July 22, 2021
What is an Unlimited PTO Policy, and is it Right for Your Business?
You may have heard that companies like Netflix, LinkedIn, and Oracle are providing unlimited paid time off fo...
For employees, the freedom and peace of mind from a paid time off allowance is crucial.
69% of employees value paid vacation time and paid sick days more than pay raises. This makes PTO one of the most sought-after perks you can offer your staff.
As a business owner, if you’re not offering your staff enough PTO, your business will likely suffer. You’ll struggle to retain your staff, and those who do stick around will likely end up underperforming.
In this article we’ll help you shape your business’ time off policy by sharing the paid time off average in various areas and industries, and explain just why you should make a generous PTO plan a priority.
PTO is paid time off. This is time when your staff are not at work, yet you agree to pay them their usual rate and hours.
This can include many different types of absences. Vacation, sick leave, parental leave, personal days and bereavement leave are just a few examples of what can come under the umbrella of paid time off.
Paid time off, as a whole, is not a necessity under law in the US, however there may be statewide laws regarding different types of time off, such as vacation or sick time.
Private workers in the US have an average of 10 paid vacation days allowed after 1 year of employment, as per the US Bureau of Labor Statistics.
The average rises with length of service (the employee’s time spent at the company). Employees with 5 years’ service average 15 vacation days per year, while after 20 years’ service, the average number of vacation days is 20.
These numbers are for vacation days only – not including public holidays, or other leave types like sick leave.
It also doesn’t take into account how many vacation days staff actually take. 55% of Americans don’t use all their allotted vacation days – adding up to 768 million unused vacation days in total.
Of course, not all businesses are equal. In some industries, it’s more common to see a larger PTO allowance. While some traditionally offer less.
According to the State of PTO Guide by Zenefits, the industries offering the highest number of PTO days on average are:
On the other end of the scale, marketing, public relations, advertising, automotive and mining all come in near the bottom for average PTO days.
Compared to the US, many countries offer much more generous paid time off.
According to the Center for Economic Policy and Research, Europe leads the way in paid vacation days required by law.
France requires staff to receive a minimum 30 paid vacation days per year, as does Spain. The United Kingdom is next, with 28, while Austria, Denmark, Finland, Norway, Spain and Sweden all give 25.
Australia and New Zealand give staff a minimum of 20 working days off per year (not including public holidays), while Japan and Canada both offer 10.
The US is the lowest of all OECD countries in terms of statutory annual leave by law – as they are the only nation that doesn’t have any minimum requirements.
Elsewhere in the world, Brazil and Peru are both generous with PTO, giving workers a minimum of 30 days off per year.
Russia is close behind, with 28 days.
India and Pakistan are two countries who, along with the US, don’t have any legally required minimum for PTO. China, the Philippines (both 5), Mexico and Thailand (both 6) are some other notable countries with smaller than average allowances.
See this interactive map for full details on minimum PTO requirements around the world.
Wondering how your company’s PTO policy should work?
How businesses handle their employees’ PTO will differ from one business to another.
The one feature consistent across all companies is what’s required by law. This is down to the state or country you’re in – check what the law says you have to give in terms of PTO.
Other than that, there are some things you can decide for yourself, such as:
Except the legally-required PTO days, each company can decide how they handle this for their own staff.
Whether or not you’re required to offer time off to your staff, it may be a good idea to err on the side of generosity with this.
As a business owner, there can be a temptation to skimp on paid time off allowances. After all, this is time you’re paying people not to work.
It’s important to realize, however, that your staff need time away from work, without worrying about losing pay. There are a number of reasons paid time off is an essential benefit – not only for your staff, but for your business as well.
Burnout is a real thing. If your staff are overworked, without adequate time off, a state of burnout can happen faster than you think.
Staff need to be able to get away, take a break, and recharge. Working for too long without a vacation is not healthy, and you’ll notice this come through in the standard of your employees’ work.
Your staff needs adequate time to spend time with their families and loved ones. This is especially true if they’re working long hours during a shift. You can’t demand this type of commitment without allowing people the freedom to go on family vacations, or be there for special milestones like birthdays or graduations.
Stress and anxiety can have a huge impact on morale and productivity. You can reduce the presence of these two things by giving staff the peace of mind that, if something happens, they’re covered at work.
We’re talking about sickness, personal issues at home, deaths – your staff needs to know that if they get sick, if something happens to their family, they don’t need to stress about losing a paycheck.
This comes down to giving adequate sick time, personal days, and allowances for things like bereavement leave.
The above benefits will almost certainly result in happier staff. In-depth studies have shown quite clearly that employee happiness has a direct impact on productivity.
So, by giving your employees proper benefits, letting them spend time with family and giving them time off to recharge, you’ll get more productivity in the time they’re on the clock.
Vacation time and paid sick time is a sought-after benefit for employees, as we shared earlier in this article. So by giving generous offers in terms of paid time off, you may be able to make your company more attractive to potential hires.
This means getting better talent that wants to work for you. If your PTO benefits are better, you may be able to beat out bigger companies, with higher salaries, that are tighter around days off.
The big question is how much PTO your staff should get.
It’s hard – in fact, maybe impossible – to give a clear answer that fits for all businesses.
First, you need to consider the country you’re based in, and the minimum number of PTO days you need to give by law.
Realize that this is a minimum, though. Today, with what we know about burnout and the relationship between happiness and productivity, it’s a good idea to be generous with your PTO policy.
You may even want to implement an unlimited PTO policy, which some small businesses (such as ours) use to good effect.
Don’t fear that offering a lot of paid time off to your employees will mean no work gets done. The key is to move to results-based performance indicators, rather than purely time in the office (on on Slack).
This kind of forward thinking will help you build a business that retains talent and stays competitive for years to come.