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Netflix took years to get its unlimited vacation policy right. But is it right for your company?

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How does the idea of unlimited time off sound to you? A few companies, most notably Netflix, have dabbled in the idea of limitless Paid Time Off (PTO), which they prefer to call a ‘No Vacation Policy’. This scheme sees employers provide employees with an unlimited amount of paid time off. Silicon Valley startups such as Netflix, Dropbox, and Github have made it a common novelty.

The Idea Behind Unlimited PTO

Back in 2004, Netflix was one of the first companies to offer unrestricted PTO. It is based on the premise that results and job quality measure performance. “We don’t need a holiday policy,” Netflix states, “just like we don’t have a 9-5 policy. You’ll always have to meet the goals and deadlines, and in a fast-paced industry like tech, they’re unlikely to slow down anytime soon.”

The Perks of Unlimited PTO

Increases employee happiness

One of the most appealing aspects of unlimited PTO is the possibility of a more flexible work schedule. Days off aren’t constantly monitored by HR, and time off is taken at the employee’s discretion. This level of autonomy allows employees to achieve a healthier work-life balance, which can lead to happier employees.

Attracts and retains primo talent

Not only in Silicon Valley but in every big tech hub, finding top talent can be difficult. Perks and incentives are significant considerations for 57% of applicants, according to a Glassdoor survey. This additional benefit is beneficial for attracting new talent, but it also can lower attrition rates.

Encourages sick people to stay at home

Paid vacation, sick, and personal days are all combined into one day of unlimited PTO. People who are suffering would be more likely to stay at home and not spread their illnesses around the workplace if they didn’t have to save days off. It will also allow those who are only partially ill to take more time off.

Creates trust

Offering unlimited PTO will help to foster a trusting community, which is critical in shaping how a company performs. Employees have more control when their time off is not monitored, demonstrating their employers’ confidence in them. They are confident that work efficiency and results and day-to-day activities will not be harmed.

The Pitfalls of Unlimited PTO

Policy abuse

One disadvantage of unlimited PTO is that it can encourage people to take advantage of the scheme. Such a liberal holiday programme would not work unless there are specific rules in place.

Unclear expectations of what’s acceptable

Kickstarter famously ended its unlimited holiday policy after discovering that employees were taking fewer vacation days. “There was no doubt about how much time off work was acceptable,” a Kickstarter spokesperson said. By defining precise criteria across the number of days, the organisation discovered employees felt less guilty about taking time off, and enjoyed better work-life balance as a result.

Pressure to take less time off

The State of American Vacation 2018 polled 4,000 American employees over 18 who had been given paid vacation time. At the end of 2017, 52% of them said they had unused vacation days. People may feel compelled to take less vacation time, or even none at all, to avoid becoming less dedicated and diligent.

Benefits employers more than employees

Employers may find unlimited PTO a cost-effective option, but workers may find it a significant disadvantage. The corporation saves money because they aren’t obligated to pay out unused sick days. Netflix uses it to considerable effect, but remember Kickstarter and how they discovered it wasn’t the right choice for them. 

Unlimited, or a stricter ration of time off? Let us know which side of the debate you’re on about unlimited PTO.

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