As explained in previous articles throughout this blog, PTO is a concept that has been gaining traction for years in the business community. Rather than separating out vacation time, sick time, personal time and other forms of time off, employees are granted a specific number of paid time off days that can be used for whatever purposes the employee needs. The more recent twist on the PTO concept is one that sounds downright crazy to many companies – unlimited PTO.

With this new take, employees aren’t even given a specific number of PTO days. They are simply told that they can take as much paid time off as they want if (and this is a big if) they are meeting their performance goals. The truth of the matter is that such a policy can only work at a company by limiting unlimited PTO. If that sounds like an oxymoron, read on and you’ll understand why even unlimited PTO has to have its limits.

A Common-Sense Approach to Limiting Unlimited PTO

There are plenty of different ways your company can approach limiting unlimited PTO that make good business sense while also offering your employees the added flexibility that comes with an unlimited PTO policy. Here are a few:

• Unlimited doesn’t mean unplanned. No business would last long if its workers could take time off without any advance notice. After all, your company needs to be able to plan on covering the workload when needed to keep company operations on an even keel. Work with your employees to make sure business goals will still be met. Unplanned sicknesses and emergencies will still happen, but unplanned vacation should not. You still need to have a time off request and approval process in place.

• Limit who is eligible. It might not make the most sense to offer an unlimited PTO benefit to every single employee right from the start. Maybe new hires don’t get the benefit until they’ve shown good performance during their first few months. Set whatever reasonable eligibility thresholds make the most sense to your company.

• Enforce performance goals. Unlimited PTO policies can only work if your employees are getting the job done well. Making unlimited PTO contingent upon performance goals means you have to have a robust performance evaluation system in place that frequently reviews an individual’s performance relative to firmly established goals.

• Limit consecutive days of PTO. For the sake of continuity and work coverage, you should probably set an upward limit of how many consecutive days of PTO can be taken, such as two or three weeks maximum.

• Minimize time off conflicts. Similar to limiting unplanned time off and consecutive days taken, you must also manage time off requests to avoid having too many people in one department being away from work at the same time. The overall burden of effectively managing employee time off does not disappear with an unlimited PTO policy. If anything, it will probably require even greater vigilance to make sure the system is not being abused.

The Benefits of Unlimited PTO

Limiting unlimited PTO is necessary for your business to meet its goals while also offering your employees a great perk. After all, what worker wouldn’t love the idea of unlimited PTO? Here are just some of the benefits:

• An unlimited PTO policy makes employees feel valued.
• It is a very attractive benefit to list in recruitment and hiring ads.
• With unlimited PTO, employees will be less likely to come to work sick, thereby spreading an illness, as they won’t be trying to horde time off for a vacation.
• Because no days off are accumulated, your company might be able to avoid unused vacation payouts depending on state laws – and won’t have to keep track of accumulated unused time.

For employees, the idea of unlimited PTO sounds like a dream come true, but from the employer’s perspective, it still needs to be managed within reasonable limits. Limiting unlimited PTO is the only way to make it a viable policy that meets the needs of both your company and your employees. Whatever approach is ultimately taken at your business, you still need to accurately measure and manage the time off your workers take. You don’t need an enterprise-level suite of software packages with more than you need to get this particular job done. Experience the power of our web-based, user-friendly CaptureLeave application by signing up for a free 60-day trial with very affordable monthly pricing after you see what it can do for you!