As the workforce evolves, unlimited and untracked vacation policies
have become tempting benefits, but they are actually a big mistake
for employers. Executives want to be the cool parents” to their
employees and also free up HR teams to focus on strategic decisions
instead of tracking paid time off (PTO). The reality is, untracked,
unlimited PTO isn’t always beneficial to employees.
In fact, it's probable that initiatives such as untracked,
unlimited PTO do more harm than good. Businesses can offer
unlimited vacation, but they should track PTO if they want to
ensure that their vacation policy actually has a positive impact on
You might think that employees would abuse this generous leave
policy, but the opposite is actually true. Unlimited PTO usually
leads to staff taking less vacation and fewer paid days off, a
problem that is only exacerbated by a lack of tracking and
When the guardrails are removed, employees grow more cautious and
fearful, and rarely take full advantage of unlimited policies.
Instead, they make judgment calls based on what they think makes
them look better to their managers, regardless of their impact on
their own wellbeing.
Automating PTO Processes Is a Solution to the Problem
The most effective strategy for encouraging employees to take time
off while improving HR’s workload is actually automating PTO
processes, not opting out of oversight altogether.
Employees need to know that their bosses don’t see them as tireless
workers or cogs in the machine. They want to be valued for their
contribution to the company but also have their personal life and
boundaries respected. Getting this feedback right for executives
and HR teams is a challenge.
A simple way to identify and understand this potential risk is by
tracking and measuring unlimited PTO. This will allow employers to
gather data and evidence to support internal communications with
employees when concerning trends are spotted. This is particularly
important in the U.S.
Employees Fear Seeming Expendable to Their Employers
American workers are especially addicted to work and are afraid of
appearing expendable to their employer. Many are also guided by the
unhealthy belief that vacations are a sign of weakness instead of a
necessary part of work-life balance. A Center for American Progress
study found that a lot of employees believe taking too many days
off work would cost them bonuses, promotions, and even their jobs.
A Project Time Off report found that more than half of Americans
don’t use all of their vacation days. That same study found roughly
1 in 4 Americans had not taken a vacation day in over a year. Of
those surveyed, the most commonly cited reason for not taking time
off was the fear of being replaced.
Working long stretches without breaks is often unhealthy, harmful,
and even downright dangerous to employees. A number of clinical
studies found that poor vacation habits can actually kill you. A
State University of New York study’s research found that
cardiovascular disease patients who didn’t take annual week-long
vacations were 30% more likely to die from their condition.
The Helsinki Businessmen Studyconcluded that vacations improve
longevity in working adults, and the Journal of Happiness Studies’
research showed that time off is enormously beneficial to mental
health.Predictably, employees who continuously overwork themselves
and fail to take adequate time away from the office are less happy
and less healthy than their more balanced peers.
Organization Can Lose When Employees Have Unlimited PTO
Businesses also stand to lose from vacation-phobic employees. When
employees burn out from being overworked, their productivity
suffers, their health can decline and usually, staff who are
unexpectedly absent from the office increases.
According to a Liberty Mutual analysis of U.S. Bureau of Labor
Statistics, the US economy loses $100 billion annually to
employees’ absenteeism. Circadian, a workforce solutions company,
estimates that absenteeism costs U.S. companies about $3,600 a year
for hourly staff and at least $2,600 for salaried.
It’s clear that employees skipping vacations poses serious
problems, problems only amplified by untracked, unlimited PTO
policies. When people are not given parameters around acceptable
PTO practices, they succumb to peer pressure, take fewer breaks and
Organizations Are Understanding the Limitations of Unlimited PTO
Businesses are starting to catch on and, after realizing the danger
of unlimited, untracked time off, th