In most industries, unlimited vacation is a rare perk. But if you’re a tech company looking to remain competitive, you need to pay attention. According to Indeed, tech job postings are six to eight times more likely to offer unlimited vacation. Even tech giants like Oracle, Dropbox, and GitHub have long tapped into this benefit to attract and retain the best talents.
So, should you offer unlimited time off? The short answer—it depends.
In this article, we’ll explain the benefits, drawbacks, and best practices for adopting an unlimited vacation policy. In the end, you’ll know whether to adopt this policy. But first, let’s understand what it means.
What Is An Unlimited Vacation Policy?
Unlimited vacation policy, also known as unlimited paid time off (PTO), allows employees to take as much time off work as possible provided they get the job done. There’s no restriction on what kind of vacation to take. It could be sick leave, family vacation, parental leave, or otherwise. But, there’s a catch.
For one, employees would still need to hand in notices and get approval as usual. Most tech employers, especially those that operate in a fast-paced environment, may also have additional policies to ensure work is not disrupted. However, a common thread is: as long as you complete all your work and do not affect the team’s work, you are free to take leave.
Additionally, only salaried exempt workers are entitled to this benefit. The worker’s performance is tracked based on results rather than the number of hours logged.
Pros Of Unlimited Vacation Policies For IT Businesses
As we mentioned earlier, tech companies like Dropbox, VMware, and LinkedIn have unlimited PTO for their workers. While they haven’t announced the impact of this policy, their commitment hints at the considerable benefits employers stand to gain. Here are some of the major benefits.
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Increase In Productivity
Periodically stepping away from work to refresh is a hack that has existed for ages. Workers often return fully energized and ready to put in their best work. Besides this, an unlimited PTO policy also fosters an ownership mentality. Employees would need to meet the company’s expectations, complete their work, and produce results rather than rely on the hours logged, thus boosting productivity. Indeed, for example, achieved many of its goals a year after setting up an open vacation policy. These goals include opening new offices, making new hires, and increasing its monthly website traffic.
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Cost Reduction
The traditional paid time off policy is often a costly venture. For instance, companies must pay employees for a predetermined number of vacation days regardless of whether they take time off. With an unlimited vacation PTO system, employees are encouraged to take as much time off as they need. It means that they cannot accrue or bank on unused vacation time.
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More Administrative Efficiency
Common HR headaches such as tracking hours worked, notices or carry-overs of unused time are non-existent in an unlimited vacation policy. Managers get a clear view of each employee’s eligibility by reviewing results rather than logged hours. They’d only have to set up an efficient system to manage requests and approval.
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Attract Top Talents
In Metlife’s 2019 Employee Benefits Trend Survey, unlimited PTO topped the list of emerging benefits employees are interested in. In the 2020 survey, a whopping 70% of employees picked it as the top emerging benefit they want. However, only 4% of employers offer it.
In the tech industry, where the talent war is as fierce as ever, offering this perk could give you the strategic advantage to beat other companies in the labor market. Rather than fight for candidates to work with you, you will attract talented workers that value what you offer.
Drawbacks Of Unlimited Vacation Policies For IT Businesses
While unlimited PTO comes with its good sides, there are still some downsides you should consider. Here are some of the drawbacks:
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Potential For Abuse
How much is too much? For companies with an unlimited vacation policy, there’s no clear answer. Thus, employees may take too much time off work. Reassigning workloads may fill the gap if these breaks are only for a couple of weeks. But in the long run, it could destabilize workflows, especially when a handful of workers spend a massive amount of time off work.
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Risks Of Underuse
Alternatively, providing open vacation benefits may have the opposite effect on workers. Some employees may be reluctant to take time off for fear of looking unproductive. Others may resort to working on vacations. In a poll conducted by Insider, up to 29% of American employees with unlimited PTO always work on vacation. This sets the pace for stress and burnout.
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Loss Of Reward
In companies with a traditional vacation policy, increasing the PTO serves as a performance reward. Employees are motivated to work harder to earn additional benefits. Also, it is often a hierarchical perk, with senior managers getting more paid time off than juniors. But with unlimited PTO, companies would need to find creative ways to motivate workers across levels.
Pros Of Unlimited Vacation Policies For IT Employees
Let’s look at some of the top advantages employees can gain from unlimited PTO.
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Healthy Work-life Balance
Working with a company that offers unlimited PTO means employees can take time off to meet other obligations. They could go on a family vacation, sick leave, or take some time off to recharge without getting on the bad side of their employer. This promotes a healthy balance between work demands and their personal life.
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Improves Health and Wellness
In the 2020 Metlife’s Employee Benefits report we mentioned earlier, 1 in 3 surveyed workers feel tired, stressed, and/on burnt out. An obvious solution? An increased paid time. It was the #1 benefit that employees said would ease their well-being. With an open vacation policy, workers can take time off at will, reducing the risk of burnout and stress-related illnesses.
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Boosts Morale
Giving employees control over their vacation time may build up confidence. They would feel empowered to manage their time and complete their work effectively. Also, implementing unlimited vacation shows you care about the well-being of your employees, in and out of work.
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Promotes A Results-oriented Evaluation
In an unlimited PTO policy, results rather than hours of work matter. For instance, an employee can dedicate a few hours to a couple of days to wrap up pending projects and then take some time off to refresh. It allows employers to recognize the real work each worker puts in.
Drawbacks Of Unlimited Vacation Policies For IT Employees
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Loss Of Accruals
Most employees would never use up their vacation off time as others. In a traditional PTO policy, they typically bank on these unused vacation days or carry it over to the following year. But it’s the opposite in an unlimited vacation system. Employees can’t stockpile, carry over, or receive compensation for unused vacation days.
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Potential For Burnout
An unlimited PTO is successful where companies encourage employees to take time off. If not, a work culture where vacationing workers are seen as lazy may grow. Once it sets in, employees may compete on taking the least time off, increasing burnout and stress.
Best Practices For Setting Up An Unlimited Vacation Policy
Establishing a successful open vacation policy is a team effort between employees and employees. We’ve outlined some tips to help you get the best results.
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Document Your Policy
As mentioned earlier, providing unlimited PTO does not mean there are no restrictions. Creating a detailed process that covers vacation requests can help set clear expectations. For employees, the policy may address eligibility, request channel, notice period, length of each time off, disciplinary action, etc.
Your handbook should also address how managers can determine who gets time off. They may make this decision based on the employee’s worksheet, team strength, and related factors.
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Encourage Time Off
To reduce the risks of underuse, encourage workers to take time off when they need it. Set a minimum vacation time off to get hyper-focused employees out of the office. Additionally, managers should lead by example. They should take sufficient vacations rather than burn themselves out.
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Set Up A Monitoring System
Determine how best to manage unlimited PTO. How many workers per team can take leave at the same time? Who tracks the process? What counts as abuse of the policy? Getting this information will help you spot infractions and ensure there’s enough staff at work.
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Create A Communication Policy
Good communication practices allow both employees and management to set clear expectations. You could start with encouraging specificity rather than implied terms. For instance, employees must specify how long their intended time off will last.
Wrapping Up
Implementing an unlimited vacation policy correctly can help companies boost productivity, employee engagement, attract the best talents, and save costs. However, this result may vary across businesses. To determine whether this policy could work for you, weigh the pros and cons carefully. Pick out what works and then follow the best practices to maximize the results of your efforts.
