While unlimited paid time off (PTO) policies are a relatively recent invention, they have quickly caught on. By 2023, 8% of organizations offered unlimited PTO. Thanks to the tight labor market, that number is likely to keep growing. Unlimited PTO can boost your talent acquisition, increase productivity, and improve employee satisfaction. However, in order for your PTO policy to work, you must be able to implement it effectively. 

How To Implement an Unlimited Paid Leave Policy 

To make sure your unlimited PTO policy is run as effectively as possible, you should take your time designing the policy. Determine what you want to accomplish, build a written policy, and incorporate it into your handbook. Then, make sure to communicate your policy to managers and workers. With a bit of planning, you can ensure a seamless implementation of your new PTO policy.

Understand the Why 

Before you go any further, you should think carefully. Is this policy really right for your company’s needs? 

In a recent Mission to Grow podcast on, “Unlimited PTO: The Positives and Negatives of Unlimited Paid Time Off”, Mary Simmons, Asure’s VP of HR Compliance and Consulting, discussed how she asks organizations about their motivation to implement and track their unlimited PTO programs. “I need to hear the right reasons, and then I walk them through the different ways we could write the policy. 50 percent of the time they go, ‘Okay, stop there, Mary, because it is work for the organization if you’re going to track it,’” Simmons says. “And if it’s not being tracked, it’s work for the employees, which may not be something the organization’s comfortable with.”

To design effective unlimited PTO policies, you need to know why you’re doing it. You’ll also need to create a plan for tracking PTO, approving requests, and investigating abuse. If that sounds like more work than your current PTO policy, it’s worth considering if you really want to make the switch.

Create a Written Policy 

No matter what type of PTO policy you make, you will need to put the policy into writing. For instance, you may want to set rules about how many days in a row a worker can ask off. 

Even if you don’t want to make rules about consecutive days off of work, you still need to create some guidelines. Workers should know that their assignments must be finished before they can go on leave. Additionally, your managers will need guidance and training about the policy.

Add It to Your Employee Handbook and Onboarding Materials 

Once you’ve created a written PTO policy, you should add it to your employee handbook and onboarding materials. Normally, this type of policy will only take up just a page or two in the employee handbook. In addition to covering the policy during onboarding, it’s a good idea to have a digital or physical copy that employees can easily refer to whenever they have questions.

Communicate With Managers 

Managers need special training about unlimited PTO policies. Other than being trained on the basics of the policy, they need to have a deeper understanding of when to send workers to the HR department for questions. 

For instance, the Family and Medical Leave Act (FMLA) covers workers who work for at least 1,250 hours in a year at a qualified company. Unlimited PTO plans need to track why workers are taking leave so that the company can determine if it is FMLA-qualified leave. Additionally, the workplace needs to decide how much FMLA leave will be paid for by the company because the law only requires companies to provide 12 weeks of unpaid leave. 

Often, workplaces that offer unlimited PTO will pay for a few weeks of FMLA leave. Afterward, the remainder of the FMLA leave is unpaid. Because FMLA leave is a legal requirement, tracking this type of leave is important. Managers must be trained to direct employees to the HR department whenever this type of compliance issue comes up. 

Set Clear Expectations 

With an unlimited PTO policy, employers must clarify their expectations. For instance, you should require employees to finish their individual workload before they go on leave. Otherwise, it’d be unfair to expect other workers to take on the added work.

You may also want to consider clarifying PTO policy requirements in other ways. 

• Limit which employees are eligible for the policy, such as exempt or non-exempt workers.
• Determine how employees can make requests. 
• Clarify how you will investigate potential abuse. 
• Restrict how many consecutive days can be requested off. 
• Black out specific days or weeks so that workers can’t take time off during busy times.
• Set specific performance or productivity requirements for taking time off. 

Develop a Process for Making Requests 

If you simply allowed workers to decide if they felt like showing up each day, you might not have enough employees on hand to run your day-to-day operations. Additionally, you need to carefully design the request process so that it is viewed as fair by your workers.

Discuss How Approvals Work

Managers and employees should understand what it takes for a PTO request to be approved. For example, they need to know how soon requests have to be made and why a request might be rejected. 

Review Limitations 

As a part of your written policy, you should describe any limitations that might be in place. Many workplaces set rules about how many days someone can take off in a row. Most likely, you will also want to restrict how soon workers are able to access leave. At most organizations, workers have to be at the company for at least 90 days before they can access their unlimited PTO. 

Often, employers are concerned about the potential for unlimited PTO to be abused. In reality, abuse is fairly rare when the policy is well-designed and implemented. If a worker can’t take time off until their tasks are wrapped up, it’s hard for them to take an excessive amount of time off. Instead, PTO serves as an encouragement for workers to become more productive and efficient. 

Create an Investigative Process

While abuse is rare, you should still have measures in place to detect and respond to it. This is one of the reasons why it is so essential to clarify the rules for requesting and taking time off. If there are clear rules in place, it will be easier to tell when the rules have been violated. Then, you can deal with the violation in an appropriate fashion.

Encourage Workers to Use Extra Vacation Days 

Many companies are worried about employees abusing vacation days, but the opposite is more frequently the case. Workers may be afraid of taking PTO because they don’t want to seem lazy. They want to appear committed to their job and ready for a promotion, so they avoid taking time off.

Unfortunately, this can eventually lead the worker to become seriously burned out. Because of this risk, employers should encourage their workers to take PTO on a regular basis.

How Self-Managed PTO Works 

At Asure, we just adopted an unlimited PTO policy for our employees. We call it a self-managed PTO policy because workers are in charge of when they need to take a day off for a vacation or doctor’s appointment. 

Self-managed PTO helps to engender goodwill among your workforce and shows that you trust your workers. It can boost your productivity, increase worker satisfaction, and enhance your attractiveness to prospective applicants. 

For the employer, self-managed PTO also costs less than traditional PTO. Workers take about the same number of days off, and some studies even show that they take less time off. When the employee terminates their position, you don’t have to pay for any accrued time off. As a result, a self-managed PTO policy is a win-win for employees and employers.

Discover How To Set up Unlimited PTO at Your Company 

Whether you are a small business or a large corporation, unlimited PTO provides a number of benefits for your employees. To maximize these benefits, you need to be clear about the program’s goals and restrictions. Additionally, you should incorporate your PTO policy information into your employee handbook and onboarding materials so that employees know what to expect. 

If you’re interested in learning more about how to implement unlimited PTO at your company, we can help. To learn more, reach out to our team of small business HR and payroll experts today.