Before you can decide if an Unlimited PTO policy is right for your company, we need to define what “unlimited” really means.
An Unlimited PTO Policy basically does away with the concepts of “vacation” or “sick” accruals, and employees are given the freedom and flexibility to take the time away from work that they need, while still having metrics and guardrails in place to make sure that the work is getting done.
Having a policy like this builds trust between employers and employees, and that’s why at PEAR we like to call it “Responsible PTO”.
Responsible PTO can be a great benefit to your team, but there are also some key factors to consider before implementing.
Why it’s great:
- Responsible PTO is seen as a major benefit to employees. It’s a great policy to promote a trusting and transparent culture.
- It can help with recruitment and retention. Responsible PTO can be used as a powerful negotiating tool when it comes to recruiting, which is helpful in today’s job market, and encourages employees to stay.
- You won’t have to worry about the “end of the year rush” to use up PTO. People don’t feel the pressure of “use it or lose it” and you may notice that employees are being more responsible regarding how much time they take and how much notice they provide. And they might even take less time off since they don’t feel that pressure to “use what they earned”.
Why it has potential disadvantages:
- Employees may take less time off. Why? Because the very fact that they do not have “accrued” time off means they may feel that they didn’t “earn” the right to take time off! I know, employees taking less time off may not sound like a disadvantage, but employees who take too little time off may become less productive or less engaged over time. It’s important for everyone to take time to recharge.
- It can be confusing: There’s no clear answer to “how much time can I take off” and yet an employee who takes “too much” time off may still face consequences. From an employee’s perspective, this might be confusing!
What you need to know to implement a successful Responsible PTO policy:
- You still need to track time. Tracking is still important, and crucial if you want to make sure people aren’t taking advantage of the policy.
- Expectations need to be set. Employees need to know what is expected of them when it comes to work getting done.
- Requests for time off still need to be made in advance (when possible). Days planned in advance should still be requested to make sure there is appropriate coverage, but sick time may not come with much notice. It’s important to make sure you’re still in compliance with state/local sick time laws (if applicable) if you have an employee taking a lot of unscheduled PTO.
- Your Leave of Absence Policy may need to be adjusted. Speaking of sick time, if an employee has the need for a leave of absence (LOA), that doesn’t necessarily mean that they will be paid for the entire time they’re out. LOA policies should take your Responsible PTO into account and put a cap on the amount of time that can be used at once and/or in conjunction with a LOA.
- Time off doesn’t get paid out and doesn’t carry-over. Since Responsible PTO is not accrued and there is no “bank”, in states where there are requirements for year-to-year rollover, or payout at termination, companies don’t have to worry about huge banks of time building up or significant payments at end of employment.
- Consider still having a separate Sick Time policy, just to be safe: In states or cities where sick time is the law, a Responsible PTO policy will most likely be compliant. However, if you want to really “dot the I’s” you can consider still having a separate sick time policy to prove beyond a shadow of a doubt that you are fully compliant.
Responsible PTO can be a great way to show your employees that they’re appreciated and trusted, but there are also important factors to consider before putting a policy like this in place.
Email me to find out how PEAR can help you create a policy that’s right for your company and set your team up for success!! firstname.lastname@example.org
Stephanie Quinn, SHRM-CP – Director of HR, PEAR Core Solutions, Inc. – www.pearcoresolutions.com