What to know: unlimited PTO

A growing trend many companies are adopting: unlimited paid time off (PTO). 

A quick overview of what it is and its pros and cons may help you, as a business owner, determine whether it's worth exploring further for your organization.

What is Unlimited PTO?

At its core, unlimited PTO gives employees the freedom to take leave as needed, creating a culture built on trust and autonomy. Hundreds of companies like Zoom and Netflix have led the way with this approach, seeing significant gains in employee well-being and talent retention.

Interestingly, research shows that employees with unlimited PTO don’t necessarily take more time off than those on traditional plans. The average worker with limited PTO takes 17 days a year off, while workers with unlimited PTO take just 10 days off. Unlimited PTO can also benefit employers based in one of the 16 states that require PTO payouts by eliminating the need to pay unused vacation days when employees leave the company. 

Family on vacation

Weighing the Pros and Cons of Unlimited PTO

To ensure unlimited PTO works effectively for employees and businesses, it must be implemented thoughtfully, with clear guidelines and communication. 

Consider these additional benefits and risks: 

The Upsides

• Attracts and retains talent - This benefit can set a company apart when attracting new talent and keeping current team members happy. In fact, 70% of workers like the idea of unlimited PTO.

• Boosts employee engagement - Employees often feel more valued and are likely more motivated when they can manage their own time off.

• Simplifies HR processes - Moving to an unlimited PTO policy reduces the administrative work of tracking traditional PTO accruals and usage. A worker simply submits a time-off request to his or her superior, and the request is either approved or denied.

The Downsides

• Risk of misuse - Without some structure, there's a risk that the system could be misused, potentially impacting team dynamics.

• Creating internal tension - Differences in how much PTO people take can lead to perceptions of unfairness.

• Navigating legal compliance - It's crucial to ensure that such a policy complies with legal requirements for different types of leave.