Unlimited Time Off? Seriously?

Often, we look to innovation leaders for insight and creative solutions on how to implement new policies within the workplace. We borrow some of these ideas when change is necessary in our own organization, such as offering telecommute options, employee perks, referral programs…and the list goes on. Staying relevant in today’s market is a tough job for any employer, and now that employees are being offered flexible and remote work options, , snack machines, gym memberships, meditation and yoga classes on-site, how do the smaller companies keep up? How do you attract the type of employee you want in your company, without compromising core values and business needs?

One interesting benefit that you might want to consider is something we’ve seen recently as a trend in startups and tech companies. It may sound a bit extreme but have you considered introducing… Unlimited PTO!

I know what you’re thinking. What could possibly be good from an employer perspective if you are giving your employees unlimited time off?

Well here’s how it could work:

♣ Unlimited doesn’t give employees carte blanche to come and go as they please, but it does allow employees to request time off without caps on the amount, eliminating the need to track time accrued on endless spreadsheets or internal time clocks, or paying an employee to maintain vacation time logs for everyone else in the office.

♣ Unlimited PTO policies should request that employees provide advanced notice as much as possible, especially for vacations that will last more than a day or two and keep the employee out of the office for any length of time.

♣ It should also account for a policy of sorts when more than one employee in a small department is requesting the same days off, because your company can’t function with an entire department shut down for weeks on end.

And here’s the scoop on why it might make more sense than you first think:

♣ Unlimited PTO policies eliminate a lot of the “busy work” from an administrative standpoint and gives your people a glimpse into the changes you’re trying to make within your organization for the benefit of all employees.

♣ You’re extending an olive branch of trust. An employer who offers unlimited PTO is telling its employees up front that we trust you, we know you’re committed to getting things done and providing the utmost in work quality. In exchange, we don’t want to track every hour you take off to go to your child’s school performance or the two hours you took off last month for a root canal.

♣ This approach proposes a mutually beneficial arrangement in which employees are expected not to take advantage, and the employer is freed up to spend their administrative resources on tasks that will bring profit to the company, rather than tracking hours upon hours of sick and vacation time, requesting a time off slip every time someone needs to come in to work an hour late due to a last minute doctor’s appointment.

I was speaking to a colleague last week who mentioned he has over 400 hours of unused vacation time on the books. 400 hours! Do you realize what that means? He could take over two months off. Or, alternatively, if he put in his two weeks’ notice tomorrow, his employer will be paying him over two months at his latest salary level, in addition to his hours worked for his final paycheck. If this company was on an unlimited PTO system, there wouldn’t be a vacation payout when an employee resigns, because there’s no accrual bank, no earned vacation time on the books. It’s simply a “cut your losses and on to the next” protocol versus a hefty paycheck that would rival a severance package for many companies.

Of course, this policy works to the benefit of the employee who likes to plan last minute trips and is more spontaneous by nature. It also benefits the employee who has other family members or significant others to consider when it comes to planning vacations. Too many times in my career as an HR professional I’ve encountered employees who are visibly upset because their vacation request was denied due to the supervisor requesting the same weeks off first.

Unlimited PTO may bring its own challenges in terms of conflicts within departments when multiple employees are out at the same time, but this is another reason to encourage cross-training across company departments. As change comes, workplaces will have to become more fluid in many of their traditional views of how people work. From non-traditional workspaces and floating office spaces to unlimited PTO and broad cross-training, the workplace is changing in so many ways, and keeping up with the Jones’ in this case will require you to seriously evaluate how new policies and innovative ways of approaching traditional workplace issues can benefit your entire organization.

If you think this might be a policy that could work for your office (or if you don’t think it’ll ever work, but you know you need to change the rules of the game somehow and this seems like the least dangerous option), check out our tips for how to make unlimited PTO work and to avoid becoming unmanaged PTO.

1. Clearly outline your policy in writing, and have all employees sign off on the policy before it’s fully implemented.

2. Require employees to provide the name of their backup for any vacation request. This puts the responsibility for backup coverage on the employee and alleviates that problem for HR and department managers.

3. Request advance notice from employees whenever feasible (but leave wiggle room for that unplanned scenario just in case). This could especially be true for vacations lasting longer than 5 business days.

4. Restrict time off during busy seasons if your organization is impacted by certain times of the year.

5. Consult with an HR professional or legal representative to make sure the policy complies with all state and federal laws, as well as leave laws and your administration of FMLA and other required federal leaves.