More and more we see companies offering unlimited time off to attract new talent and retain current staff members. The misconception with Unlimited Time Off, is that it is not “Infinite” time off. Now, some employees may think this is what it may mean, but there should be some guidelines presented by managers and superiors in the way they want time off spent. Like anything, unlimited time off has its pros and cons, and we are here to discuss what some of those are.
Unlimited vs. Limited PTO
Every employer needs to decide which is best for their business and their workers. Asking questions like, “Are my employees responsible?”, “Do they take their jobs seriously”, “Will I have any employees abusing this policy?”, and “Are my employees onsite or do they work from home?” are a good place to start assessing if unlimited time off would have a positive impact for your team.
Now, a lot of people may think that unlimited time off could cost a company more money than limited time off, but according to Workest, unlimited amount of PTO can actually save your company money. How? Well, when there are set PTO days that exist in Limited time off, if an employee leaves, employers will have to pay out the vacation days that aren’t used. With unlimited, you won’t have to pay your employees out for those days.
Offering unlimited time off is not only a recruiting tool but shows your staff that you truly care about their health and wellness. As an employer, you’re promoting to your workers that they do need time to reset and recharge, and finding childcare around holiday times, or when things like sickness come up, they aren’t issues. Unlimited time off also promotes that employees are rewarded based off results, not appearances.
Limited PTO also has benefits, one of those being that it motivates employees to gain more time off the longer they are with the same company or being rewarded extra time for good work. According to SHRM, “While limited PTO may not seem conducive to the modern workplace, it does have its upsides. Santopietro Panall said that, with limited PTO, companies can easily track time off and calculate costs. For instance, they can determine lost productivity for salaried employees and lost dollars for nonexempt hourly employees.”
We believe that both Limited and Unlimited PTO can have pros and cons, and every company must make the best choice for its employees and what kind of business they are.
The Pros and Cons at Quick Glance:
Both time-off systems can work effectively and have benefits, but what are they in short? Look at our list below.
Unlimited PTO Pros:
- Modernizing the workplace
- Attracting new talent
- Retaining current talent
- Cost efficient
- Easier on and for HR Departments
Unlimited PTO Cons:
- Potential for abuse
- Less regulation
- Losing PTO as a Reward
- Can create a penalizing PTO system
Limited PTO Pros:
- Easily track costs
- Used as rewards and motivators
- Benefits certain industries more than others
- Gives employees upfront expectations
Limited PTO Cons:
- Can create unnecessary penalties if more time off is needed
- More work for HR departments who must keep track and monitor
- Could deem a company as “old school”
- Can discourage employees from taking time for themselves
Before changing or starting a time-off system, we recommend first reviewing laws based on the cities and states where you and your employees reside. We also recommend reviewing your company culture and creating a layered approval process for time-off altogether. By asking yourself questions about your team and your business model, you will be able to effectively decide for your workplace. And remember, that time-off, is based on trust with employees.