Unlimited PTO: Is it a Good Idea or Just Plain Crazy?

In a tight labor market where attracting top talent has become increasingly difficult, offering employee’s perks other than a higher salary could help an applicant considering multiple offers accept your offer instead of others.  One of the perks that some companies have considered offering is unlimited paid time off (PTO) programs.  Before you write off the idea as wackadoo, hear me out.

The premise behind unlimited PTO is that an employee can take as much paid time off as they would like, subject to prior approval and so long as the time an employee takes off does not impact their ability to complete their work in a timely fashion.  If employees are taking too much time off and their productivity is suffering, employers can and should treat that as a disciplinary issue. 

Some of the benefits that employers have found from offering unlimited PTO, in addition to attracting top talent, include: no accrued expense for banked time, no rush during the end of the year to take your use-it-or-lose it PTO, and savings in administrative time for HR who no longer has to track and police use of paid time off.  Further, studies have showed that even when employers offer unlimited PTO to their employees, employees still tend to take about the same amount of paid time off as when they had traditional PTO plans, and sometimes even less.   

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