Your No-PTO Policy: The Good, The Bad, The Ugly

In a recent campaign aired by MasterCard, children of working parents are trying to understand the rationale of giving up PAID vacation days. These idealistic children imagined all the fabulous things that could come from taking back that one day. We all remember being kids and the excitement we had in anticipation of a day off. Why hasn’t that same excitement transpired into our adult life? Last year 40% of Americans left vacation time on the table, expired and essentially taken away.

So, what if there was no structured time away from work policy at all? Many employers are now opting for a No-PTO policy that essentially provides unlimited PTO taken by employees as needed. Would more employees take time off? Would your workforce abuse this? Would productivity soar or fall flat? These questions are forcing employers to ask if unlimited time off is the right move for them.

The Good:

A strong work-life balance plays a major role in the recruitment and retention of employees.  Allowing employees the ability to manage their own time and essentially create their perfect work-life balance ensures that everyone wins.

In states that mandate employers to pay out all unused accrued vacation /PTO time at termination, time away from work policies can be costly; the absence of a PTO or vacation policy can possibly remove this liability if executed properly in a compliant manner.

From a recruiting standpoint, if your goal is to hire motivated, responsible employees who seek to balance their time off with completing their projects – you now have the ultimate recruiting tool. Further, some employers may be betting that motivated employees will intrinsically take slightly less PTO under an employee-directed “no-PTO” policy, and use only what they truly feel they need.  This should not be the main goal of this PTO structure, but it could be a nice perk if it results in increased productivity and cost-savings!

The Bad

No one likes a perceived value. It’s in our human nature to associate tangible things with value. If there is no policy on how time off is taken, many employees will find it challenging to see this as a benefit of their employment.

Using the term unlimited instead of simply having “no policy” for time off can also be dangerous for those employers in states that require payment of unused accrued time at termination.  What is the value of unlimited when it comes to accrued time? There are strict state-specific guidelines for executing this no-PTO-policy in order to eliminate the payout liability at termination.  If employers do not adhere to these guidelines, they could be on the hook to pay out unlimited PTO.  Yikes!

Currently only 1% of companies are adopting these standards. That’s because it’s simply too difficult to administer in most industries and work environments.

The Ugly

Unless you have a company full of salaried exempt employees, having a no PTO policy in place is confusing to execute as hourly employees simply aren’t paid when they don’t work.

We all hope that we can trust employees to not abuse a policy, but let’s be real, that isn’t always the case. If work isn’t being completed then odds are your bottom line is being affected – the C-suite’s worst nightmare.

Even under current standards of employers giving a prescribed amount of time off to employees, they aren’t taking time. With no structure in place it is likely some employees will take less time instead of more. This could do more harm than good, including but not limited to: employee burnout, extremely unbalanced work-life ratio, stress, poor work product and many other key factors that hinder an employee’s performance.

The Key to Compliance

Kind of sounds like a double-edge sword, right? If you are an employer considering going rogue with your vacation/PTO policy, the best bet is to ensure consistency, set guidelines, and be completely transparent with how it would work.  The rest is up to the employee.

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