Many companies have jumped on the unlimited vacation time trend. Companies like HubSpot, GE, Netflix and many others have announced over the past several years that instead of having a set amount of vacation time each year, employees will be allowed to take as much vacation as they would like, with no one tracking their time off. The thought is that employees will police themselves, and only take off as much time as they feel they deserve or need. Other companies have come forward stating they have similar policies, with a recent survey showing 2-3% of businesses going in this direction.
This type of policy does not mean that an employee can take unplanned time off, except for sick days or similar emergencies. PTO requests must still be approved by a manager as with traditional PTO or vacation time policies. Your company’s established work schedule or flex-time benefits can remain the same as they would be with traditional PTO. Studies show that, for the most part, employees with unlimited PTO frequently end up
taking about the same amount of time off as employees who have an allotted amount of PTO. In some cases, employees who have unlimited PTO benefits actually have to be encouraged to take more time off. When unlimited PTO is offered, some employees may be afraid to take “too much,” detracting from the goal of giving employees the guilt-free time off needed to take care of personal or family matters, relax on vacation, or recover at home when sick. There are some important things to consider when looking at moving to unlimited vacation time.
If your company doesn’t currently provide unlimited vacation time for employees, this can be very confusing to employees at first. It is important to create a written policy that outlines the unlimited vacation benefit structure, including the following considerations:
- How does this leave fit into your company culture and values?
- Who is eligible? (typically unlimited vacation time is difficult to offer to nonexempt employees who are paid hourly)
- How do employees request time off?
- What is the minimum required days off employees must take each year?
- What rules surround the use of this benefit?
- What are the consequences of abuse of this benefit?
- What are the maximum number of days an employee can take consecutively?
While unlimited vacation time policies are not the best strategy for all businesses, it may be time to look at your vacation policy and see if it needs to be revamped. Consider your industry, budget and what your employees (and prospective employees you may try to recruit) expect when it comes to vacation time. If you have friends in a similar industry, ask what they do to get a feel for what is standard. Check out competitors on Glassdoor.com or even look at their job postings to get an idea of what might be offered by others. Then decide what will work best for your company.
Here are a few things to consider:
- Will the time off be accrued or given at as a lump sum?
- Will the time be based on the calendar year or anniversary date?
- Will the time carry over year to year (either on calendar year or anniversary date) or will it be lost if not used?
- Will you pay out unused time if an employee quits or is fired? (state laws vary)
- Finally, remember that it is easier to add benefits later than to take them away from employees, so start lower than the highest you can afford and adjust up if possible.
Are you ready to take a look at your vacation policy? Contact our HR experts at email@example.com or check out our recently updated PTO and Flexibility Toolkit.