Did you know that President William Howard Taft first proposed federal mandates for vacation time in 1910? More than 100 years later, many other countries have laws that require a minimum amount of paid vacation for all workers, but the U.S. remains an exception. Nevertheless, vacation time is a popular benefit for Silicon Valley workers, and recently companies have begun adopting a policy of unlimited PTO (Paid Time Off).

businessman working on vacation

How Does Unlimited PTO Work?

While policy details vary, the concept usually means that employees are allowed to use as much vacation time as they want, with prior notice, subject to workload, deadlines and manager approval. For the employee, there are several advantages to this practice. First, a new hire who would not yet have accrued significant vacation time under a traditional program may still go on a planned trip without a loss of pay. Second, employees are able to plan time off without worrying about the exact number of days they will be away from work. Lastly, workers are enabled to spend the time they need away from the office, regardless of longevity or seniority.

There are multiple benefits to the organization as well. For example, there is less time needed to track and administer vacation accruals. More importantly, a company realizes cost savings in not having to pay out accrued, unused vacation time when an employee leaves his or her job. One privately held technology company used these financial savings to implement a 401(k) contribution matching program.

Are There Any Disadvantages?

Unlimited PTO sounds very appealing, and it aligns nicely with loosely structured work arrangements in the San Francisco Bay Area, such as the opportunity to work remotely and flexible working hours. Unfortunately, some organizations have discovered that on average, employees who receive unlimited vacation actually end up taking *less* time off than they would have under a traditional vacation policy.

It’s easy to understand why this would be the case. Our “always-on” culture, the rise of smartphones, and a barrage of electronic communication mean that many workers are “connected” even when they aren’t officially at work. Most of these policies rely on the department manager to approve and encourage time off. Thus the reality of time off can vary within an organization and group, sometimes dramatically or drastically. Practically speaking, unlimited vacation policies do offer a true benefit to some workers - especially those on larger teams where cross-training and well-executed hand-offs allow others to cover effectively for one person’s absence.

What Does This Mean For You?

If your company now offers unlimited PTO, maximize that opportunity. Plan for the trips and getaways you have been dreaming about! Or simply plan a staycation at home to rest and recharge your batteries. Do schedule time off with plenty of notice, so that your team can prepare for your absence. Make a comprehensive list of pending tasks and incomplete projects and do a formal hand-off to your colleagues or manager before you leave. Similarly, conduct a return hand-off when you come back to work. These practices will make taking time off less disruptive for you and your coworkers. Lastly, make sure to take a good book along on your vacation!

Menlo Partners is Here to Help

For further information about unlimited PTO programs and their place in the 21st-century workforce, contact the expert recruiting staff at Menlo Partners today.