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What is an Unlimited PTO Policy and How Does It Work?

What is an Unlimited PTO Policy and How Does It Work

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What Is Unlimited PTO?

Unlimited PTO or an “Unlimited Vacation policy” typically means that an employee can take as many days off as needed throughout the year, providing their productivity doesn’t suffer and the business needs are still met. With an unlimited PTO policy, employers offer paid time off from one accrual category, rather than keeping track of several categories such as Sick, Vacation, or Personal time off (PTO), and the employee only being able to utilize the time they have allotted from each category as deemed appropriate. 

How Does Unlimited PTO Work?

When using unlimited PTO, an employee isn’t constrained to having to use traditional accrual categories. This means an employee would be able to take an unlimited amount of sick days without having to consider how many hours they have left in their “Sick” accrual category, for example.

They are free to take paid time off as a vacation day, bereavement time, or any other form of personal time off for appointments or personal needs, without the challenge of having to choose how to utilize the correct time off category.

To properly utilize unlimited time off, an employee would need to seek approval from their manager for their time off to be confirmed. Managers may still want to consider granting time off on a first come, first served basis as a way to avoid coverage issues and ensure the business needs are still met. A successful unlimited PTO policy may help cut down on administrative tasks for leaders, and help employees feel trusted and empowered.

Why is an Unlimited PTO Policy Good?

Employees and management alike can benefit from unlimited vacation time because it allows us to rest at our convenience. When unlimited vacation policies are offered, employees will be able to take the time needed when they’re under the weather, needing to recoup from a long project or other necessary breaks from work that each of us would appreciate having. When your employees feel trusted to manage their time, they can focus on providing you with their full talent and effort, knowing they can rest as needed.

Another great result of implementing a PTO policy with no restrictions, employees often increased their productivity and reduce burnout. How often have you witnessed an exhausted employee make a career switch because they felt burnt out in their current position? When employees’ needs for rest and time away are acknowledged and met, they may feel more engaged with their teams and loyal to the company.

Why Is an Unlimited PTO Policy Bad?

Employees may potentially abuse the policy if the process and requests are not managed properly. You’ll want to ensure that employees know your company’s required process when requesting PTO, and make sure the process is properly adhered to.

If requests and processes aren’t managed well, time off may overlap with other employee requests resulting in a lack of coverage, missed deadlines, or other challenges to the business.

How Do You Manage Unlimited PTO Requests from Employees?

We want to keep three main things in mind when we’re managing this type of policy.

First, we always want unlimited PTO policies to be in writing, and we want to clearly spell out both the rights and the obligations of the employee and the employer under the policy. We want to

make it clear how employees are going to be requesting time off, how much notice is needed for those requests, and then any consequences of failing to schedule that time off in advance.

The second thing we want to keep in mind is that we want to allow sufficient opportunities for employees to actually take that time off or to work fewer hours in lieu of taking time off if taking time off just isn’t available at that moment. In other words, if we’re calling it an unlimited PTO policy, we have to actually be treating it as an unlimited PTO policy.

And the third and final thing that we want to keep in mind with managing these types of policies, we really want to make sure that we’re fairly and uniformly implementing this policy throughout the company. We don’t want to be giving one employee lots of time off in one Department, but then in another Department that’s busier maybe we’re not giving those employees time off or giving them fewer hours. We want to make sure that this whole process is uniform within the company so it doesn’t look like we’re treating people unfairly or could be perceived as favoritism or discrimination.

How Can an Employer Partner with HR to Offer an Unlimited Paid Time Off Policy to Their Employees?

Is your business wanting to offer unlimited PTO to your employees? Offering unlimited PTO doesn’t have to be a challenge. With Bizhaven, we can help you create an unlimited paid time off policy and PTO request process that makes sense for your business. We custom tailor policies to meet your needs and make your HR tasks and initiatives easy. Bizhaven provides a complete HR approach to your organization, wherever you are. Find out how we can help you solve your employee leave challenges, provide management with easy processes, and keep you up-to-date with the latest information to best protect your business.

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