy that’s the issue at all - it could simply be a case of selection bias.
That being said, introducing an unlimited PTO policy can lead to fewer days being taken off by employees overall, all else being equal, so there is one valid criticism of the unlimited PTO policy - it makes the expectations of PTO much less clear.
When you are told you have 10 PTO days per year, that helps set an expectation of taking 10 days of PTO (or thereabouts) per year. Unlimited PTO, however, is impossible to judge from the policy alone - do most people take 5 days? 50?
This ambiguity is what causes many of the challenges in successfully implementing an unlimited PTO policy - so creating a really solid PTO Policy is definitely important - but it’s also important to set the right tone in your workplace culture to encourage and maximize the benefits of vacations.
An unlimited PTO policy, like any workplace policy, needs to be crafted with specific goals in mind.
For most organizations, a PTO policy is supposed to:
provide employees with necessary time off to avoid burnout and manage their health
increase productivity of employees
increase the happiness of employees
act as a perk for attracting and retaining top talent.
You’ll probably agree that all of these are great benefits for any organization, right? Here’s some specific strategies that will help you achieve them.
If employees aren’t taking time off, they’re obviously much more likely to suffer from burnout or poor health. Similarly, if they’re feeling like taking a vacation (or a day off) will make them unpopular with management or their coworkers, that added stress may reduce the health benefits of any PTO they do take.
The problem here isn’t so much the policy itself as it is workplace culture. If you’re a manager who regularly brags about not taking vacations, you’re probably sending a message to your employees that they too shouldn’t take time off - even if you don’t mean it that way.
A better approach is to talk about vacations and time off both informally and formally in your workplace more. Talk to coworkers about their vacation plans, positively, without referencing workloads or impacts on work schedules. Not only will it help you connect with the people you spend so much of your life with, it’ll also help you and others feel ok (and eventually, even openly enjoy) the idea of a vacation!
And of course, make sure that you don’t penalize employees who do take vacations or reward those who do not. People take note of these things, so if you’re a manager, you may need to consciously remind yourself that vacations are ok.
If you feel like you’ve been discriminated against as an employee because you’ve taken your allocated vacation time, voice those concerns to your manager, as it takes a lot of little steps from a lot of people to shift a workplace culture.
As previously mentioned, looking forward to a vacation is often a bigger happiness and productivity booster than the vacation itself, so make the most of it!
If you have a more traditional PTO policy, you can let your employees see their PTO accruing day by day (or however you accrue PTO) with a live tracker, like the one we use in Bindle. That way, they can start to envision their vacation plans, book in some time off and start feeling happier (and yes, be more productive).
But how do you effectively do this with an unlimited PTO policy?
One method is to set up a shared PTO calendar with your team. Depending on the size of your workplace, this could be for your immediate team-members, a department or the entire organization.
This has two key benefits:
Everyone knows who’s on vacation and when, which makes it easier to schedule projects and meetings
Everyone is seeing when their coworkers are taking vacations, which encourages them to think about their own vacation plans!
Most Bindle users do this by syncing with a team Apple, Google or Outlook calendar (or even with Slack notifications), which is all automatically updated by Bindle, but you can manually maintain a group calendar too if you don’t have PTO & Vacation Tracking Software by assigning one person as the “keeper of PTO” and ensuring managers and employees track their PTO days on the shared calendar.
And of course, once employees are on vacation, it’s a good idea to make sure they’re not disturbed unless absolutely necessary.
This can be a policy, but it’s also a cultural attitude - I’ve worked in workplaces where I was told off for replying to work emails while on vacation by my boss and by my coworkers, and from then on I truly switched off from work in a way I wouldn’t have if they hadn’t given me this indirect “approval” to relax.
Extremely effective, and all because the whole team respected vacation time and each other.
For some people, the prospect of unlimited PTO sounds amazing; a dream come true.
For others (especially those who have worked in workplaces with ineffective unlimited PTO policies), it can be seen as a gimmick.
So how can you tell potential employees about your amazing, unlimited PTO policy?
Let’s use the example of two different job interviews as an example to show what I mean.
Interviewer: “…and of course, as we value, respect and trust our employees to take time off when they think it’s necessary, so we allow them to take unlimited paid time off.”
Candidate: “That sounds great - how much time off to people usually take?”
Wrong Answer: “As much time as they want.”
Why is that wrong? Because, as we mentioned before, as much time as you want is ambiguous. And a potential employee has no way of knowing what is normal, as they aren’t yet part of the culture. This answer could mean “they take off a month a year” or it could mean “they won’t want to take any time off because they’re worried they’ll be fired.”
Better Answer: “Well, last month Sam took two weeks off to go visit her family in Hawaii - she’d been working really hard on a big project and really deserved the break.”
Bonus follow-up for those with flexible working-from-home policies “…and she might work from home for another week if she wants to stay with them a bit longer.”
See the difference?
It’s not the unlimited part of the PTO policy that is the perk: it’s the autonomy, flexibility and trust that the policy represents that employees value.
Show that you have a great workplace culture (which your PTO policy should reflect) and your business will be seen as a great place to work.
You might think that an unlimited PTO policy is easier to manage than a traditional PTO policy as you don’t need to track time off.
Whilst this may be true for some businesses, in general, you’re still going to want to track employee PTO even if they have unlimited days, because:
Knowing how and when employees use leave is extremely useful for organizational planning purposes
Tracking individual employee PTO can prevent abuse of the system.
The first point is probably pretty self-explanatory - unlimited PTO is fine, but not if your entire team goes on vacation at the same time and leaves you short-staffed! - but the second point needs to be managed very carefully.
First, you’ll need to define what constitutes fair use of your unlimited PTO policy and what does not. If you are going to set limits, then it’s not really an unlimited PTO policy, and word will quickly spread if you reprimand an employee for taking “too much” PTO (as mentioned earlier, that’s an easy way to prevent employees from taking any time off and thereby kill all the benefits of your policy).
This will depend on your business structure and industry, but one of the most effective (and simplest ways to restrict unlimited PTO fairly is to say:
“Employees can take as much Paid Time Off as they like, so long as they complete their work to a high enough standard, on time.”
This means that an employee who takes 50 days of PTO for a year, but still meets all performance targets, is using the policy exactly as intended.
However, if you have an employee who takes 50 days of PTO for a year and misses deadlines or doesn’t perform their job to the same standard as their coworkers, you have someone who is potentially abusing the unlimited PTO policy.
The important distinction here is that the amount of PTO taken is less relevant than the results. Knowing the employee takes time off is neither here nor there; knowing that they take time off AND that they aren’t performing their work to the required standard is a problem worth addressing.
Of course, your workplace may require additional rules, such as:
PTO must be approved by a manager (just make sure they are fair with approvals)
Limits on length of PTO (for example, a limit of 4 weeks of consecutive time off)
Company vacation blackouts (busy periods when PTO can’t be taken)
Just bear in mind that the more restrictions you place on employees, the less they will feel trusted, respected and motivated by the “unlimited” PTO policy.
Encourage employees to track PTO on a shared calendar
Track Working From Home Days, Sick Days and any other type of leave or PTO for management/HR purposes
Automate the process as much as possible, using software such as Bindle or internal workflows.
By looking at the failures of other unlimited PTO policies here, I hope you can not only avoid the common pitfalls we’ve looked at, but also craft an effective PTO policy for your workplace and cultivate a more trusting, open and happy workplace for your team that others will long to join themselves.