If it wasn’t already clear before the pandemic, by now, it’s pretty much undisputed that limited, hand-holding vacation policies have no place in today’s workplace.
People deserve the flexibility needed to take care of both their professional and personal lives — something that can be pretty near impossible to accomplish with only 10 to 15 paid days off a year. Increasingly, companies that seek to outright own so much of their workforce’s time are labeled as outdated and inhumane. Workplace flexibility is, inarguably, the future, and unlimited PTO policies — something that as many as 72% of workers express interest in — are one way for companies to stay competitive.
An unlimited approach to paid time off makes sense; employees get to feel like the stewards of their own time, and companies get the benefit of an appreciative, more productive workforce. At least, that would be true, if that was how these policies were actually implemented.
Insider found in 2019 that nearly one in three workers with unlimited PTO report they “always” work on vacation, more than double the number of workers with traditional PTO policies who said the same. Meanwhile, we know that workers with unlimited PTO are far less likely to take time off to begin with; research from Namely, an HR platform, found that employees with unlimited PTO take, on average, fewer vacation days each year compared to their traditional PTO counterparts.
The problem, to be clear, isn’t with the idea of unlimited or flexible PTO policies in and of themselves. It’s with the bungled way they’re written and executed. Below, we heard from experts about what, exactly, causes these policies to fail and how they can be made better, for the benefit of both employees and employers.
1. Unlimited PTO policies are often unclear.
With no guidelines other than knowing their PTO is, in theory, “unlimited,” workers can be left feeling uncertain as to how they’ll actually use this policy, Dan Close, CEO of We Buy Houses in Kentucky, said.
“The concept of unlimited paid time off may be confusing and uncomfortable for some people,” Close said. “Employees who are confused are more likely to just carry on as they were before, not even taking advantage of the full amount of paid time off they’d been granted earlier. And employees who are uncomfortable with their jobs may believe that taking advantage of limitless PTO is simply taking advantage.”
The solution: Create clarity, and add some structure.
“People like structure, so setting certain boundaries or offering specific verbiage to help your team understand just what unlimited PTO really means may clear up confusion and benefit your business in the long run,” Brad Hall, CEO of SONU Sleep, said. “Help your team determine what appropriate PTO is and what it looks like, such as clarifying what specific tasks need to be completed and work finalized before leaving. You can still deem it unlimited, but parameters will help your employees feel more comfortable when signing off.”
2. Unlimited PTO only works if your leadership is strong and your culture trusting.
Unlimited PTO policies readily fail if the right example, including toward work-life balance as a whole, hasn’t been set at the top, Robert C. Bird, a professor of business law and ethics, said.
“Before an unlimited PTO policy can be successful, a company must already have a culture that supports a strong work-life balance,” he said. “If the company already has a long-hours culture, employees may believe that an unlimited PTO policy is just for show and that the ‘real’ PTO standards remain hidden from view.”
Additionally, those under a manager who shows “lukewarm enthusiasm” toward the company’s unlimited PTO policy “may conclude that what the company really wants is no PTO at all,” he added. “Employees may believe they’ll suffer retaliation if they actually use an unlimited PTO policy.”
The solution: Make sure company leaders are on the same page about work-life balance as a whole.
As Julian Goldie, CEO of Goldie Agency, put it, unlimited PTO “only works if your company’s leadership is solid.”
“Be open and honest if you decide to apply this policy,” she said. “Make it clear to employees that taking a lot of time off is acceptable, but that it must be done strategically for their personal and the company’s benefit. Company leaders must lead by example, demonstrating how unlimited PTO, when used wisely, can be a great benefit for everyone.”
3. Unlimited PTO can breed resentment between colleagues.
These policies have the potential to “open the door to unfairness,” Dean Kaplan, CEO of Kaplan Collection Agency, said.
“One person might want to take 15 days off in a year, and another may feel they need 25,” he said. “When they’re away, the people left in the office need to be able to cover for them. In practice, this means that people with more common skill sets are able to take lots of time off, whereas others with more specialist skill sets cannot.”
The solution: Make it possible for all to take advantage of unlimited PTO.
“Cross-train employees so that there will never be a shortage of vital skills due when certain team members are away,” Kaplan said. “Empower your employees to participate in solving scheduling problems; for example, to resolve a situation where too many people are asking for the same days off.”
4. Rarely do unlimited PTO policies actually mean unlimited.
As Zack Elliott, Chief Marketing Advisor at Radiocaca, put it, “‘unlimited vacation’ does not imply ‘infinite vacation.’”
“It just cannot be done,” he said. “The reality of running a business requires that there will be times when we don’t want our employees to go. In this situation, ‘unlimited’ really implies ‘we’re not counting.’ However, by adopting the word ‘unlimited,’ our team leaders felt they had no legal basis to refuse holiday requests if they conflicted with the company’s needs.”
In situations like these, dismissing a holiday request “became far more personal than it would have been otherwise,” Elliott said. “It wasn’t just, ‘Oh, you can’t go away on that date.’ It was changed to, ‘No, and I don’t have faith in your judgment on this.’”
The solution: If there are unideal windows for employees to take off, make those clear.
The significant majority of workers won’t abuse an unlimited PTO policy; as made clear above, most don’t feel empowered enough to use a policy like this in the first place. Trust that your staff, by asking off at an unideal time, isn’t trying to game the system, and put “parameters and conditions in place to make (the situation) manageable for employees and employers,” Kyle Davies, Director at Handyman Hunter, said.
“For example, you could make PTO contingent on the number of employees already on leave,” he said. “There have to be employees left working; otherwise your company won’t run. To prevent bias towards employees, there should be an identifiable reason for the leave and a considerable notice period before the date.”
5. Unlimited PTO means nothing if no one’s using it.
Perhaps the biggest downfall of unlimited PTO policies is that — even if company leaders strongly support work-life balance, and even if protocols have been put in place to make this benefit more accessible — there’s no system to track and ensure employees take time off.
“Our employees are dedicated, hard workers who are enthusiastic about their jobs and careers,” Gerrid Smith, CEO of Criminal Defense, said. “In such an environment, it’s hardly surprising that some people weren’t paying attention to their vacation time. There’s no visible cue for you to refer to without that numerical allowance, and no number hanging over your head.”
The solution: Gently remind employees to take a vacation if they’ve gone a while without using PTO.
And, rather than a general reminder, make the conversation specific to individual employees. Someone at your organization should be tracking how many days are taken off, even if the time-off policy is an unlimited one. Create a system that will help you identify when an employee has gone a certain number of consecutive days without taking time off. Then, ensure that their manager encourages them to use PTO, and to use it soon. With a nebulous, “unlimited” policy, some people may need a direct nudge — especially at first — to feel confident enough to take advantage of this benefit.
Find more organizational culture advice for leaders on the blog.