We are witnessing a new HR trend: unlimited or forced paid time off (PTO), also known as unlimited vacation in the U.S. or, on the other side of the pond, unlimited holidays. The London stockbroker FinnCap recently announced that it will force its employees to take at least four weeks of vacation, following a difficult year that required employees to work longer hours. Online counseling startup Spill asked all of its employees to take two weeks off at Christmas and, further, launched a holiday pledge to incentivize leaders to model positive behavior by taking time off to rest and combat burnout. Consulting firm Deloitte will provide unlimited flexibility on PTO as well. For companies like Deloitte, these policies have become part of their brand, demonstrating an extreme shift to flexible working.
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Unlimited PTO consists of giving employees freedom to choose the amount of time they take off in a working year, along with the autonomy to choose (in coordination with colleagues) when to take it. Crucially, these policies rely on organizations trusting that their teams will continue to get work done under the frame of maximum flexibility, or hyperflexibility. Forced time off, in contrast, stems from the fact that some employees take too little time away to release the pressure they face — in which case, companies must mandate that they take a break.
Rebalancing the Employer-Employee Reciprocity Equation
The pandemic-driven shift to remote work has eroded work-life boundaries and caused an epidemic of burnout. If we can work everywhere and at any time, there is nowhere we can be safe from work.
These developments have spurred staggering resignation rates, further pressuring employers to retain employees any way they can. Enter the new paradigm of hyperflexibility. In theory, unlimited and forced PTO seem to be good ideas. In practice, these policies can often be counterproductive.
On the bright side, unlimited PTO rebalances the reciprocity equation. According to the equity theory of motivation, workers regulate their relationships with employers by continuously evaluating what they are giving — their effort, time, and energy — versus what they are receiving, such as wages, benefits, vacation time, and so on.
When working remotely, employees are giving maximum flexibility — for example, checking emails or notifications far beyond expected working hours.