Unlimited Time off: Pros and Cons to Keep in Mind

CoAdvantage- More and more companies are offering unlimited time off as an employee benefit. In fact, in some sectors, unlimited time off has turned from a genuine differentiator into a necessity just to keep up with competitors in attracting and retaining new talent.

Beyond its strengths as a recruitment boon, unlimited time off also offers a few other potential upsides for employers.

–   Employers no longer have to worry about the accrual of vacation days that must be paid out when an employee leaves a company.

–   It’s also administratively easier because, depending on how the program is implemented, it may no longer be necessary to track the hours taken by each employee. “That’s part of the benefit of having the policy in the first place so we don’t have to waste time on administrative tracking of PTO and can instead use our time on more strategic people initiatives,” Emma Brudner, director of people operations at Lola.com, a travel management app, told the Society for Human Resource Management.

However, it’s not without risks, and employers should approach any such benefit offering with care.

1: Risk to productivity

First, it’s possible an unlimited time off program could backfire entirely. Most employees will take less time off on an unlimited plan. Social media management company Buffer was one of the first to adopt unlimited leave, but they found that under the policy employees barely took any time off. That could undermine a principal reason for offering time off at all: giving the employee time to recharge and avoid burnout. “People didn’t know how much time everyone else was taking off, like, what is the norm?” Hailley Griffis, Buffer’s public relations head, told the BBC. “We don’t want people to burn out. We want our employees to have the most balanced lifestyle they can.”

2: Risk to employee relations

Second, it could inadvertently stoke employee resentment and depress morale, so even if it’s successful at bringing new employees in, it could negatively affect loyalty, engagement, and turnover. In part, that’s because no unlimited plan is actually unlimited, so if you’re going to offer it, you’ve got to mean it. Otherwise, you’re just setting the stage for undermining employee relations. This is especially true if your organization fails to provide much clarity around what amount of time off is acceptable within the organization. If you leave employees guessing, they’re going to resent employees who take more time than them and resent the company for making this aspect of their work-life harder.

3: Risk to labor law compliance

Finally, there’s a lot of room for potential employment law violations. For example, in the absence of clear guidance on how much time off is acceptable, you might have one supervisor who encourages more and another who encourages less. Or one supervisor who encourages more for some employees but not others. If this has a differential impact on certain groups of employees, it could be grounds for regulatory or legal action.

CoAdvantage, one of the nation’s largest Professional Employer Organizations (PEOs), helps small to mid-sized companies with HR administration, benefits, payroll, and compliance. To learn more about CoAdvantage’s ability to create a strategic HR function in your business that drives business growth potential, contact us today.