I was in a meeting where someone said, “I have a friend who just got a job that provides her Unlimited Paid Time Off (unlimited PTO)”. My response was, are you serious, how does that work, that sounds too good to be true. After that meeting, I dug into the subject and did some research into what it is and how it works.
The theory of “unlimited PTO”—offering employees paid time off with no cap—got its start in Californian’s Silicon Valley in the late-90s. This benefit is exactly as it states, unlimited, no limits, boundless and infinite. The only caveat is as long as it does not interfere with their ability to complete their work. This employee benefit is used to attract the best talent that otherwise may not choose to work for you. This benefit is becoming more popular in select industries while others will not likely move in this direction.
What type industries are using Unlimited PTO to attract and retain employees.
There are many companies that provide this benefit. According to a 2019 survey of Employee Benefits conducted by Society for Human Resources Management (SHRM), 6% of organizations offer open or unlimited PTO. The data, I found leans heavily toward Technology and Remote job companies. Some of the big companies are Netflix, Oracle, LinkedIn, and Twitter. Non-Technology companies include General Electric, US Foods and Chegg. These companies are vying for the best talent why still ensuring maximum productivity.
What type of jobs are a goof fit for Unlimited PTO?
Some of the positions that are good fits for this type of leave are computer programmers, web designers, labor and employees’ relations specialists and sales professionals. Unlimited PTO is not a good fit for all positions and companies. These include production, assembly, customer service, non-project-based jobs. Incentive driven production and project-based incentives work well for this benefit.
What is bad about Unlimited PTO?
There are drawbacks for the employee who have access to Unlimited PTO, is that they may not take full advantage of it. In a hyper competitive environment, often times employees attempt to out do each other and prove that they are a better employee than the other. This may translate into the employee not taking the time off. As there is no balance building up, there is no incentive to use the balances. The other concern with Unlimited PTO is that the employee does not accrue any sort of balances. Under most State’s the employer is responsible for paying out employees PTO balances. As the employer is not technically providing accruals, there is no obligation to pay any sort of balances out upon separation.
Conclusion
A properly managed Unlimited PTO program for select industries and positions can be a good fit for many. There needs to be clear expectations for the employee and managers as to when time is appropriate to take off and when to be in the office and productive. The Employer benefits as there is no accrual require any sort of post-employment benefit to be paid.
The Employee benefits as they are able to take the appropriate amount of time to stay focused and recharged. The benefit is not right for all industries, just as manufacturing and manual labor jobs. Over all, each organization needs to assess their situation and review the pros and cons prior to making a change to this benefit.
