The advent and popularity of unlimited paid time off (PTO) is continuing to grow. Even before the pandemic, some industry leaders started implementing unlimited PTO and flexible work structures that allowed employees to take time as needed, so long as it didn’t interrupt with their ability to meet deadlines and finish tasks.
So what is unlimited PTO and how does unlimited PTO work? An unlimited PTO policy doesn’t place a hard cap on how many paid vacation days an employee can take a year. It’s a contractual agreement that states that employees, upon request, are not limited to vacation time as long as the time off doesn’t interfere with their tasks.
Unlimited PTO, especially in the post-pandemic era of hybrid and remote work, continues to grow and gain popularity globally. Below we’ll get into how unlimited PTO works and if an unlimited vacation policy makes sense for your organization to adopt.
In a traditional PTO structure, employers will grant their employees a hard cap and paid time off. They might have 25 days off a year, with 10 of those being vacation days, 5 sick days, and the rest dedicated to paid holidays.
While unlimited PTO is growing, traditional PTO structures do have their benefits. Traditional PTO structures provide certainty to both employers and employees, so employees know exactly what they can expect from a work year and plan accordingly.
They’re also much easier to manage. Most companies with unlimited PTO have to approve every request and determine, based on the needs of the business, whether or not it’s an appropriate time for an employee to take a day off. Additionally, you can expect absenteeism rates to drop with limited PTO structures.
What we’re learning, however, is that flexibility can be profitable. Employees with unlimited PTO structures are happier and more satisfied with their work, which leads to improved company culture, performance, and retention rates. On top of that, workers are more efficient. They are less likely to slack off during busy weeks or seasons.
Another disadvantage to traditional PTO structures is that PTO doesn’t distinguish between sick days and vacation days, so employees might end up hoarding their sick days in order to receive a payout for those sick days to roll over for vacation into the next year.
If you’re considering an unlimited paid time off policy, we’re going to break down the pros, cons, and why unlimited PTO fits the modern workforce.
Especially in light of the pandemic, employees and employers are seeing the benefits of flexibility in the workplace. Employees don’t want to have to unnecessarily sit around the office when there isn’t much work to be done. They would rather immerse themselves in their work when necessary and take time off when they can.
Employees want more flexibility when it comes to both work hours and vacation time. This MetLife study showed responses from more than 2,500 workers and found that 72% of workers showed interest in working under an unlimited PTO policy.
Studies, reports, and growing trends continue to show that employees want greater attention to work-life balance. Gallup's State of the American Workplace report showed that more than 50% highly valued a job that improved work-life balance, and a Glassdoor study showed that employees value workplace benefits over additional income at a rate of 80%.
The trends are pretty clear; employees want to improve their quality of life and their overall wellbeing. Unlimited PTO could be a great tool for meeting that need.
As with any significant policy shift, unlimited PTO policies come with their own unique pros and cons. We’re going to break down some of the biggest pros and cons to help you get a better idea of whether unlimited PTO makes sense for your business or not.
Unlimited PTO cons
Employees benefits don’t need to stop with unlimited PTO. As more employees head back home for the remote and hybrid work settings, they can appreciate the resources, videos, and digital features of an all-in-one digital wellbeing platform, like Grokker.
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