PTO, better known as Paid Time Off, is something every employee is entitled to – think holiday, sick leave, maternity leave, etc. But there is a growing trend for UK companies, particularly tech companies, that want to attract the best talent; they’re offering unlimited PTO.

Yet another Americanism that has been adopted in the UK, but sadly it doesn’t work for everyone. Indeed, one major UK company is now axing their PTO policy, citing employee anxiety. They found that in reality, their staff took fewer days of holiday, felt guilty for taking their unlimited PTO, created a lack of cohesion within teams and many employees felt anxious taking time off with deadlines to meet.

So, is this one idea from abroad that we really shouldn’t be adopting?

What is PTO?

PTO is Paid Time Off, or annual leave, or statutory leave entitlement, or plain and simple holiday. It’s the time you can take off work and still get paid. In the UK, as well as it being nice to have time off to relax and de-stress, every worker is entitled to PTO by law. How much time off you get depends on your working hours.

Currently, those who work a five-day week are legally entitled to 5.6 weeks – 28 days – and part time/shift employees also get their share of this entitlement. But it must be remembered that this PTO usually includes bank holidays, Easter and Christmas.

Types of PTO

PTO comes in a variety of forms, including:

• Annual leave/holiday – by law, full time, five-day week employees are entitled to 28 days leave a year, while part time and shift workers, or irregular hours workers, are also entitled to this on a pro-rata basis. But you will have to include Christmas, Easter and other bank holidays into this entitlement. In addition, some employers insist on at least two weeks (10 days) taken concurrently during the year – it may be in your employment contract.
• Maternity leave – this is the time off an employee can take after the birth of their child. In fact, it can start (and usually does) 11 weeks prior to their due date. The maximum amount of time for maternity leave is 52 weeks in the UK and you are paid for this time off, albeit tapered. However, it is broken down into two parts: Ordinary Maternity Leave covers the first 26 weeks, whilst Additional Maternity Leave covers the remaining 26 weeks.
• Paternity leave – applicable to the partner of a mother who’s given birth, or a couple who have adopted, they are entitled to two weeks statutory paternity leave, consecutively or separately, and before the 56th day of their child’s birth.
• Statutory sick pay – in the UK, SSP covers employees who are ill and off work for a minimum of four consecutive days, including non-work days (weekends). Employers will start paying this from the fourth day for a maximum of 28 weeks. However, your taxes and National Insurance contributions will be deducted.
• Compassionate leave – also known as bereavement leave, this covers time off for an employee should a dependent or relative becomes ill, or dies. However, one point to remember is this leave is at the discretion of the employer; they are not legally obliged to offer compassionate leave, paid or otherwise, but most employers do. That said, employees are entitled to unpaid time off for an illness/injury/assault, their child involved in an incident at their school, or for care arrangement disruption.

An increase in unlimited PTO

In recent years, companies have faced challenges in recruiting and retaining the best talent, often having to sweeten the job offer with a variety of employee benefits. Unlimited PTO has become one of those benefits, particularly for senior staff.

Once unheard of in the UK and left to the American companies, like LinkedIn and Netflix, it is now being adopted by a variety of large companies in this country, such as Virgin, Goldman Sachs, Visualsoft and Graphcore.

The thing is; what works for one company doesn’t necessarily translate over to another. It’s not that the idea isn’t worthy; encouraging employees to take ownership of their workload, offering a better work-life balance and supporting a growing need for greater work flexibility. In fact, there are quite a few benefits to unlimited PTO, including: 

• Empowering your work teams and increased employee satisfaction.
• Provides greater flexibility for a better work-life balance.
• Establishing an open policy to manage employee holidays, attracting and retaining quality talent.
• Creates an environment of employee work ownership and responsibility, thereby increasing productivity.
• Boost employee morale and motivation by improving the workplace culture.
• Developing trust between employer and employee.

However, there is also a downside to unlimited PTO:

• A lack of specific holiday allowance can lead to anxiety as employees feel they are being judged on the amount of time they take off.
• Middle and senior management may feel they can’t take the time off.
• May lead to unfairness – some employees won’t have a problem taking plenty of days off; others will think otherwise and worry they would be adding pressure on their colleagues.
• Can lead to staffing issues, and therefore productivity levels, if not managed properly.
• Does not fit into some industries, such as manufacturing or service sectors.
• Without tracking, it may lead to some employees being ‘away’ for long periods being missed.
• Challenges to implementing and managing unlimited PTO policies.

Could an unlimited PTO policy work for you?

If there is already a shared culture built on mutual trust and responsibility within the company, a well-managed unlimited PTO policy may well work. However, if that’s not the case – and it pays to be really honest at this point – it’s quite likely that an unlimited PTO policy is not suitable.

There’s also the problem that unlimited PTO isn’t realistic for some industries and types of employment, such as service/manufacturing/production or those who are on shift work. Plus there’s the legal aspect to consider, how to define a policy that incorporates very clear guidelines, being able to successfully track the time off taken by every employee entitled to unlimited PTO and measuring performance.

What might sound great often, in reality, proves to be otherwise. There’s also the premise of “if it isn’t broken, why fit it?” 28 days holiday a year is not a small number; many companies offer the opportunity of extending that for years worked. How many of us, if we’re truthful, have enough of a flexible workload to be able to take any more time off work? Probably nowhere near as many as you may think.

Maybe this is one American invention that is probably best left to the Americans.

Auxato is a leading UK executive search and recruitment consultancy specialising in sourcing the best communications and marketing professionals. So, if you’re looking for the right job or have a role in marketing PR or communications, let Auxato take the strain and help you find your next perfect employee or job in a cost-effective, streamlined way.