Unlimited PTO: Amazing Perk or HR Mind Trick?

Linda Le Phan

When you think about cool job perks, among the most sought-after – arguably moreso than free beer and snacks, depending on who you’re asking! – is unlimited vacation. Or unlimited PTO / paid time off, whatever you want to call it.

The reason is simple: who wouldn’t want the freedom to take off work whenever and however you pleased, all with your boss’ consent? Pretty much every working human being, probably.

This concept of unlimited paid time off sounds like an amazing perk, but does it actually work or is it all a trick? I’ll get to that shortly – first let’s talk about which companies were crazy enough to offer it first. 

How the idea got started

The unlimited vacation policy first started as far back as 2004 when Netflix allowed employees to take as many days off as they wanted. Over the years, other big names began to follow suit such as BestBuy and Evernote, as well as local companies (to us) such as HubSpot and Veracode.

 

Today, roughly 1% of all companies offer a take-all-you-need vacation rule for their employees including VMware, Riot Games, LinkedIn, and Virgin, just to name a few. Which begs the question…

Great perk or HR mind trick?  

Great perk

When it works the way it should, an unlimited vacation policy is actually a really great, legitimate workplace perk. That’s because, for companies that approach it in the right way, the policy is simply one aspect of a greater company culture that fosters an environment of trust, autonomy, and essentially, happier workers. Just as one Praytell Agency employee’s kununu review points out, “we have unlimited vacation time because they trust that we won’t abuse it, and everyone does a great job with it”.

 

Mind trick

There’s this other theory though, that for companies to voluntarily give employees so much leeway to take time off they must be attempting some sort of HR mind trick. Depending on how you look at it, this isn’t far from the truth.

On the one hand, some employees see an unlimited time-off policy as way to justify unreasonable working hours and an “always working” mindset. For instance, a kununu review from a Gallup employee reveals that, “Gallup promotes unlimited vacation and personal time, but you have to average over 45 hrs per week over the course of the year or your job is not considered full-time. So, by all means take a vacation, but take a company laptop with you and plan on working 8+ hours per day while on vacation. There is considerable pressure to always be connected and available, even in the evenings.”

And for other employees, the policy seems like a great idea in theory but it just isn’t something they can ever actually use. For instance, an employee from Live Nation Entertainment shared in their kununu review: “I loved that I could bring my dog to work and that I had the ability to take as much vacation time I need (unlimited vacation bank) Although, I had too much work to ever take advantage [of it].”

 

Before you make any conclusions about unlimited vacation policies, you should also know that it sometimes comes with a price.

The cost of unlimited vacation

In 2014, Tribune Publishing reversed it’s unlimited vacation policy back to a traditional one after reports of confusion and concern from employees who 1) felt their vacation days were being taken away, and 2) felt that they were also losing the monetary value of their many years-worth of accumulated paid-time-off.

Slightly more recently, Kickstarter also reversed its unlimited vacation policy, saying that the program actually encouraged employees to take less time off due to a lack of clear guidelines on how to approach their managers about it, and when it was acceptable to do so given the open policy.

As of 2016, only 3 out of the 100 Best Companies to Work For offer unlimited time off.

 

Whichever way you look at it, unlimited vacation policies are neither all good nor all bad, not always an amazing perk and not just an HR trick. Because generally, when employees are given the freedom to take as much time off as they want, they don’t actually take more time off than they normally would; the number of vacation days employees take is pretty much the same overall with or without an unlimited vacation policy.

And as Moritz Kothe, our CEO, aptly puts it, “No single company policy should make your employees love or hate you. What’s more important is having a set of company values and benefits that create a supportive workplace culture. That’s what will bring out the best in your people individually, and also as a whole group.”

 

What do you think about unlimited vacation policies? Are you all for it or are you doubtful that they can really work? Let us know @kununu_US!

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Linda Le Phan is the Content Marketing Manager at kununu US, a company review platform built on transparency. When she isn’t focused on creating great content around the modern workplace, company culture, and workplace happiness, she is probably going out to get an iced coffee (even in Boston winter), raiding the snack drawer, or jamming to kununu’s Spotify playlist.