Microsoft is ditching its traditional paid vacation policy and moving to an unlimited paid leave policy.
The tech giant announced last week that U.S. salaried workers will have unlimited paid time off (PTO) under its new "Discretionary Time Off" policy. The policy went into effect Jan. 16, and it does not apply to hourly workers or employees outside of the U.S. Microsoft has roughly 122,000 U.S. employees, although the firm announced Jan. 18 it is planning to lay off approximately 10,000 workers as part of broader cost-cutting measures due to economic uncertainty.
"How, when, and where we do our jobs has dramatically changed," Microsoft Chief People Officer Kathleen Hogan said in an internal memo, released by The Verge. "And as we've transformed, modernizing our vacation policy to a more flexible model was a natural next step."
SHRM Online gathered additional news on the topic.
Other Time Off Still Offered
In addition to the unlimited PTO provided under its new plan, Microsoft will still offer other specific leave options to its employees. Those include 10 corporate holidays as well as days off for physical illness, mental health, jury duty and bereavement. Microsoft also is giving employees a one-time payout in April for unused vacation time.
No Tracking Time Off
Significantly, employees won't have to track their vacation time in the new policy. That might be good news for the employer, which then has less administrative work to do. It also provides another benefit to employers: They won't have to compensate employees who quit with unused and accrued vacation time.
Unlimited PTO Challenges
Microsoft isn't the only firm to have an unlimited time off policy. Employers like Netflix and Salesforce also have similar policies, although research finds unlimited vacation time is a fairly rare offering. The Society for Human Resource Management's (SHRM's) 2022 annual benefits survey found that just 6 percent of organizations offered unlimited leave in 2022. But while some industry insiders say there are benefits to such policies, they also can prove to be problematic for a few different reasons. For one, some research points to the fact that employees then don't take as much time off as when they have a set amount of vacation days.
Generally speaking, some employees may be skeptical of the promise of unlimited PTO, Anjela Mangrum, president of Mangrum Career Solutions in Cincinnati, told SHRM Online last year. That's because they "assume that they'll have to work harder without getting compensated for vacations they never took," she said. As a result, they may feel they've been hoodwinked if there's no way they're actually going to be able to take time off and still get their work done.
Flexibility in the Workplace
Microsoft's Hogan cited new ways of working and a desire for flexibility as reasons why the tech firm is embracing a new unlimited time off policy. While many firms are enhancing leave policies, embracing remote work policies and offering more flexibility as a result of the many changes the COVID-19 pandemic has brought on, some companies are going the opposite direction. The Walt Disney Company, for instance, just told corporate employees this week they will have to be in offices four days a week—a split from many firms that are continuing to largely embrace remote work.