Has your company considered offering your employees unlimited Paid Time Off (“PTO”)? Many businesses challenged with wanting to recruit and retain the best talent are experimenting with providing new and arguably better benefits to employees. PTO combines an employee’s vacation time, sick days, and other leave into one discretionary plan. Employers will typically not question the reason the employee is out of work as the employee has the flexibility to use the time granted for whatever purpose it is needed or wanted. Unlimited PTO takes it one step further. Employees can take as much time off as needed without repercussion as long as the work gets done. The motivation is clear: build employee loyalty and morale; recruit and retain great talent. The bottom line is sensible: treat the employees you hire like adults and hold them accountable for the outcomes they deliver rather than the time they spend in the office.
So, what issues should a company consider when implementing this benefit?
- Some companies report having a hard time getting employees with unlimited PTO to actually go on vacation. People like to know what is expected of them so employers should offer some direction about what is acceptable.
- Communication and coordination is critical to make sure that the company’s business needs are met. For example, everyone can’t take time off at once, and appropriate notice should be expected for planned absences.
- Some employers report that employees who are single and childless perceive inequity in use of the benefit. Management needs to communicate that PTO should be used for whatever personal needs require people to be out of work: vacation, care of elderly parents, mental health days to recharge, personal doctors’ appointments, etc.
- Companies need to be mindful of the interplay with state and federal laws which govern time off: state paid sick leave policies, FMLA, parental leave and FLSA.
- The transition to unlimited PTO will require addressing what will happen to unused but accrued time off. Will it be paid out? Will employees need to use it within a period of time?
- Management needs to determine whether the culture of a company will support such a benefit. Does the company currently do a good job of managing and evaluating employees based on outcomes? Are there clear goals set for workers? Will long term employees accept the fact that new employees will be on the same footing from day one?
- It is critically important to have a clear written policy setting out the company’s expectations of both employees and those who supervise them so that people are treated fairly and act as part of a working team.
- Performance issues and issues of abuse of this privilege should be addressed quickly and with transparency. Company morale depends upon it.
Unlimited PTO does not mean that there are no rules . In exchange for this benefit, employees must take responsibility to meet the goals set for them. If success in your business is measured by sales, profits, client encounters or even billable hours, that is the criteria by which performance will need to be evaluated, and employees should have clear notice of the expectations.