Is having an unlimited vacation policy good for workers? A 2015 study from Lund University says yes (Arevalo and De Jong, 2015). The research shows that employees feel more satisfied and productive at work when allowed to take as much paid time off (PTO) as they need.

This particular research relied on self-reported, subjective data. Employees at three U.S. tech companies were asked in interviews how they felt having unlimited PTO influenced their satisfaction at work, perceived productivity (“perceived” meaning it isn’t measured, but rather it’s a reporting of how productive people feel), and work-life balance.

What Skeptics Say

Skeptics, including some management experts, are wary of unlimited vacation policies because they may not deliver what’s promised. When organizations technically allow employees to take off as many days as they need, there’s a question of whether employees actually take sufficient time off.

The worry is that even when an organization makes the promise of unlimited time off, company culture frowns upon those who take it. In high-pressure environments, it can be tough to stay away from work. One’s reputation and team dynamic may depend on not taking time off, showing up early, staying late, or all three.

Others argue that because unlimited PTO isn’t always tracked, it’s hard for employees to know whether they’ve taken a fair amount of time off, or the equivalent amount that they would expect to receive if PTO were tracked.

How to Make Unlimited PTO a Success

The researchers from Lund University note that the unlimited vacation policy must be “successfully implemented” for it to have positive effects on employees. So what makes it successful?

Trust is a leading factor. The employer needs to trust that the employee will not abuse the system or take off during an unreasonable time in the work schedule, and the employee needs to trust that the employer (including the company culture and team dynamic) support taking time off.

Another way unlimited PTO can be successful is when it’s seen as part of a flexible work arrangement, similar to work-from-home arrangements or flexible working hours. Similar to unlimited PTO, these policies rely on having trust between employer and employee. But they can also build greater trust between them, too. Employees feel valued because they are allowed to work with greater autonomy. And employers have trust in their employees when they stay productive no matter where they are or how they get their work done.

Resources

Arevalo, L. M., & De Jong, C. L. U. (2015). “Unlimited Vacation Policies: Their influence on employees,” Lund University, Department of Business Administration, Mater’s Programme in Management. Retrieved April 10, 2017 from https://lup.lub.lu.se/student-papers/search/publication/7369132.

Image by jenny downing, CC.