February 13, 2024
What is Discretionary Time Off? (DTO)
We’re in an age where new workplace terms are being thrown at us from all angles. One you might have heard ...
It’s one of the biggest employee wellness trends today – unlimited PTO. Yet some companies, though they want to provide a system of paid time off that uplifts employees, are hesitant to go the whole way and implement an unlimited vacation policy.
There are a number of examples of high-profile companies with unlimited PTO, including Netflix, Twitter and Oracle. It appears to work for them – however, for your company, it may or may not be the best fit.
If you’re looking for unlimited PTO alternatives, or considering converting to unlimited PTO, read on. We’ll share some other ways to shape your leave policy, while still making employee wellness a priority. You may find one of these systems works best for your company, or that unlimited PTO is still the way to go.
Before looking at alternatives to unlimited PTO, consider whether it may be right for your leave policy.
Unlimited PTO has its pros and cons. The pros may or may not be particularly valuable to your business. Likewise, you might be able to manage the cons that come with it, or they might be too much, causing you to look for an alternative.
Here’s a quick rundown on the pros and cons.
Unlimited PTO seems to have people firmly on either side of the fence. Either you think it’s the clear-cut best option for employees, or like others, you may think that unlimited PTO is a trap, or a scam.
Realistically it’s in between. The pros are valid, as are the cons. It just depends which apply the most for your business.
If you’re not ready to switch completely to unlimited PTO, there are some other options you can consider. Here are a few ideas, which don’t necessarily sacrifice employee wellness.
The obvious alternative to unlimited PTO is “limited” PTO.
This is how it works in the majority of companies that offer their employees paid time off. Each person has a certain number of hours or days they can take off. This could be calculated over a specific time period (e.g. you have 15 days off per year), or it could be accrued (e.g. you earn 1 day of PTO for every 20 days worked).
Though this may sound limiting, it really comes down to how much PTO your leave policy allows. Offering below the average number of PTO days massively reduces the impact of PTO as a benefit. Yet giving employees 15+ days per year, along with paid public holidays, can be just as enticing as an unlimited PTO policy.
Best of all, regular PTO policies are clear and predictable, both for employees and employers. Staff know just what’s expected from them, and companies don’t have to worry about rogue staff taking too much PTO.
Pros of limited PTO:
Flexible PTO is a broad term that can cover a number of different setups.
This is not much different from unlimited PTO. A flexible leave policy might not have any strict limit on PTO days, just like unlimited PTO. But removing the word “unlimited” makes things a bit clearer, as unlimited vacation policies are rarely ever actually “unlimited”.
Think of flexible PTO as being in between unlimited PTO and regular PTO. You’re generally going to provide more freedom to employees, but it’s implied that there are still some rules that must be followed.
Pros of flexible PTO:
If you want to stick with a traditional PTO setup, but provide a bit more flexibility, you could allow employees to take “negative PTO”.
This is where they don’t have enough PTO days accrued, but you allow them to dip into a negative balance.
For example – the employee in question has 5 PTO days accrued. They want to take a vacation that lasts two weeks (10 working days).
You can allow this, and let their PTO balance go to -5. As they accrue more PTO days, their balance eventually goes back to zero, then positive again.
You could also allow people to take unpaid time off, if they don’t have the PTO balance remaining.
Either way, this provides a little more freedom for employees to live their lives outside of work, without making it a free-for-all where they do whatever they like.
Pros of allowing negative PTO or unpaid time off:
Many companies that experiment with unlimited PTO find that the problem isn’t with employees taking too much time off. It’s the other way – people end up with a lot of anxiety and guilt around taking vacation days, so they rarely go on leave in the first place.
Minimum or mandatory vacation policies generally have an upper limit, as a regular leave policy would. But the difference is, they also have a lower limit.
Employees are expected to take a minimum number of vacation days in a given period (generally a year). This is to combat problems where employees neglect their leave, usually because they feel scared it will impact negatively on their image in the workplace.
Buffer switched to a minimum vacation policy after trying unlimited PTO, and finding the exact problems we mentioned above. Team members are encouraged (though not forced) to take at least 3 weeks, or 15 days’ vacation per year.
These companies understand that PTO isn’t something you should ignore or discourage. Instead, you should push people to take leave, as it results in more productive and healthier team members.
Pros of minimum PTO/mandatory vacation:
If you use a tool like Flamingo to manage your team’s leave, it’s easy to pull up regular reports on employees’ leave history. You can use that to follow up on who hasn’t taken leave in a while, and start pushing regular mandatory vacations for your staff.
Check it out on the Slack app directory and sign up free to try it out in your team.
You can see there are many ways you can craft your company’s leave policy.
None of these options are specifically “right” or “wrong”. The best option is the one that fits right for your business.
If your employees are paid hourly, for example, an unlimited PTO policy isn’t really going to work. You’ll be better off having a regular PTO policy, with accruals based on time worked.
You can also think about letting staff take unpaid time off or dip into a negative balance to allow a little extra flexibility.
On the other hand, more adaptable businesses, with primarily salaried employees – think small tech startups – may be better off with unlimited PTO, or something similar. If you don’t want to go with unlimited vacation specifically, you could change it to a “flexible” leave policy, or simply make it a limited, yet generous, number of vacation days available.
Check out the benefits of each of the leave policies mentioned above, and make a call on which one seems most attractive for your situation.
Flamingo makes managing your team’s paid time off a breeze.