08/29/2018 Stephanie Anderson

Unlimited PTO: A win or lose for employees?

At face value, unlimited vacation time sounds like a dream come true. No more agonizing over whether you’re sick enough to head home or if you should power through and stay at the office. No more feeling guilty about taking time off to go to your kid’s school conferences. Need a “mental health day”? You’ve got it. Have to be home to let repair folks in? No worries; you don’t have a PTO bank you have to monitor!

Unlimited PTO is the shiny new object in the world of employee benefits. For companies, it sends a clear message to employees: We trust you and want you to have work-life balance. It shows that an employer understands that people are more than their job title and have interests and responsibilities beyond work.

The benefits for employers go beyond good internal PR.

Employers no longer need systems that track accrued PTO for each employee, which typically reduces administrative tasks. There’s also no end-of-the-year rush to use it or lose it, when teams function with skeleton crews. Furthermore, in the current competitive hiring market, it’s a wonderful way to lure top talent with a benefit they likely won’t find elsewhere, which is a big score for recruitment.

When implemented and used correctly, unlimited PTO can be great for employees, too. The problem is this doesn’t always happen, and there are many hurdles on the the road to this pot of gold.

Typically, unlimited PTO is for exempt employees only, and at some companies, only for certain pay grades and above. If you do get this cool new benefit, you still have to go through an approval process. Just because you have unlimited PTO doesn’t mean you’ll get time off whenever you want. Your boss still needs to give the OK, and you still have to compete with other employees vying for days off. At times, it can feel like it’s working against the important team mentality that’s needed for success.

Beyond these concerns, there’s one big problem with unlimited PTO: the guilt factor. The psychology of unlimited PTO is actually having the opposite effect on some employees who feel too guilt-ridden to take time off. The leniency leaves them wondering what is appropriate and what’s not, so they take little or no time off at all. Too many rules can make employees feel restricted, but too few rules appear to cause confusion. Some employees may take a ton of PTO while others take none, which can create resentment and lead to retaliation.

One important thing employees typically don’t think about when unlimited PTO policies are implemented is the fact that they can’t bank PTO. PTO is typically a benefit you earn, so when you leave a job, the company will cut you a check for all unused PTO. This can be thousands of dollars depending on the PTO amount, which is a huge benefit during transition periods. With unlimited PTO, it’s not a benefit you earn monthly, and therefore this payout doesn’t exist when you leave.

Unlimited PTO has its perks, and for some companies it’s been wildly successful. However, it’s not as simple as it sounds and doesn’t work everywhere. The expectation is all sunshine and lollipops, but too much sun can cause sunburn and too many lollipops can give you a cavity.

How do you feel about unlimited PTO? Great new perk or too good to be true?

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