Most of the developed world offers paid time off. In fact, the United States is the only developed country that doesn't require paid vacation or holidays off, which means that a quarter of Americans don't even have a single day off in the calendar year. But even when they do have vacation days, many Americans don't take them. The average American employee who can take PTO took just 17.2 days off in 2017 — 52 percent of Americans were left with unused vacation days, according to Project Time Off.
Many companies started implementing unlimited paid time off to encourage employees to take vacations and days off when they need them. Of course, there are pros and cons to having unlimited paid time off, however, as there are arguably some pitfalls to these policies.
Here's what you need to know about unlimited paid time off.
Typical paid time off policies included allotted compensated vacation, sick and personal days (as well as holidays) that are credited to employees' "banks" usually ever pay period. Employes actually pay employees even if they aren't working for an average of 10 paid holidays, two weeks of vacation, two personal days and eight sick days per year. Paid time off is typically accrued over time, as hours earned are put into a bank based on hours worked.
Many companies are now offering unlimited paid time off, which means that employees don't have a limited number of days that they can take off. Rather, they're entitled to take as many days off throughout the year as necessary, so long as their managers approve that time off. The policy is usually based on trust that employees won't take advantage of it — and that trust can feel empowering for a lot of employees.
Statistics show that unlimited paid time off policies, unsurprisingly, lead to happier employees. And research from economists at the University of Warwick suggests that happier workforces are 12 percent more productive, and they're far more creative and have better analytical skills. In fact, 40 percent of our capacity for happiness lies within our power to change, so having the ability to choose the duration and timing of our paid time off increases happiness.
Unlimited vacation time is a fairly new idea. Startups, mid-size companies and non-profits began offering unlimited paid time off as a way to attract and retain talent. For startups and non-profits, especially, being able to offer an attractive benefit can make up for lesser funds to pay higher salaries.
Only in recent years did companies start offering unlimited vacation. It originated in Silicon Valley, as part of the emerging startup scene. Startups like Dropbox, Hubspot and Stitchfix, for example, are three companies that offer unlimited paid time off policies that allow employees to be autonomous while getting their work done and still making personal time off decisions for themselves.
But what was once a trendier benefit that startups were offering has become more widespread; companies of all sizes and value have begun offering unlimited paid time off, as well. Though the total number of companies offering unlimited vacation days is still relatively small, research from the Society for Human Resource Management (SHRM) indicates that unlimited (or at least unstructured) paid time off programs are growing ever more popular. The current research estimates the total percentage of companies in the U.S. offering unlimited vacation time at around two percent, and a survey by HR association WorldatWork indicates that one percent of large companies are offering a vacation policy with no cap.
That said, there's been a lot of controversy surrounding these types of policies in the last few years as they've grown more mainstream.
In a Havard Business Review article, The High Price of Overly Prescriptive HR Policies, Sue Bingham writes: “If you believe employees need strict rules and enforcement to be productive, hiring and retaining high-performance people will be a challenge for you. You hired these people for their tenacity and talents. Get out of the way and let them be great. Deal with any people who choose not to meet expectations on a case-by-case basis.”
Bingham makes a point. But while, on the surface, unlimited paid time off seems like a great idea — trust, autonomy and flexibility can all lead to happier and healthier workplaces — there are certainly pros and cons to everything.
Let's break them down.
The pros of unlimited paid time off are plentiful. These pros include the following.
Unlimited paid time off does have its downsides. These cons include the following.
AnnaMarie Houlis is a feminist, a freelance journalist and an adventure aficionado with an affinity for impulsive solo travel. She spends her days writing about women’s empowerment from around the world. You can follow her work on her blog, HerReport.org, and follow her journeys on Instagram @her_report,
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