Does Unlimited PTO Make Sense on a Global Scale?
More and more US companies have started offering unlimited PTO as a perk to attract top talent. In fact, the percentage of US businesses offering unlimited PTO in their benefits package rose from 4% in 2016 to 7% in 2020. Slow-but-steady adoption. And since job seekers currently have the ability to be more selective with the roles they accept, unlimited PTO could be an attractive perk—at least in the US.
The US is unique because employees take less time off than employees in other countries. This is because the US doesn’t have a federal minimum requirement for paid time off. The US also prioritizes individual hard work, incentivizing long hours with no breaks.
Another reason is that US companies don’t have to pay out employees for unused PTO at a federal level—some states require PTO payouts. But if PTO is unlimited and the country has no legal minimum, employees are far less likely to take PTO.
So, given the US’s unique approach to PTO, does the unlimited PTO perk make sense outside the US? Ultimately, yes. But a few of the main benefits of unlimited PTO in the US don’t apply in other countries. Let’s dig in.
Unlimited PTO adoption around the world
The US is one of six countries globally that doesn’t have any sort of national paid leave requirement. But that doesn’t necessarily put the US too far behind other countries in terms of unlimited PTO adoption. In 2018:
- 13% of businesses in Europe, the Middle East, and Africa adopted or considered adopting an unlimited PTO policy
- 12% of companies in the Americas adopted or considered adopting an unlimited PTO policy (but remember that the US companies alone hit 7% in 2020)
- 8% of businesses in the Asia Pacific region had adopted or were considering adopting an unlimited PTO policy
However, while countries haven’t necessarily implemented universal unlimited PTO yet, they are ensuring that their employees have a minimum number of paid days off.
Global PTO policies
Each country has its own regulations regarding PTO. Some of the more generous national policies include:
- Argentina offers 14-35 days depending on how long you’ve worked at the company
- Brazil, Finland, Panama, and Peru each guarantee 30 days
- Germany requires 20 days, but most employers offer up to six weeks
- Taiwan offers 3-30 days depending on how long you’ve worked at the company
- The United Arab Emirates guarantees two days per month after six months of work and 30 days per year after a full year of work
Why is unlimited PTO becoming increasingly popular?
As we said before, unlimited PTO has evident benefits for the employees and can help set your business apart in the eyes of potential candidates during recruitment.
But unlimited PTO offers perks to you as the employer too. Unlimited PTO is gaining traction for multiple reasons including:
- It saves employers money because they don’t have to pay employees for unused days off
- It saves HR teams from having to track which category a paid day off belongs in (medical, personal, parental, etc.) or collect doctor’s notes to prove illness
- It increases employee productivity because employees get the rest they need when they’re out of the office
- It reduces employee burnout because they can take a much-needed day off
- It attracts top talent because employees appreciate the work-life balance that comes with unlimited PTO
- It eliminates the “December rush,” when employees use up any paid days off that they’d lose at the end of the year
The drawbacks of unlimited PTO
Many employees and companies approach unlimited PTO with scrutiny and for a good reason. If you choose to offer an unlimited PTO policy, there are a few things you need to look out for.
In a worst-case scenario, your employees may not take advantage of their paid days off because they don’t want to seem like a slacker and don’t have a concrete ballpark for a “reasonable” number of days. Also, some companies might implement unlimited PTO without enough redundancy to guarantee workers can feasibly take time off without coming back to piles of work.
At the other end of the spectrum, you may have employees that take advantage of the system by taking too many days off. Also, some employees may be frustrated that they lose the opportunity to convert unused days into additional compensation should they arrive at the end of a year without taking much PTO.
Successful unlimited PTO policies begin with company cultures built on trust and proactive communication. Success depends on employees genuinely feeling like they can take time off and workflows that allow employees to step away. Some companies even require all employees to take a minimum number of days off each year but let them take unlimited additional time off.
Is unlimited PTO compliant with labor laws around the globe?
Yes. Unlimited PTO is compliant with labor laws worldwide, so long as your international employees take off as many days as mandated by their home country. For example, if you have an employee living in Brazil, you have to ensure they have the opportunity to take at least 30 days off every year.
Also, some countries require you to track and record employee hours worked and time off. When you hire an employee in another country, check the regional regulations for tracking time and paid days off.
Does unlimited PTO make sense internationally?
Yes and no.
Pros of unlimited PTO on a global scale
Other countries already have more strict regulations for PTO than the US, so expanding your unlimited PTO policy on a global level actually makes it easier for you to cater to different countries’ statutory requirements.
As with unlimited PTO in the US, your global employees will be able to take the days off that they genuinely need. And just like in the US, unlimited PTO is generally a big draw for employees in other countries.
Additionally, your employee retention rates will improve because it will be hard for employees anywhere to find a more generous policy than unlimited time off, especially if most companies in their home country offer the national minimum.
Cons of unlimited PTO on a global scale
A handful of the pros for unlimited PTO in the US quickly become cons when transferred to a global scale.
While unlimited PTO in the US saves your HR team some time, they may still have to track PTO depending on where your international employees live. Many countries have regulations for tracking paid days off as well as the number of days the employee must take off.
Additionally, some countries require you to pay employees for the mandatory days off they didn’t take. So you’ll still have to make payouts if an employee takes less PTO than their country’s minimum, even though you offered them more than enough days.
Finally, unlimited PTO may not have the same recruiting power outside the US. International candidates may read “unlimited vacation” as incompatible with their national requirements. As unlimited PTO becomes more standard worldwide, this will be less and less likely.
Alternatives to unlimited PTO
Unlimited PTO on a global scale may not be the right move for every company. But you still have options to offer a competitive PTO package to stand out from other employers on job boards.
Instead of unlimited PTO, you may want to shift from segmented PTO to an all-inclusive plan. Segmented PTO assigns a given number of days for each reason you’d need to be out of the office (X sick days, X vacation days, X parental leave days, etc.)
With an all-inclusive policy, employees have a specific number of days they can take off within a year for whatever reason.
Instead of offering a lump sum of days per year, you can offer PTO as a reward by increasing the number of PTO days available to employees based on the number of months or years they’ve spent at your company.
More flexible hours
Instead of altering your current PTO policy, you may want to offer more flexibility in your employees’ schedules. Especially for remote workers, being able to set their own hours may be more beneficial than having unlimited days off.
Plus, your workers will be able to work when they feel most productive. This isn’t to say that you shouldn’t have a generous PTO policy, and flexible hours may not work for every role and company. But it is an attractive perk for employees across the globe.
Easily manage PTO with PTO by Roots
Even with unlimited PTO, teams need an effective way to track PTO requests and approvals. With Roots, your employees can effortlessly request PTO Slack, and you can approve their requests with the click of a button. Record-keeping becomes easy and centralized, and Slack statuses automatically update to reflect OOO status.
Our PTO system also keeps tabs on who needs some time off and sends automatic reminders when it’s been a while since an employee’s last out-of-office day. Roots brings clarity to the PTO process so you can prepare for when you have fewer hands on deck.
Sound like something you could use? Try Roots today.