There has been a steady rise in the number of companies implementing unlimited PTO programs over the past few years. Originally a perk offered by start-ups and tech companies, such programs are growing in popularity among all businesses, regardless of sector and size.
Unlimited paid time off (PTO) programs give employees the freedom to take as much time off as they want, providing they hit their performance goals. And most unlimited PTO policies have no maximum limits or accrual requirements.
Tip: Annual leave entitlement is mandated in most countries, so global companies must make sure their employees in countries with mandates still take the minimum level of PTO as defined by statute regardless of whether an unlimited PTO program is in place or not. Maintaining a system or process for employees to submit leave requests, so managers can approve and HR can track, is still important. Most human resources information systems (HRIS) provide this facility.
Why do businesses implement unlimited PTO programs?
Unlimited PTO programs can be an effective talent attraction and retention tool. The flexibility such programs provide to employees and managers alike is also a big advantage. They can generate cost savings and boost productivity at the same time.
In this blog post, we’ll look at the benefits of unlimited PTO and the reasons why it’s fast becoming a popular perk.
Global PTO allowances: In APAC, the minimum paid leave entitlement is between five and 10 days, while in Europe, it’s between 20 and 30. The US doesn’t mandate PTO, but American employees typically get an average of 10 days of PTO every year.
What are the benefits of unlimited PTO to employers?
Shows you care: First and foremost, unlimited PTO programs show you truly care about your employees. Companies can talk about what a great employee experience they offer but trusting employees to manage their own time really does show you mean what you say. Employees who feel cared for are 3.2x more likely to be happy at work, research from Glint found. And they are 3.7x more likely to recommend working for their company. Who doesn’t love referrals?
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Great attraction tool: Employee expectations have changed more in the last couple of years than they have in the last decade. The pandemic gave people the opportunity to reflect on their lives and what’s important to them. Many came to the conclusion that life shouldn’t all be about work (and rightly so!). People now want jobs that fit around their lives, and unlimited PTO can help as it gives people more time to pursue other interests outside of work.
Boosts retention: When asked what non-traditional perks and benefits interest employees, 80% of respondents said increased paid leave or paid time off, according to the 2021 US Employee Benefit Trends Study by MetLife. We all know that if you do your best to give employees what they want, they’re more likely to be loyal to your company. So, unlimited PTO really could help you to hold on to your top performers.
Reduces burnout among employees: The pressure from the pandemic, coupled with the severe skills shortages that are impacting most industries, has led to a rise in employee burnout. Some 52% of people experienced burnout in 2021, research from Indeed revealed. In addition, discussions about burnout in Glassdoor reviews have increased 128% since April 2021. Unlimited PTO programs can help to combat burnout as people can take time to recharge their batteries if they’re feeling overwhelmed. Additionally, unlimited PTO means employees are less likely to come to work when sick.
"There have been many pressures put on all of us from the pandemic — so it’s more important than ever that people take time out to recharge and come back feeling refreshed.”
Saves costs: Companies with unlimited PTO programs can save money on paying out vacation days to US employees when they leave or when European and APAC employees leave and have accrued more than the statutory minimum time off.
Increases productivity: When employees have the option to take time off when they need it, it means they can take time off solely to relax, rather than feel as though their time off is wasted if they don’t go on a trip. As a result, they come back to work refreshed, which helps to increase productivity.
Reduces admin for HR teams: Unlimited PTO programs give HR teams more time to spend on strategic initiatives, such as talent development, because they don’t have to spend a massive amount of time tracking the ins and outs of PTO.
Prevents everyone from taking the same days off: Companies that provide annual leave without the ability to roll over any unused days often see a rush in leave requests as the end of the year approaches. This doesn’t happen with unlimited paid time off as employees don’t feel pressured to use it or lose it.
More positive employee reviews: Since we launched MyTime at WilsonHCG (our version of unlimited paid time off), it’s fast become the most appreciated benefit according both internal pulse surveys and external employee reviews.
What happened when WilsonHCG launched an unlimited PTO program?
We launched an unlimited PTO program at WilsonHCG in 2020. We’ve had a really positive response from our employees in our pulse surveys, stay interviews, exit interviews and review sites. As expected, employees took more time off in the year during which was launched (2020) compared to the previous year (2019). The number of days employees took rose by 57%; US employees, on average took around three weeks off, while in the EU, employees took around a month off. However, this leveled out in 2021; there was a slight drop (3.3%) in the number of days employees took off in 2021 compared with 2020. It’s clearly become a top-rated perk among our employees and features regularly in employee reviews and pulse surveys.
How many days off work did you have last year?
We posted a short poll on LinkedIn recently to see how many days of paid time off (PTO) people actually took last year, and the results may surprise you!
6 tips to develop a successful unlimited PTO program
Do your research before you begin. Read what other companies with unlimited PTO are saying on the matter and speak to your peers. Hearing about their experiences will help as you’ll be able to learn more about the dos and don’ts. Every business is unique, so the rules and processes related to unlimited PTO will differ. We’ve included some suggestions below that will help you get started.
#1: Set clear boundaries. Employers must make the rules clear to avoid confusion. Unlimited PTO programs are not intended to be used for all leave. For example, an employee who is absent for any reason related to sickness must still follow sickness procedures. At WilsonHCG, MyTime can be taken to cover jury duty, bereavement leave or compassionate leave. It does not cover maternity, paternity, shared parental, sick leave or disability leave.
#2: Mutual trust is essential. Trust works both ways when it comes to unlimited PTO polices. Employers must trust their employees to take time off as and when they need it and not to abuse the system, while employees must trust their employers to help manage their workloads during their absence.
Unlimited PTO empowers employees to take time off when it suits them. They don’t have to choose which trip to abandon due to a lack of time off; instead, they can have multiple breaks a year. Managers also feel empowered to encourage their teams to take time off.
#3: Collaboration is key. Employees and employers must work together to ensure that time off doesn’t negatively impact their role, their team or the wider company. Managers must collaborate with their teams to ensure coverage in the same way they would in a standard annual leave program.
#4: Ensure your program does not interfere with legally established PTO guidelines. For example, if your company is a global business with employees located in several regions, it’s important that employees still take the minimum level of PTO as defined by statute. So, in the UK and Ireland, employees must take at least 28 days inclusive of bank holidays and additional leave. Thereafter, it would be categorized as MyTime.
#5: Provide explanations if leave requests are turned down. Unlimited PTO programs do give employees unlimited time off, but managers may have to deny requests based on business need. Managers should always explain their reasoning behind the decision to avoid feelings of resentment.
#6: Encourage your employees to take time off. Managers have a duty to their teams to encourage them to take time off, while reassuring them that their tasks will be managed appropriately while they are away. If you have unlimited time off but the culture is one that looks down upon using it, then the program won’t work the way you intend. Often, if it’s instilled from the top-down, employees will feel more comfortable using it the way they should.
Unlimited PTO is quickly becoming a must-have rather than a nice-to-have among employees and candidates alike. And because we're experiencing the most competitive job markets ever, now could be the ideal time to introduce unlimited PTO at your company. Employers with unlimited PTO programs will find it easier to attract and retain talent – fact.
If you’re considering implementing an unlimited PTO program at your company, make sure you consider all aspects before rushing it out. If you don't do it thoughtfully, you can risk damaging morale.
In a world where everyone is fighting for talent, unlimited PTO could be the differentiator your business needs.