What You Need to Know about Unlimited Vacation Policies

What You Need to Know about Unlimited Vacation Policies

Unlimited vacation time (sometimes called open PTO) is a flexible leave policy that has grown more popular in recent years despite the fact that some employers worry about people abusing it. In fact, many large companies have begun testing the concept while re-examining their PTO policies.

Here, we’ll go through everything you need to know about open PTO policies, including how they function, what their pros and cons are, and how to decide if this type of policy will work at your company.




What Is Open PTO?

Open PTO gained popularity roughly five years ago as companies became more open-minded about telecommuting and flexible scheduling. To prioritize a better work-life balance, many firms developed a less rigid time-off policy that allowed employees to have more control over their schedules.

The idea behind unlimited time off is not to allow employees to take six-month sabbaticals, but instead to eliminate their fears of running out of vacation time. For example, if an employee has used up his or her allotment of 10 paid days off per year (excluding holidays), he or she could not take any more days off to deal with a sudden personal crisis , because any additional time off would be unpaid. The employee might also face disciplinary action, depending on the company’s time-off policy. In contrast, open PTO policies allow employees to take as many days as they need without jeopardizing their job.


How Can Companies Implement an Open PTO Policy?

So how can you implement an open PTO policy that works for both the company and its employees? The first thing to do is figure out a suitable name for the policy. For companies that have successfully implemented open PTO, many have found that using the word unlimited sends the wrong message for two reasons. First, the word suggests that an employee can take as much time off as he or she wants, which is not necessarily true. All good open PTO policies should have a clearly articulated cap detailing how much time is considered reasonable. Secondly, companies should avoid using the word “unlimited” because it sends a message of unprofessionalism that puts greater emphasis on time away from the office than on being productive in the office. Words like “flexible” or “self-driven” are better ways to describe this type of vacation policy.

After you select the name of the policy, it’s time to fine-tune the details. HR should work with management and executives to determine which personnel are essential and how much time off the company can comfortably allow. If you have a more relaxed work culture that doesn’t require employees to spend 100 percent of their time in the office, it might be easier to allow a combination of work-from-home hours and vacation time. For more structured environments, companies usually determine the annual vacation time cap based on departmental needs. Employees should understand the process for submitting a request and have an easy way to keep track of how much time they have taken and how much remains for the year.


What Are the Pros and Cons of Open PTO Policies?

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As with any HR policy, there are pros and cons that must be considered. On the pro side, unlimited PTO is an awesome way for companies to show that they really care about the wellbeing of their employees. Work-life balance has become very important for many workers, and open PTO is one way for organizations to show that they are competitive. For HR and managers, flexible PTO policies eliminate the need to diligently keep track of employee vacation and sick hours.

Another pro of open PTO is employee wellness. When employees no longer have to worry about running out of sick time, they won’t be tempted to show up to work ill. This not only increases productive in-office hours, it also minimizes the spread of disease so that healthy employees can continue working.

One of the drawbacks to an open PTO policy is that a significant percentage of staff might end up out of the office at the same time. This may not be a big deal if it’s just for one or two days, but if several employees are out for a week, it can throw the office off balance.

Another downside to open PTO policies is that employees might feel guilty about asking for days off beyond the company limit—even if they really need it. On the other hand, employers also need to be cognizant of employees who abuse the policy. Some employees will view the policy as a license to do whatever they want, including showing up late or unexpectedly cutting their workday short.


Will Open PTO Work for Your Business?

The only way to really know if an open PTO system will work is to develop a policy and try it out. Smaller businesses may benefit from implementing open PTO on a trial basis and then gathering feedback from participating employees. At that time, companies can determine if it’s a good idea to continue to program.

Obviously, open PTO policies won’t work for every company, but the only way to know for sure is to try it out. Again, avoid calling the policy “unlimited” and concentrate on making the rules clear. By taking a calculated approach, you can ensure that any policy you implement is well received.

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