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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. Unlimited holiday time rebalances the equation by also allowing workers to receive maximum flexibility from their employer.
However, these policies might hide more multifaceted implications, and employers need to consider two risks: First, unlimited PTO is a sign that hyperflexibility is here to stay. Second, hyperflexibility might benefit workers inequitably, accentuating the burnout epidemic in some parts of the employee population.
Shattering Work-Life Boundaries
When hyperflexibility is formalized through PTO policies, the temporary “work from anywhere” measures adopted during the pandemic become a permanent fixture of the employee relationship. An implication could be that the burnout we have observed (and perhaps experienced) during the pandemic will become a permanent fixture of work and that flexibility, ironically, will become another source of pressure.
If employees can take as much time as they need, how much can they safely take without being perceived as a slacker by their managers or coworkers? The absence of clear boundaries and rules can actually trigger additional anxiety, reinforcing employees’ guilt about the time they take off. Making hyperflexibility the norm may thus risk institutionalizing burnout.
Hyperflexibility can also unfairly (if unintentionally) penalize some employees when coworkers take time off and shift their workloads to the colleagues left behind. The highest performers are more likely to be committed to their work and their organization — and thus might actually take less, or even zero, time off compared with their colleagues, for fear of abandoning ship. There is thus a risk of adverse selection in the employees who might take advantage of this perk: Those who are less engaged and less responsible might enjoy unlimited time off at the expense of their overworked colleagues. This might happen even in the most trustful and positive organizational culture.
The unintended consequence of hyperflexible PTO policies may, then, be that those highest performers are left behind to work, burdened with a heavier load and at further risk of burnout. The risk for the organization is thus to lose the very best performers instead of preserving them.
More broadly, unlimited PTO policies can lead to an employee sentiment that the situation is deeply unfair. Those workers who don’t take time off — including those unable to take vacation because others have done so — will likely face bottlenecks due to others’ absence. Can forced holidays during a particular time period, such as Christmas, be maintained when the organization is scaling up? It is unlikely that fast-growing organizations, especially when they are expected to serve their customers around the clock, can simply stop operating during a certain period every year.
Ultimately, while unlimited and forced PTO policies may seem to be a good idea in the shift to flexible work and in today’s competitive hiring landscape, the reality is that they may cause more harm than good.