Unlimited Time Off — Good or Bad?

Companies need to stay competitive in every aspect of business and that includes competing to entice new talent and keep current employees around. There are dozens of ways to do this, from raises to bonuses to dental insurance, but one option you may not have thought of is unlimited time off. Sound crazy? There are definite pros and cons to unlimited time off, but the clear benefits will put to rest any doubts you may have.
What is Unlimited Time Off?
Unlimited paid time off is not designed to give your employees an excuse not to show up to work for months at a time or come and go as they please without notice or approval. It is also not a replacement for sick leave, paid holidays, maternity leave, and other government mandated allowances. The purpose of unlimited time off is to offer a chance to reach a better work/life balance.
How does it work?
You may be wondering how unlimited paid time off really works. Will employees over-use it? Who should be eligible? How will we track time off? These are all important questions to ask. Make your decisions ahead of time with input from both employees and owners, and clearly spell the policy out in an addendum to your employee handbook.
Why is it Important to Employees?
In a 2017 Gallup poll, 53% of employees indicated it was “very important” to have benefits that allowed them a healthy work-life integration.1 By giving employees an unlimited opportunity for time off, you are opening their freedom of choice and empowering them to decide what a healthy work/life balance looks like for them. The joy of having this freedom is a better productivity booster than any raise.
What are the Benefits of Unlimited PTO?
Stress is a killer…literally. “The CDC reports 110 million people die every year as a direct result of stress.”2 No matter how much fun you have at work, there’s still pressure to perform. Unlimited time off give employees the allowance to leave the stresses of the workplace behind, whether it be for just a day or an extended sabbatical. On top of this, when your employees are relaxing, they won’t be stressed that they aren’t earning. Unlimited paid time off allows employees the necessary time to rest, follow a dream, or deal with an emergency.
What Will Happen if I Try it?
One company had interesting results when they tried out unlimited time off. Within one year, employees ranked this new vacation benefit third in importance, just behind their 401K and health insurance. They also found that workers took the same average number of days off per year as they had previously been allotted under stricter rules. Even though many employees didn’t take advantage of the additional days, they still reported an increase in worker happiness.3

You may be picturing a completely empty office as everyone rushes to take advantage of their extended vacation time. But there’s a 99.9% probability that your office will be just as busy and full of workers after you begin unlimited time off as it is now. In fact, the stats say your employees aren’t even taking all of their currently allotted time off. In 2017, workers left 7,000,000 vacation days on the table. Strict policies and limited vacation days (not to mention work overload) discourage workers from taking advantage of the days they have.

Limits require budgeting and employees budget vacation time like they do money. Being under budget this month doesn’t mean you should go out and spend that money. Employees use the same mentality when budgeting vacation time.

Whether they are saving it for a last minute mental health day or just too focused to give themselves a break, employees routinely under-use the vacation days they do have. Unlimited PTO incentivizes workers to take vacations because there is no longer a set limit. Employees can plan the vacation they dream of without fear of using up days that could be needed in the future.

While unlimited PTO can be a great tool for motivating employees toward a healthy work/life balance, simply having vacation days does not guarantee workers have the means to actually take a vacation. Many people avoid taking vacations because they simply don’t want to go through the hassle of planning a trip or prices have skyrocketed at their desired destination. Staycations may still be a thing, but your employee isn’t going to appreciate additional time off if they can’t afford to do anything with their current time off. This is where programs like Travel as a Benefit can help.

When combined with an Unlimited PTO model, Taab enhances the ability of your staff to take their well-deserved vacation time. An unlimited time off policy gives workers the freedom to discover their own work/life balance. It is an investment in employee wellness and health. The benefits of travel are obvious and the problems with current accrual-based time off systems can be easily corrected with a new vacation policy.