Quick-to-read HR news & insights
From recruiting and retention to company culture and the latest in HR tech, HR Brew delivers up-to-date industry news and tips to help HR pros stay nimble in today’s fast-changing business environment.
Unlimited paid time off (PTO) has always sounded a little too good to be true. Sure, your company’s HR department may technically allow workers to take as much vacation as they want, but does that mean they actually will?
Research suggests workers who receive unlimited PTO don’t really take more time off than their counterparts on traditional plans. If anything, the benefit seems to offer a bigger return-on-investment for employers, as they don’t have to pay out unused vacation days when workers depart the company.
The limits of unlimited PTO. A new analysis of data from workforce intelligence firm Revelio Labs shows this benefit may be losing its appeal in the job market, as the share of job postings advertising unlimited PTO shrunk by half over the past two years. The data also showed that while 3.1 out of every 1,000 job postings mentioned unlimited PTO as of May 2022, by this July the number of jobs touting the benefit had dropped to 1.5 per 1,000 postings.
The peak in mentions of unlimited PTO coincided with the “Great Resignation,” when record numbers of workers quit their jobs, prompting employers to boost wages and benefits in an effort to hold onto employees. Extending this benefit to more workers doesn’t appear to have improved their satisfaction with their jobs, though. Revelio found companies offering unlimited PTO were rated 3.24% lower on work-life balance than those that didn’t offer it in 2023, according to a separate analysis of data from employee sentiment sites like Glassdoor.
“We have heard all these narratives about the negative sentiment around unlimited PTO, and when it’s not implemented well, it can create a lot of anxiety among employees in terms of how much time is appropriate,” said Jin Yan, a senior economist with Revelio. She added that the lower work-life balance scores reflect the narrative “of how the unlimited PTO policy has been viewed somewhat negatively over time.”
Jobs mentioning unlimited PTO also took longer to fill in July, averaging 41.4 days compared to other postings, which averaged 33.9 days. While this finding suggests job-seekers might view unlimited PTO as “a little bit of a red flag,” the study didn’t take into account other factors that might affect the pace of hiring in industries that tend to offer unlimited PTO, Yan noted.
Not all bad. While unlimited PTO appears to have lost its luster, these policies aren’t inherently bad, Yan said, “I think if it’s implemented well, it can really serve employees.”
Regardless of whether employers offer unlimited PTO or not, they could ensure workers are taking adequate PTO by fostering a culture “that normalizes vacation, including flexible policies and executive buy-in,” Ceridian’s VP of people, Michelle Bonam, previously told HR Brew. If HR pros notice workers aren’t taking enough vacation, they might consider instituting a mandatory PTO policy, requiring employees to take two weeks of PTO each year, for example.