Implementing an unlimited PTO policy
Useful tips on creating an unlimited PTO policy. I used to think these were more accounting hacks than real benefits - but I've changed my mind over time.
Jen Dennard shares tips on implementing unlimited PTO policies for a startup in this piece. It’s characteristically practical and well thought out, although I have some questions about what kind of tracking and limits are allowable and which are not.
I’ve been on a journey with unlimited PTO policies. They are an accounting hack: in particular, an organization that implements them doesn’t need to pay employees for unused time when they leave, and the lower administrative requirements are easier for startups to implement. That lack of payout for unused time used to really irk me.
But that would be more of a problem if US companies offered sane vacation policies. The statutory minimum PTO of 5.6 weeks that I enjoyed in the UK would be seen as a joke here: how would any work get done?! (The answer is that employees with these benefits are productive, happy, and far better rested, but never mind that.) In those situations, a departing employee might be owed as much as a month and a half’s pay. But in the US, knowledge workers start with an average 11 days of vacation a year, working up to 20.
In order to be fully effective, happier, healthier, and receive the full value of their benefits, every employee should use their full PTO. In a world where everyone is taking 2-4 weeks of vacation a year, the lack of payouts on an unlimited PTO plan is moot. So as long as the company strongly encourages that people take theirs — as Jen notes here, they can’t require vacation — and doesn’t create a culture of performative productivity, it’s actually a pretty good deal.
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