How to manage an unlimited PTO policy

Family of three eating at the dinner table

Unlimited paid time off sounds like a great benefit. Combined with the flexible hours and freedom of location for remote teams, unlimited PTO should theoretically allow workers to live their lives on their own terms. 

Theoretically.

In truth, even well-meaning companies don’t always implement unlimited PTO policies correctly. Research indicates employees often take fewer days off with unlimited PTO than they do with more structured policies.

Done right, unlimited PTO offers employees an incredible opportunity to maintain the perfect work-life balance while ensuring your company thrives through an engaged, effective workforce every day of the year. Make sure your unlimited PTO policy falls on the right side of the line by following some basic, often overlooked rules.

Don’t keep score.

Only track employee time off for official reporting purposes, which some countries require. Track performance metrics based on real productivity without respect for hours spent in the office. Not only do studies show that employees who work long hours are more likely to suffer from health problems, like heart attacks and strokes, but working more than 55 hours doesn’t correlate to gains in productivity anyway.

Remote’s unlimited PTO policy does not keep score regarding which employees take the most time off. Our “tell, don’t ask,” policy gives our team members the benefit of the doubt. We only ask that anyone who decides to take time off let others know in advance by using our unavailability calendar.

Set a minimum.

Set a minimum number of days that employees must take off, both for individual stretches and for the year in total. We mandate a minimum of 20 days off per employee per year. While we expect most team members to take more than that, we insist they take at least that much for their own well-being and for the sake of their productivity at work.

Encourage employees to take at least one long stretch away from work each year and make special policies for significant life events. Our parental leave policy, for example, mandates a minimum 14 weeks off for new parents.

If employees don’t take enough time off, don’t try to make it up to them by offering a cash bonus or other compensation. Some people within the organization may take as little time off as possible in the hopes of scoring a big check at the end of the year. Instead, work with managers to ensure team members take regular breaks from their work. At Remote, we follow a general rule that every person should always have some upcoming time off on our unavailability calendar.

Identify and eliminate bottlenecks.

Nothing highlights a problem with your business like having everything grind to a halt because one person takes a week off. If your company can’t handle someone’s absence, that’s not the responsibility of the person who took a vacation — it’s yours to ensure that no single person holds the keys to your company’s growth.

Early-stage businesses can’t afford to keep many people with duplicate responsibilities. Such companies may only have one designer, one marketer, one IT manager, or one salesperson. In these cases, the people taking time off should communicate early and often to keep others updated on upcoming projects and events.

We strongly advocate for asynchronous work and vigilant documentation for the same reasons. When everything is public to others within the company (we use Notion for this) and no one feels required to work during specific time slots, anyone can read the documentation and pick up where others left off without the need for catch-up meetings, which are time-wasters anyway.

Respect personal and cultural differences.

People should communicate if they expect to take off for a holiday, but cultural differences are not limited to days on and off. Some people may feel comfortable doing a little work on their days off, even when their leaders assure them it’s not necessary. Others may delete Slack from their phones, shut down all email notifications, and head up into the mountains to get away from the world for a while.

Both approaches are fine. If one person feels comfortable answering emails in the evening and doesn’t feel pressured to work through every vacation, respect that choice. If someone else goes off the grid, though, don’t hold that person to the same standard as their more connected colleagues.

People view their vacation time differently. This is especially true across international borders. Respect the differences in the way your team members treat their PTO. Just make sure they take enough of it.

Make unlimited PTO a perk, not an excuse.

With traditional PTO, employees accrue time off in a bank and are entitled to a payout of that bank’s value when they leave the company. Unlimited PTO is an ongoing perk, which means employees do not bank hours and therefore do not receive payouts if they leave the company, no matter how much (or how little) time off they took during their employment. 

Rather than view unlimited PTO as a cost-cutting measure during exit interviews, work proactively to ensure both sides benefit from the perk while the relationship is ongoing. Regularly bring up your unlimited PTO policy in team meetings and remind employees who do not have any time off on the calendar to schedule some. At the end of the employment relationship, employees should feel like they got a great deal during their time with the company, not like they missed out on a parting payday.

Your employees need time off to function well on the clock and to live their best lives as humans off the clock. The most successful companies are full of happy, productive people who are engaged with their work and don’t feel burned out. Unlimited PTO can help create that positive reality, but to make it work, you must proactively build a culture that champions a healthy work-life balance.

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