A popular novelty of Silicon Valley startups, unlimited paid time off (PTO) is a policy where companies offer their workers an unrestricted amount of paid leave. Sounds like the ultimate dream, doesn’t it?

Image by chen zo via Unsplash

Well, for some people, such as the employees of Netflix, Dropbox, and Github, unlimited paid time off is actually a reality. But is having a limitless amount of time off really all that it’s cracked up to be?

The Idea Behind Unlimited PTO

If you think unlimited PTO means you’ll be spending all of your time in a hammock on a Caribbean island, think again. Don’t forget you still have a job and you’re probably required to do it. You’ll still have your targets and deadlines to meet, and in an industry like tech, they’re probably not going to slow down anytime soon. Unlimited PTO simply offers a more flexible approach to how time off is taken.

The idea behind it is that instead of measuring success based on how long someone is present in the office, it’s assessed on results and work quality. As Netflix, who was one of the first companies to offer the program back in 2004, puts it, “we don’t track hours worked per day or per week, so why are we tracking days of vacation per year?” the company stated in a slideshow titled “Freedom & Responsibility Culture”. “We should focus on what people get done, not how many hours or days worked. Just as we don’t have a 9-5 day policy, we don’t need a vacation policy.”

The Importance of Taking Days Off

It’s no secret how hard people in the tech industry work. With such high expectations and competitive work culture, it comes as no shock to learn that a typical work week exceeds the usual 40 hours. It’s also not surprising to discover that burnouts, which is now an official medical diagnosis, are a huge problem within the industry.

Taking time off from work is imperative for health and well-being. With excessive stress being linked to heart disease and high blood pressure, having time off gives you the opportunity to destress and recoup from the pressure and demands of everyday work life.

It can also enhance job performance. It gives you the chance to recharge your batteries and be inspired by a different environment. Even if you spend your time off at home, being away from the office can give you a fresh perspective on how you go about your work.

So, could an unrestricted vacation policy be the answer to encourage more tech workers to take time off? We’ll weigh in on the perks and pitfalls that implementing an unlimited PTO could bring to your company.

The Perks of Unlimited PTO

Increases Employee Happiness

One of the biggest perks of unlimited PTO is the prospect of having a flexible work schedule. As days off aren’t commonly tracked by the HR department, and time off is taken at the employee’s discretion, this leaves people with the liberty to take the afternoon off to watch their child’s soccer match or to go home early when they’ve finished their tasks and not feel guilty about it.

This kind of autonomy offers a better work-life balance which can lead to happier employees. And happier employees can also mean more productive employees.

Attracts and Retains Talent

Recruiting top talent can be competitive, not just in Silicon Valley, but in any other major tech hub. For small businesses having to compete with the bigger and more prominent names, offering benefits such as unlimited PTO can put you in with a running chance as according to a Glassdoor survey, 57% of candidates consider perks and benefits as important factors when considering a job offer.

This added perk isn’t only great for drawing in new talent, but it also has the potential to reduce turnover rates. Already existing employees may see this as a great motivator to stay at the company.

Encourages Sick People to Stay at Home

There’s nothing worse than working in an office with people coughing and sneezing. With restricted time off, it’s common for people who are only partially sick to still come into the office because they don’t want to give up an entire vacation day. With unlimited PTO, things can be different. 

Where traditional time off separates paid vacation, sick, and personal days, unlimited PTO combines it all together and is used at the employee’s discretion. Not having to preserve days off would encourage people who are sick to actually stay home and not spread their ailments around the office. 

Creates Trust

Offering unlimited PTO can cultivate a culture of trust, which is an imperative factor in influencing how a business performs. It affects teamwork and collaboration, as well as morale and motivation. As Stephen M. R. Covey explains in his book, The Speed of Trust, “whether you’re on a sports team, in an office or a member of a family, if you can’t trust one another there’s going to be trouble.”

Not monitoring time off offers employees autonomy and highlights the confidence their employers have in them to make the right decisions. They trust that work quality and performance, as well as daily business operations, won’t be affected.

The Pitfalls of Unlimited PTO

Policy Abuse

A potential drawback of unlimited PTO is that it can result in people taking advantage of the system. Unless there are clear guidelines imposed, such a liberal vacation policy can mean employees extending their week-long vacation into a month-long vacation without suffering any serious repercussions.

Unclear Expectations of What’s Acceptable

Another issue that could arise is the hesitation of actually taking time off due to the uncertainty of what constitutes an acceptable amount of days away from the office.

Kickstarter famously got rid of its unlimited vacation policy as it found people were taking less time off. In an interview with BuzzFeed News, a Kickstarter spokesperson stated that because it wasn’t clear how much time off was considered acceptable, people were prone to not taking as much as when their vacation policy was capped.

“What we found was that by setting specific parameters around the number of days, there was no question about how much time was appropriate to take from work to engage in personal, creative, and family activities,” explained the spokesperson.

Pressure to Take Less Time Off

Americans are already known for their lack of vacation culture. The State of American Vacation 2018, a study conducted by Project: Time Off which surveyed about 4,000 American workers aged over 18 years old who were granted paid time off from their employer, found that 52% of them reported having unused vacation days at the end of 2017.

A generous policy like unlimited PTO could be overwhelming. Along with an unclear idea of what’s considered an acceptable amount of days off, people may feel pressured to take less time off—or even none at all—for fear of appearing less committed and diligent than their colleagues. This pressure can be reinforced especially if they see their managers also not taking any time off.

Benefits Employers More Than Employees

While a cost-effective solution for employers, unlimited PTO can be a major drawback for employees. It reduces expenses for the company as they’re not obliged to pay out unused vacation days, depending on the laws and regulations of the state you live in. This refers to both voluntary and involuntary termination. Basically, the policy operates on a “use it or lose it” system.

Final Thoughts

Time off is an important element of any work routine, especially for those hustling in Silicon Valley and other tech hubs. While unlimited PTO is a popular benefit in these crowds, it doesn’t necessarily mean it will bode well for your company.

Sure, it works wonders for Netflix, but also consider Kickstarter and how they discovered it wasn’t the best solution for them. With all the perks and pitfalls taken into account, what it comes down to is the nature of your company and whether or not unlimited PTO is something that can be embraced.

Would you benefit from unlimited paid time off? Let us know which side of the fence you’re on when it comes to unlimited PTO.


Dinnie and the Zenkit Team