Unlimited PTO: Should You Offer It?

One of the best ways to recruit and retain talent is to offer unlimited paid time off. Some 72 percent of employees want unlimited PTO. In fact, 50 percent of employees would prefer unlimited vacation time over a higher salary.

Unlike traditional PTO policies, companies that make the switch allow employees to take an unlimited number of days off each year. Instead of offering a set number of days, employees can take as much time off as they want. If you’re considering offering this benefit, it’s important to know how to make it work so employees aren’t taking too much time off or too little. Here’s everything you need to know.

Pros and Cons

Like with any policy, it’s important to weigh the pros and cons. Fortunately, there are strategies you can use to mitigate the potential cons of offering unlimited PTO.

Pros

Recruit and retain talent. Candidates and employees want this benefit so it can help you attract and keep top talent.
Increase work-life balance. Some companies offer a set number of vacation, sick, and personal days which can be limiting. Offering unlimited time off allows people to decide how they want to use their time. It can also be helpful for parents and other caregivers who may need to take time off to take care of family members.

Cons

Employees may take less time off. Some employees may take less time off because they don’t want to be seen as taking too much time off. Others might take less time off because they don’t have the pressure of “losing” PTO days at the end of the year. You may see higher rates of burnout and decreased employee morale if your team members aren’t taking time to recharge.
Employees may take too much time off. On the flip side, some employees may try to take too many days off, leaving other employees to pick up the slack. If left unchecked, this could lead to resentment and decreased employee morale. Depending on the position and your team structure, you may not have people who can fill in to accomplish the tasks.

How to Make Unlimited PTO Work

You can use this advice to create an effective PTO policy.

Create Formal Policies and Procedures

Start by writing PTO and attendance policies so employees know how to request time off.

PTO Policy. Specify how far in advance employees must request planned time off like vacations and the process for requesting it. You may also want to mention reasons why PTO might be denied. Consider sharing the average number of days off your employees take per year so employees can determine how much time off is acceptable.
Attendance Policy. Share what counts as an excused or unexcused absence. Note the number of unexcused absences an employee can have in a specific period and the consequences. (This can be helpful in case someone files a wrongful termination claim.)

Use Absence Management Software

Save time by using absence management software to stay organized. Depending on your needs and the software you choose:

Employees can request time off and input sick days.
Employees can clock in and out and log their hours.
Managers can approve or deny requests.
Managers can log unexcused absences.
Managers can create shift schedules.
Managers can see the team coverage for their department.
HR can see everyone’s time off and create reports to understand absence trends.

Evaluate Your Unlimited PTO Policy

Ask your HR team to identify time off trends such as the average number of days off per year and whether there are seasonal trends like people taking more time off in the winter and summer. Depending on the trends, you may want to:

Institute a minimum number of days off employees should take per year, such as at least two weeks off.
Set a maximum number of days off in a row or a set time frame. (Make sure to note that any time off approved under the Family and Medical Leave Act (FMLA), the Americans with Disabilities Act(ADA), and any other relevant federal, state, and local laws do not count as PTO days.)
Hire temporary workers if you find a lot of employees take off during your “busy season.”

Learn More HR Best Practices

Now you know the advantages of creating an unlimited PTO policy and how to create an effective policy. Learn more ways to recruit and retain talent with expert-recommended hiring and management advice from Monster.