Unlimited Vacation: The Pros and Cons for Workers and Employers

It doesn’t take much to realize why the notion of unlimited paid time off (PTO) can be enticing for employees.

After all, what is there to dislike about not having to worry about how much PTO you’ve accrued or not feeling guilty about taking a day off to do some life admin.

Our attitude toward work is changing. Employees increasingly value flexibility and employers — those that want to remain ahead of the curve — are adapting to the needs and desires of the workforce.

Unlimited PTO isn’t new. Successful businesses such as streaming giant Netflix or online food delivery outfit GrubHub and others have been offering unlimited PTO since 2015.

But, what are the pros and cons?

The advantages

The first advantage is obvious: it gives workers the chance to take time off work to switch off, relax, and rejuvenate when they need or want to. Employees have the freedom to book days off without having to worry about how much time they’ve accrued. In theory, this freedom and flexibility means people should be able to travel more frequently or take more vacations to destinations that are usually unaffordable during peak times.

More importantly, advocates claim it’s the perfect way to prevent employees from burning out and could also help you boost productivity.

You may also be able to make some long-term savings. If you roll out an unlimited PTO vacation policy, you’re not required to pay accrued holiday if an employee leaves the company.

Having an unlimited PTO policy may also help your recruiting. Unlimited vacation can obviously be a huge perk when it comes to attracting and retaining talent.

Unlimited vacation policies can help foster trust between employees and employers and help you create a real people-centric culture. In order for this policy to work, it’s vital that business leaders trust their employees not to abuse the policy.

Last but not least, unlimited vacation policies make employees more accountable about their work and responsibility as a team member. By having full control over when they can take time off, people are more likely to do so when their work allows them to.

The disadvantages

One of the biggest disadvantages of offering an unlimited PTO policy is that employees sometimes abuse it by taking several weeks off, or months, without repercussions. While this is an understandable concern, it’s important to note that HR teams can, and should, set boundaries about how the policy can be used.

For example, contracts could state that employees can’t take more than two consecutive weeks off, or that team members can’t be on vacation at the same time. Planning is crucial. You need to establish a process that works for every team across the business: ensure that individuals request time off from their managers to avoid any possible overlaps.

On the flip side, there’s also evidence to suggest that many employees don’t take advantage of unlimited PTO policies. To avoid this, it’s important for HR teams to encourage their employees to take a minimum amount of days off a year to ensure they have the chance to relax and unwind.

Remember to:

• Be transparent and clear so that employees are aware of what’s expected from them and what the parameters are.
• Ask for feedback. Speak to team leaders and employees to find out what’s working and what needs to change to continually meet business needs.
• Gather data. Keep a record of time off taken by everyone at the company. Make sure you separate actual vacation days from sick days.
• Monitor the data. Look out for patterns that could be symptomatic of underlying issues in an employees’ personal or professional life.