Tessara Smith, PayScale
It’s no secret that vacations are vital to the sanity of every full-time employee, but what happens when all of their allotted break time is being sucked up by sick days and family emergencies? Instead of planning their getaways to Disneyland or the Caribbean, employees are instead forfeiting dreams of relaxation in the name of taking their kid to the doctor’s office. There is no denying that it is important for workers not to skimp on time spent in the office, but most agree that it is unfair to have to surrender what would be mental health days in order to complete mundane tasks. Studies show that workers are more productive when they take vacations, and many companies are beginning to come to the realization that a strict PTO policy may not be the way to go in terms of supporting a healthy work environment.
Thankfully, some companies have come to recognize that their current policies may be outdated and they are beginning to utilize a new tactic called “endless summer” or more formally known as unlimited Paid Time Off (PTO). This means that an employee’s vacation time, sick days, and other inconveniences are all rolled into one discretionary plan. I’m one of the lucky employees who will benefit from unlimited PTO since PayScale has just adopted this policy.
Unlimited PTO is good news for workers who need the flexibility they need to manage chaotic home lives without risking their career status. These same employees can avoid running the risk of damaging their reputation as long as they are getting their work done efficiently. This innovative policy takes a detour from the traditional belief that employees need to put in as much face time as possible if they want to avoid losing their position.
Some naysayers call into question whether this type of plan will lead to employees abusing their discretionary break time. Companies that support the policy do not believe this is the case, and they say that employees are far too concerned with damaging their reputation to take advantage of unlimited PTO. In fact, many businesses are finding that since starting to use the new policy, their employees are actually taking less time off from work than they did before it went into effect.
Only about 1% of companies have started offering a benefit of unlimited PTO, and those that have made the switch have reported positive changes in their employee’s satisfaction levels. Executives at Netflix attest that their employees are grateful for the increase in adaptability and appreciate the company looking out for their best interests. Here at PayScale, unlimited PTO is proving to be a recruiting draw that attracts job seekers to our many open positions. It also helps our employees feel more satisfied in their jobs and achieve work-life balance.
In an effort to promote relaxation a few of the companies that have adopted unlimited PTO, have also introduced a cash incentive for employees that take time off. For example, the software company Evernote, pays employees a $1,000 cash bonus as a reward for spending a full seven days out of the office. If an employee doesn’t take their vacation then consequently they don’t get their bonus. It seems a little counterintuitive to pay an employee not to work, but ultimately this strategy succeeds in boosting employee productivity.
Unlimited PTO is meant to include regular vacation time but also accommodate the minor inconveniences that employees face throughout the year. The policy lets employees take needed time to attend to their lives outside of work without having to stress about it taking a chunk out of their PTO.
My past 3 companies here in Silicon Valley all had unlimited PTO policies.
Here’s what they found:
1. Employees are less inclined to take vacation days
2. Bosses are more inclined to say something to the effect of “are you sure you can afford to take time off”
3. Employees found themselves out of thousands of dollars when the leave the company because of the unlimited PTO policy.
Absolutely no value whatsoever in unlimited PTO. A marketing spin given and made up by the greedy execs to dismiss the company from paying out accrued vacation time. That’s really what its about.
We have unlimited PTO where I work and it’s been a blessing. I’m typically a 9-10 hour a day machine and the flexibility to push that hard then spend a few days recharging. Depending on the type of work done some tasks need extra push and as our head of operations says our type of work is a “stressful game we’re in”. It is and taking time off when it’s needed rather than when there is enough time accrued is the difference between raring to go and burn out.
Insanity!
interesting! would love to hear how your companies are handling FMLA and other LOA?
suzanne – at our company carved out a separate LOA piece. We offer hours related to LOA that can be used as part of the process. Not accrued – just a straight amount that is not carried over.
We offer unlimited PTO at PeopleFirm too. We’ve done it since 2008 when we started the company and nobody has ever abused the policy. Its amazing what happens when you treat people like adults at work. Wow… they behave like adults! We’re not living in the 1950’s any more, and work should reflect this!
We are also an employer that has had a Discretionary Time Off or DTO policy. It is a great perk for employees. Over the course of 1 1/2 years we have still tracked time off and find that there is no abuse. I agree with Susan, the more common event is that people do not take enough time off. DTO or unlimited PTO puts more responsibility and ownership of projects on the employee creating even more buy-in and loyalty to a company. People are more than capable of being responsible in this way. We have recently went through acquisition and… Read more »
When I worked at the main office of Alpha Beta in the ’80’s we had unlimited sick leave – same diff.
And yes, there was one (new) employee who took advantage and basically worked a 3-4 day work week as a result. Guess there will always be a handful of abusers. But she wasn’t there long.
Maybe I am missing something but I don’t quite understand why this is needed. We offer paid vacation according to Canadian legislation and we track it diligently. We put a lot of time and effort into ensuring each employee takes their legislated amount of vacation, explaining that to be healthy and productive they need time off of work. We also offer unpaid ‘sick days’ in addition to unpaid LOA (for personal matters other than sick time). We accommodate employee’s needs for certain shifts or days due to family requirements, again according to Canadian legislation. Most of our employees are in… Read more »
No accruals and not payouts at the end of the year? We are in CA. We also have to have sick leave, but I would think this satisfies that also? Not sure there will be any policy to report sick back, but doubt it. Waiting for more guidance.
Would love to know how many weeks a year your employees take off with this unlimited PTO and when do you draw the line that they are taking too much time off?
From and employee relations view point this is an awesome concept. Our company has a very generous PTO policy of 21 days per year for frontline employees and 26 days per year for executive team members. With a big part of our business being in healthcare, time off must be closely monitored to state requirements of proper coverage.
I agree with TMM. Only I am from the US. We give employees 5-7 weeks PTO a year and are a health care provider where we count on our employees being here to see patients and be able to run efficiently day by day. We also provide 5 days sick leave and FMLA so why would any company give unlimited PTO unless they are only providing a week for their employees to take off.
This is an interesting concept. Being in CA how does this affect PTO payouts for Associates that terminated or are no longer with the company. Is there some kind of cap?
A very interesting concept. I live in the Canadian Province of Alberta, our labour code is actually one of the only ones in Canada that allows employees to take as little vacation as one day at a time out of their statutory allotment. Obviously this allows employees to take sick days, or family matters out of their vacation but I truly do think that there is merit to having to take 7 consecutive days off. I see too often in our province where employees have taken single days for this, that, or other thing, that had to be taken care… Read more »
From an HR perspective, how do you determine who is abusing an unlimited PTO policy? If someone effectively only works 30 hours per week and applies 10 hours per week to the policy, how do you discipline someone who is using the benefit advertised as “unlimited”? SOunds good from a PR perspective, but sounds fraught with problems in execution.
I agree with TMM, I think there are many businesses and industry segments where unlimited PTO would not work. It seems more suitable for salaried (OT exempt) employees, probably in an office or telecommuting environment. How exactly would this work in a restaurant company where 90% of employees are paid hourly, 75% of them are under 21, and they work according to scheduled for shifts that must be covered to ensure a minimum level of customer service? Calling in sick and not showing up for shifts is already a common problem in the restaurant industry. Would the unlimited PTO apply… Read more »
My company is one of the best companies in the USA to work for according to some surveys. We have fixed vacation time but unlimited sick leave. A terrificrelief over the PTO system. I believe DTO would work here.
I am in the midst of drafting a DTO policy for our manufacturing company. For those that have unlimited PTO, how do you manage operations employees? the same? different program? please let me know.
Although unlimited time sounds great in theory, I actually think it could lead to more burnout of employees. (1) The work needs to get done regardless. Some people are better than others at realizing that you cannot work 30 hours and expect to finish 40 hours worth of work on a regular basis. You miss work, you normally have to make up that work when you return. If you miss too much, you will be in constant catch up mode. (2) When you have a “bank” of time, most feel they can take that time without guilt, but when you… Read more »
It sounds great, but as a small business that is a government contractor, it does not make sense. If you are not billable, the company isn’t able to generate the revenue to pay your fringe benefits, which include your time off. Project deadlines still have to be met and ths customer is expecting the company resources to be onsite and performing. Accrued PTO is a liability, how do you account and budget for unlimited PTO? As someone else commented, it doesn’t work for every industry. We are however in the process of looking at our current policy, recognizing that we… Read more »
Can someone share their “unlimited PTO” policy please.
I’m a fan of this policy and have used it for Senior Management positions at a Financial Services Company, however, has anyone used this policy in a retail or healthcare setting? How would this work where people are working with the public day in and day out? I’m a supporter of PTO in general as I believe it is a great equalizer for those that don’t get sick verses those that do, however, my concern is how to make this successful in an environment where people are needed face-to-face with the public daily in their roles. I would love to… Read more »
The concept is quite attractive. However, I would be very interested in how companies with a mix of work environments, manage the us versus them communications challenges where some work groups have relative ease in scheduling time off and others are constrained by customer interface requirements or production/maintenance team responsibilities.
The company I work for is looking at implementing a PTO program, but not unlimited. By law, we are required to give two (2) weeks vacation per year (Alberta Labour Standards); however, as we know, at times, that just isn’t enough. We are proposing to our exec team, that employees can voluntarily contribute to their own PTO bank (up to 2 weeks as the cap per year) – outside of the regular two weeks’ vacation. They pay into the plan themselves each pay period. When they leave the organization, whatever they have banked gets paid out since it’s their money.
I am an HR consultant and I have written two of these unlimited PTO policies for clients. There are significant risks associated with not calling out separate time for leaves of absence, relative to FMLA, CFRA and other California related laws. The concept of unlimited PTO may fit well with certain company cultures, based on the type of work being done and the maturity level of the employees, as well as the managers skill in managing a more liberal policy and ensuring “all” managers manage the process similarly. My recommendation is to walk carefully into this program with eyes wide… Read more »
I have a hard enough time keeping them in their seats as it is and we are talking about all white collar professionals. They will take 5 days off for a cold and think nothing of it; at least we did change the policy to doctors release after 3 days this time last year. Unlimited PTO – it would be a ghost town around here. No thank you.
I work with companies helping them offer a vacation benefit to their employees. All the companies that have implemented this benefit are showing results of: Increased productivity and creativity Less absenteeism and slowing down of rising healthcare costs Less turnover and ability to attract key people Create a culture of teamwork and happiness in the workforce. Which all leads to increased profit and happy Board members. Some of these companies were like comment #28 Debra B. It’s not that the employees want to abuse time off – it’s that they don’t like being there or they don’t like the atmosphere… Read more »
As a HR professional I have not been so brave as to think up a policy like Unlimited PTO. There is a lot of validity in the comments made, and also in the success that some of the companies have shown by implementing such a policy. In echo on some of the remarks, employee maturity levels and the fair management of such a policy would be of great importance, also applying such a policy in a mixed work environment of blue collar and white collar workers could set the platform for endless “us vs them” debates. However, employee wellness is… Read more »
We implemented a generous PTO plan (2 wks for yrs 1-2, 4wks for yrs 3-5 and 5 wks in yr 6) in addition to unlimited sick days. Results: Employee Satisfaction sky rocketed, increased productivity, increased efficiencies in many areas. As for fear of abuse: the abuse has not materialized to date, however, we also have a solid performance evaluation program that would deal with hindered work performance due to abuse of PTO/Unlimited sick days. Bottom line for us: our employees WANT to be here. They have taken ownership of their respective areas and do not need to be told when… Read more »
How do you handle unlimited PTO for hourly workers? Is it only for salary exempt? What about part-time regular employees? Help!
If you’re worried unlimited PTO would lead to a “ghost town” in the office, you’re doing it wrong. If employees don’t want to be at work to such an extreme, they obviously don’t feel respected and therefore, aren’t going to respect their work environment. Rather than blaming the employees, you need to take a better, more involved look at how you’re operating and treating your employees.
I think underutilization of PTO may be a bigger problem than how much should be offered, especially with roles that are critical and/or single-threaded. There’s a saying I’ve often used: “No vacation goes unpunished.” I’ve found personally that the biggest discouragement to taking time off is the avalanche of work that will be waiting for me, work that is not and/or cannot be done by another person, upon my return. This generally leads me to spend some of my “vacation” actually working remotely – defeating the stated purpose of PTO. Many companies are all about being lean, and for good… Read more »
I am an HR person for a technology company in SC and I’ve spent a great deal of time researching and constructing an unlimited PTO policy. I should mention we are all exempt level employees, and our part time team members are not eligible to receive PTO. We are rolling this out company wide in two weeks and we hope all goes smoothly and that it is welcomed with open arms! In my research I came across the answers to many of the questions posed throughout this feed so here are some of my thoughts: – How do you handle… Read more »
DTO is just a way for companies to rip off employees. As most here report , employees are taking less vacation and I know individuals that were denied of their vacation request even given a couple months of advanced notice. Furthermore, when employees leaves a company, there’s no “unused vacation” for them to cash out on.
We tried it, every employee took an average of 45 days. Counterintuitive and had to be reversed.
I don’t believe “Unlimited PTO” is necessary, but rather, we should adopt the international standard (Most commonly in the Middle East and Europe) of 30 days PTO. Especially for people like myself, PTO is THE MOST important benefit of a company. If a company only offers 2 weeks PTO, I’m not in. 2 weeks might be great for the “average Joe” who would fly an hour or two to Disneyland, but for international vacations it’s not enough. Let’s say you want to vacation in Dubai, it takes 12-14 hours (If you get a direct flight), that’s one day gone, then… Read more »
It’s a great policy, however I don’t believe Unlimited is necessary. I’m sure 30 days is a great starting point for new hires, as practiced in Europe. The problem with the 2-3 weeks American Standard is that is doesn’t really leave much time for a true vacation. Especially if you want to travel internationally, where flights can take an entire day or even two days. — Also, I’ve always wanted to attend conferences and conventions related to my field but don’t want to waste one or two of my precious PTO days on it. Or how about taking a certification… Read more »
Hi Sarah. It seems rather unusual to me that your employer requires you to take PTO to attend work-related training and conferences, but perhaps I’ve just been fortunate to not have experienced that kind of policy. I would at least ask the question why, and work to change the policy by showing how counter-intuitive it is. If the employer won’t chage the policy and it is important enough to you, then maybe look for a new employer. As for the work load, you’re probably not going to like what I have to say. I’ll just summarize it as follows: it… Read more »
I joined a company a year ago that offered unlimited PTO. I despised the idea. I’m a hard worker, hardly ever take vacations (I’ve been married 3 years and still haven’t gone on my honeymoon, only took one day off for the wedding), so I view “unlimited” as an unfair way for my employer to jack me out of a big payout when it’s time for me to move on. Oh how wrong I was! I LOVE unlimited PTO. I’m no longer afraid to take week-long vacations. If I need to stay home to let the maids in I can.… Read more »
I’ve mixed feelings to PTO. As long as a decent amount of time off (excluding sick days) of 30 days a year isn’t a law in the US it feels like a way to make people feel guilty to take time off. I live in Europe where 30 days a year (excluding sick days) is just a normal amount. And it’s nothing more than normal to just use all your time every year for a few holidays. But here in this part of the world it’s also more a cultural thing that a company cares about their employees (usually). When… Read more »
Wow, as a single mother and a women, believe me this policy can solve all my problems in a glance
I have been terminated from my previous company because of taking a lot of leaves to take care of my baby girl.
but the problem in this new policy is that “what if your direct supervisor is a mean person who takes leaves all the time and pressure you to take his work or other wise he will report you to the management as a not responsible person”
Wow, as a single mother and a women, believe me this policy can solve all my problems in a glance
I have been terminated from my previous company because of taking a lot of leaves to take care of my baby girl.
but the problem in this new policy is that “what if your direct supervisor is a mean person who takes leaves all the time and pressure you to take his work or other wise he will report you to the management as a not responsible person”
We are one of the employers that offers unlimited PTO! It has worked very well for us. We even find we have to remind people in their busy lives that you need and can take this time for you and your family! We have found they may take less. We do track it. I work for an amazing company and I think more employers needs to consider this!