Navigating Benefits

Should Your Company Offer Unlimited PTO?

  • Unlimited vacation sounds like a dream, but problems do come up
  • You may find that employees take fewer vacation days precisely because they don't really know what is allowed
  • Consider your company culture and what works for your employees before offering unlimited PTO

Posted by September 29, 2017

Unlimited vacation days sound like a dream. Imagine being able to take off and go to the beach anytime you like. Or perhaps beach trips aren’t your thing, so you can go skiing every Friday or stay home every time your children are out of school. Think of the money you’ll save by not having to pay for child care during those times!

Unfortunately, unlimited PTO doesn’t really work that way in practice. You still need to do your job, which means you still need to work. And if you don’t do a good job and get all of your work done, you’ll be fired. So, unlimited PTO doesn’t necessarily translate into more time off.

Forbes says that everyone should offer unlimited PTO, based on Netflix’s example. After all, given today’s knowledge economy and the instant availability required in most jobs—time that isn’t tracked—why bother tracking time away from the office? It makes some sense, but it doesn’t always work in the employees’ favor. Here are some examples.

No Longer a Paid Benefit

Many companies pay out unused vacation days when you leave your job, and many others allow you to roll extra days over into the following year. With unlimited PTO, your vacation balance is, effectively, always at zero. No payout when you leave.

This can also come into play with unpaid leaves, such as FMLA. Many companies allow you to use your PTO time to cover the time you cannot work. But if you don’t have a fixed bank, the company has to decide if they pay at all. There’s no legal requirement for them to cover FMLA leaves and if you don’t qualify for short-term disability pay, you don’t have vacation time to fall back on.

Everyone Is Equal

This sounds great, unless you’re the baby boomer who has put in 25 years at the company (or negotiated extra vacation upon hire, based on your years of experience) and suddenly, the millennial just out of school has the same privileges you do. While that sounds like a petty gripe, don’t underestimate the employment need for “fairness.”

It Requires Extra Good Management

If you are told when you’re hired that you have 20 PTO days to do with as you please, you can plan and schedule. If your manager refuses to grant you time off, you can go to their boss or HR and complain. Hopefully, they’ll get a swift kick. After all, this is part of your negotiated compensation and benefits package. But if vacation is unlimited, there’s not as much recourse when a manager refuses to let an employee have time off. The manager can say, “It’s super busy now. Take a lot of time next year.” With a set bank, you are entitled to 20 days during the year. Without it? Nothing.

Boundaries

What counts as an excessive vacation and what’s considered too short? With unlimited vacation, you may find that employees take fewer vacation days precisely because they don’t really know what is allowed. Kickstarter kicked unlimited vacation to the curb after finding out that their employees were taking fewer days than before, because they didn’t know the boundaries. If your employees don’t want their managers to think poorly of them, they may use less vacation than they should.

Every Company Is Different

Unlimited PTO worked for Netflix, but not for Kickstarter. Every company is different. They have different cultures and, thus, different results. Consider your company culture and what works for your employees. There isn’t a right answer for every company, even if this one sounds fabulous when you first learn about it.

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