Ask HR: The Rationale of Unlimited PTO

SHRM President and Chief Executive Officer Johnny C. Taylor, Jr., SHRM-SCP, answers HR questions each week.

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I’ve worked full time directly for employers throughout my career. I’m looking for another position but need help finding full-time roles that fit my background. I’ve come across several contract and temp opportunities. Are they worthwhile? What are some of the pros and cons of taking short-term work opportunities? —Briana

Taking on contract or temporary work can be a smart strategic move, especially in today’s job market. While these types of work offer flexibility and opportunities to gain new experience, weighing the pros and cons before deciding is essential.

The potential benefits of contract or temporary roles include:

• A foot in the door. These roles can provide an avenue to a new company or industry and an opportunity to demonstrate your skills to a potential new full-time employer.
• Flexibility. These positions often offer more freedom regarding hours and project duration, which can be beneficial if you have other commitments.
• Skills development. You can gain new skills and knowledge, enhancing your marketability for future full-time roles.
• Networking opportunities. Working on temporary projects can connect you with new professionals and expand your network.

Potential downsides to consider include:

• Lack of stability. Contract and temporary work often lack the long-term security of full-time employment.
• Limited benefits. These positions may not offer the same benefits as full-time roles, such as health insurance, retirement plans, and paid time off.
• Advancement challenges. Career advancement within a contract or temporary role can be limited compared to full-time positions.

Evaluate your financial situation and determine if the potential salary from a contract or temporary role aligns with your needs. Assess your current benefits coverage and determine if you can afford to forgo company-provided benefits. Consider how a contract or temporary role fits into your long-term career plans and if it can help you achieve your goals. Evaluate your personal and professional commitments to determine if the flexibility offered by contract or temporary work aligns with your needs.

Ultimately, deciding whether to pursue contract or temporary work depends on your circumstances and career goals. Carefully consider the pros and cons before deciding. And best of luck in your search!

In talking with a former boss, I learned that the company had changed its vacation policy to unlimited paid time off (PTO), with the only caveat being that you can’t permanently change your schedule (for example, you can’t take every Friday off and create a four-day workweek). Upon learning about the change in vacation policy at my previous company, I couldn’t help but wonder about its rationale. I initially thought it might be a strategy to avoid vacation accruals and the subsequent payout of unused days. Is this a correct assumption? —Conan

You’re not alone in questioning the underlying motivations behind unlimited PTO policies. While avoiding vacation accruals and payouts is certainly one factor, there are several other reasons why companies implement such policies.

Here’s a breakdown of the potential benefits for companies and employees:

• Attracting and retaining top talent. Unlimited PTO, or open leave, can be a powerful recruitment and retention tool, especially for younger workers who value flexibility and work/life integration.
• Boosting employee morale and productivity. Allowing employees to take time off when needed can reduce stress, increase job satisfaction, and improve productivity.
• Reducing administrative burden. Unlimited leave policies can simplify time-off administration for employees, managers, and HR departments.
• Promoting a culture of trust. By offering unlimited PTO, companies can demonstrate their confidence in employees and their commitment to work/life integration.

Though unlimited PTO has tremendous benefits, it also presents the potential for abuse, along with other unintended consequences. Without clear guidelines and expectations, some employees may take excessive time off, negatively impacting team productivity and morale. In some cases, unlimited leave policies can pressure employees to work longer hours or avoid taking time off to avoid appearing less committed.

While unlimited leave can benefit employees and employers, it’s vital to consider potential drawbacks and implement the policy effectively. Clear guidelines and expectations, combined with a culture of trust, are essential for success.