Is unlimited PTO too good to be true?

Tessara Smith,  PayScale

It’s no secret that vacations are vital to the sanity of every full-time employee, but what happens when all of their allotted break time is being sucked up by sick days and family emergencies? Instead of planning their getaways to Disneyland or the Caribbean, employees are instead forfeiting dreams of relaxation in the name of taking their kid to the doctor’s office. There is no denying that it is important for workers not to skimp on time spent in the office, but most agree that it is unfair to have to surrender what would be mental health days in order to complete mundane tasks. Studies show that workers are more productive when they take vacations, and many companies are beginning to come to the realization that a strict PTO policy may not be the way to go in terms of supporting a healthy work environment. 

Thankfully, some companies have come to recognize that their current policies may be outdated and they are beginning to utilize a new tactic called “endless summer” or more formally known as unlimited Paid Time Off (PTO). This means that an employee’s vacation time, sick days, and other inconveniences are all rolled into one discretionary plan. I’m one of the lucky employees who will benefit from unlimited PTO since PayScale has just adopted this policy. 

Unlimited PTO is good news for workers who need the flexibility they need to manage chaotic home lives without risking their career status. These same employees can avoid running the risk of damaging their reputation as long as they are getting their work done efficiently. This innovative policy takes a detour from the traditional belief that employees need to put in as much face time as possible if they want to avoid losing their position. 

Some naysayers call into question whether this type of plan will lead to employees abusing their discretionary break time. Companies that support the policy do not believe this is the case, and they say that employees are far too concerned with damaging their reputation to take advantage of unlimited PTO. In fact, many businesses are finding that since starting to use the new policy, their employees are actually taking less time off from work than they did before it went into effect.  

Only about 1% of companies have started offering a benefit of unlimited PTO, and those that have made the switch have reported positive changes in their employee’s satisfaction levels. Executives at Netflix attest that their employees are grateful for the increase in adaptability and appreciate the company looking out for their best interests. Here at PayScale, unlimited PTO is proving to be a recruiting draw that attracts job seekers to our many open positions. It also helps our employees feel more satisfied in their jobs and achieve work-life balance.

In an effort to promote relaxation a few of the companies that have adopted unlimited PTO, have also introduced a cash incentive for employees that take time off. For example, the software company Evernote, pays employees a $1,000 cash bonus as a reward for spending a full seven days out of the office. If an employee doesn’t take their vacation then consequently they don’t get their bonus. It seems a little counterintuitive to pay an employee not to work, but ultimately this strategy succeeds in boosting employee productivity.

Unlimited PTO is meant to include regular vacation time but also accommodate the minor inconveniences that employees face throughout the year. The policy lets employees take needed time to attend to their lives outside of work without having to stress about it taking a chunk out of their PTO.