Unlimited Time Off Is Often Better for Employers Than Employees

More companies are shifting to unlimited vacation. Here are the benefits and drawbacks.

(Bloomberg) — Microsoft Corp. is the latest company that’s moving from set allowances of paid time off to unlimited vacation, joining a growing list of employers like Adobe Inc., Netflix Inc. and Goldman Sachs Group Inc. While only 6% of employers offered unlimited leave, according to a 2022 employee benefits survey by the Society for Human Resource Management, the high-profile additions lead many to ask: Is the perk as good as it sounds, and who benefits the most?

Pros:

Recruit talent: For companies seeking new ways to stand out in a still-competitive labor market, offering unlimited time off is one option that seems to work. A Glassdoor study in July found that employee reviews mentioning unlimited policies were up 75% from pre-pandemic levels — and were overwhelmingly positive.
Fight burnout: Burnout in the workforce has gotten more attention, especially through the pandemic. Taking adequate time off to rest is essential to employees’ health and long-term productivity, experts say. The policy can demonstrate trust and show workers that they’re valued, which can in turn improve morale and engagement.
Save money: Companies can actually save money with unlimited paid-time-off policies because they don’t have to pay out unused time when an employee leaves like they would under traditional policies. The policy also means one less administrative task to track.

Read more: How Employers Benefit From Offering Unlimited Paid Time Off

Cons:

Underuse: Research suggests that employees often end up taking less time off under unlimited PTO policies than traditional ones for fear of overstepping — especially in highly competitive industries like banking. One complaint is that the policies eliminate guidance on how much vacation employees should actually take.
Potential abuse: While most employees will use time off responsibly, unlimited policies do open the door to the possibility of misuse. If absenteeism becomes a problem, an employee may burden their coworkers and hinder workflows.
Overlapping vacations: Without restrictions, certain times of the year like summer and winter holidays may bring lots of OOO messages — so much so that it leaves those still working without sufficient resources.

Read more: Goldman’s Unlimited Vacation Is a Mirage for Workaholic Banker

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