Unlimited PTO - Right for Small Businesses?

Unlimited PTO – Right for Small Businesses?

When you think about unlimited PTO, large corporations that employ thousands of workers may come to mind. But what if you’re a small business owner looking to offer unlimited PTO to enhance your benefits package. Is it really a viable option?

Reasons why companies offer unlimited PTO

If you’ve considered offering unlimited PTO, you’re probably well aware of the advantages. Beyond enhancing your benefits package to attract employees, unlimited PTO:

  • Frees up internal resources to track PTO use;
  • Relieves the expectation to pay out unused PTO after an employee quits;
  • Demonstrates trust in staff that they’ll get their work done without being micromanaged;
  • Eliminates mass time-off conflicts when PTO accruals max out at year-end and employees are rushing to utilize expiring PTO; and
  • Prevents germs from being spread when employees are sick, as they’re less likely to come into work when they don’t have to use an accrued day-off.

With so many advantages, why doesn’t every company make the move?

Concerns of offering unlimited PTO

Most companies that currently offer unlimited PTO say that employees use about the same amount of PTO when it’s unlimited versus when it’s accrued. So what keeps small businesses from adopting the benefit?

  • Many employers are concerned about being taken advantage of;
  • Some employees do better having defined limits rather than saying it’s unlimited;
  • Some positions and/or companies can’t handle an unmanned position for too long; or
  • It may create extra pressure on supervisors to more closely manage performance and ensure employees aren’t abusing the unlimited PTO policy.

At the end of day, if your PTO accrual plan isn’t broken, there’s really no need to change it. But if your company culture might be right for offering unlimited PTO, here’s how you make it work.

How to make your unlimited PTO plan work

To ensure your unlimited PTO plan is successful, you still have to do some administrative work to set expectations, such as:

  • Create a defined policy. Just because your PTO is unlimited doesn’t mean it’s unmanaged or that employees always get time off whenever they want it. For a sample policy, please contact our HR experts at HR@stratus.hr.
  • Implement restrictions. You may need to establish guidelines for your company’s busiest times and require employees to provide managers with advance notice. They may need to find somebody to cover for them while they’re gone and/or be available for work calls and emails, depending on their job duties.
  • Consider who it includes. Because of complexities surrounding state and federal wage and hour laws, you may want to only offer unlimited PTO to exempt employees.
  • Regularly check with managers. To ensure the unlimited PTO policy is not a problem, shifts will need to be consistently covered and productivity measures will have to be met. This means managers may need additional training on productivity metrics and be able to candidly and tactfully address potential abusers.
  • Communicate. Both managers and coworkers need to know when an employee is out of the office. This can be as simple as sending out advance notice to coworkers and entering days off in a calendar that everyone in the company can access.
  • Encourage employees to use it. Managers should encourage taking time off from work and set the example by leaving themselves. Talk with employees about their upcoming vacations; be excited for them! If an employee’s workload prevents them from taking time off, managers need to reevaluate their load.

If you haven’t yet implemented flexible work arrangements such as working remotely or allowing employees to start early or work late, you may want to start there first. If you’re seriously considering moving to an unlimited PTO plan, learn how one company made the transition from an accrued PTO plan.

Unlimited PTO

Most companies that have implemented an unlimited PTO policy have had a positive experience, even if it means employees may occasionally need to be accessible while on vacation.
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