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Is your paid time off policy still relevant?

Last updated on
December 6, 2021
Is your paid time off policy still relevant?

Paid time off policies have always been a core expression of a company’s culture, but increasingly, they are becoming a battleground for attracting and keeping talent. Gone are the days when two weeks vacation and a few fixed holidays here and there was the norm; time off policy has risen to become a key competitive differentiator for communicating your values and rewarding an increasingly stressed, uninspired, and burnt out workforce. As people expect more flexibility and social responsibility from their employers, it’s time to seriously question whether your paid time off policy is still relevant.

When PTO policy breaks down

We all know that taking breaks, protecting downtime, and getting plenty of rest are vital for people to stay healthy and function at their best. Yet for some reason, many employees—particularly in the US—seem unable to actually take time off.

The experience of the past two years has brought this issue into sharp focus: even as boundaries between work and private lives became increasingly blurred, and people struggled to live in an environment of protracted uncertainty, few workers took their full vacation allowance. Yet this trend existed even before the COVID-19 pandemic fully sank in. In 2018, American employees left behind 768 million days of unused PTO, a 9% increase from 2017. The US is also the only advanced economy in the world that doesn’t mandate that employers provide paid vacation time.

There are many factors which cause workers not to take their PTO; it could be concerns about returning to a huge pile of work, feeling like you’re the only person who can do your job, or fear of missing out on a promotion. Perhaps it’s also the lingering influence of the American Dream—that if you try hard enough, you can achieve anything you want.

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The cultural significance of your PTO policy

But with an evolving legislative landscape, a progressive and diverse incoming workforce, and plenty of competition for talent, things are beginning to change. Paid time off is becoming a direct statement of company culture and compassion, and by overhauling their PTO, companies are increasingly trying to meet both the needs of their business with that of their workforce.

The pandemic has undoubtedly played a large part in these changes. A recent survey showed that 42% of companies have made changes to PTO due to the pandemic, and there are several reasons for this. Firstly, 2020 was simply a year of extreme stress: burnout rocketed, as did the inability to disconnect, and many employees found it hard to justify taking time off while working from home. Fears over taking time off when the job market was so unpredictable no doubt played a part too—as did the fact that you couldn’t actually travel.

But there are other reasons the pandemic had such a significant effect on the way we view PTO. 2020 was also the year that changed corporate social responsibility, and companies are now expected to show that they care about their employees and value them as individuals and human beings. Over the past two years, many of us have reconsidered our relationship with work, reflecting on what we value and how much we want to work.

2021 has also been the year of ‘The Great Resignation’, which has heightened the need to retain and appeal to the best talent. “There’s just more openness to the fact that people need flexibility, and when they have that flexibility, they are more engaged, more productive and more likely to stay with the organization,” says Mikaela Kiner, founder and CEO of Seattle consulting firm Uniquely HR.

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How businesses are rethinking paid time off

The biggest trend to come out of all of this is the move away from a one-size-fits-all approach to time off policy, with individuals being offered a more customizable policy that works for them. Organizations are also showing greater awareness of workforce diversity and the need for inclusivity: Spotify, for example, is using PTO to acknowledge the cultural and religious diversity of its 2,000+ employees—allowing their workers to swap traditional holidays like Christmas for days of their choosing. Increasingly, companies are also moving away from an uncomfortable binary of “vacation” and “sick” leave to embrace more general paid time off policies.

Seven popular paid time off policy trends

1. Unlimited holiday

Ever since companies like Netflix, LinkedIn and Workday adopted a policy of unlimited PTO, there’s been quite a buzz around it, and it’s been slowly making an appearance outside of Silicon Valley.  As the name suggests, unlimited PTO is unlimited—as long as employees have completed their work and have their manager’s approval.

For employees, unlimited PTO gives them the ability to create a work/life balance that suits the way they want to live their life, and gives them more freedom and flexibility. However, some companies have found that after implementing an unlimited PTO policy, employees actually take less time off.

2. Burnout breaks

A newer PTO that’s also been making waves is the idea of “burnout breaks”. This summer, in their fight against burnout, dating App Bumble closed for a week to give all their staff a paid vacation. We know that burnout has soared over the past two years, so forcing all employees to take time off can help them get the break they need.

One big perk of this policy is that—unlike unlimited PTO, where it was found that not everyone takes their paid holiday—everyone is given the same chance to take a proper break. However, while the focus on mental health and wellness is welcome, it’s important to note that mental health “holidays” don’t fix the root cause of organizational burnout.

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3. Floating holiday

Some companies are offering employees floating holidays on top of their other paid holiday. These holidays don’t carry over into the next year, and can be used any way the employee wants; they could take their floating holiday to celebrate their birthday, for a cultural or religious festival, to volunteer for social causes, or simply to enjoy a day at home.

4. Forced holiday

Then there’s forced time off, where employees are required to take their minimum PTO and aren’t allowed to accrue or carry-over days into the next year. Because technology has made it so hard to disconnect, some companies are taking further steps to ensure employees actually relax while they’re away; at Moz, for example, workers are given $7,500 each year to put towards a vacation—as long as they agree they won’t work while they’re away.

Other ways of utilizing forced holidays involve things like having a Christmas shutdown for the entire organization. Doing this allows employees to actually enjoy their time off, because they won’t be worrying that they’ll be behind when they get back.

5. Reduced working week

The reduced working week, where employees work around 32 hours a week—usually over four days, although sometimes five six-hour days—is another new PTO trend. Results have been mixed, however; while productivity often went up and sick days went down, employees who already had vague lines between their personal and professional lives often found it harder to maintain a healthy work/life balance and meet deadlines.

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6. Flexible work during health-related life events

Fashion giant ASOS recently provided their staff with paid time off and flexible working options for several different "health-related life events”. This includes menopause, pregnancy loss, fertility treatment, cancer treatment, gender reassignment surgery, and escaping domestic violence.

Workers who are going through menopause are now able to work flexibly, take short notice leave or work from home, and employees dealing with abortion or miscarriage can take up to 10 days of paid leave. Not only do these new policies help break down the taboos surrounding some of these issues, they also provide support when people experience unexpected challenges in life.

7. Pawternity leave

Another form of PTO is what’s being called “pawternity leave”, where employees get paid time off to bond with and look after a new pet. While it might sound like it’ll never catch on—and a survey of 34,000 people found that 61% of people were against it—some companies are already offering it.

Mars Petcare gives workers 10 hours of paid leave to look after a new pet, and craft beer company BrewDog has offered their employees a week’s “puppy parental leave” since 2017.

While these paid time off trends are all different, they all have something in common: a focus and appreciation of employee wellbeing and individuality. We know that the current workforce is looking for far more than a promotion and a decent paycheck; they want to feel valued, part of something, and as though they’re actually contributing something meaningful. Recognition of individual difference—in terms of lifestyle choices, cultural identity, and health—are all central to this.

Ultimately, in this ever-evolving professional landscape, giving employees more control over how they want to take their time off, and showing them that you care about their health and wellbeing, will go a long way.

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