A woman works on her laptop while on vacation

Types of Vacation Policies

A traditional vacation policy gives employees a set amount of sick days and personal days. If unused, these days don’t roll over into the next year. Employees will be excused in the case of mandatory leave days—absences in line with the federal FMLA policy, bereavement, or military leave. Within the last 20 years, employers have distanced themselves from the old-school vacation policy; PTO policies have become commonplace, and the coveted unlimited vacation policy is on the rise. Yes, there is such a thing as unlimited vacation time.

The Popular PTO Policy

A PTO (paid time off) policy gives employees an allotment of days off per year. Employees can draw from their pool of PTO days for whatever reason, regardless of whether they’re on vacation or taking a sick day. Many employers are shifting to PTO policies because they’re more cost-effective than the standard vacation policy. Employees don’t have to worry about using their sick days when they’ve run out of vacation time; this reduces the amount of unplanned absences and fake sick days, saving the employer money.

PTO policies and traditional policies alike usually reward long-tenured employees. Employees may start with seven days of PTO, which increases to two weeks after two years of employment. By the time an employee has been with the company for 10 years, he or she will have four weeks of PTO. What happens to your paid time off if you don’t use it? Some employers have a “use it or lose it” policy, in which your unused PTO days expire at the end of the year. Alternatively, some states have laws preventing “use it or lose it” PTO policies and apply leftover PTO days to the following year’s amount, up to a predetermined cap.

Unlimited Vacation Time: Too Good to be True?

No, unlimited vacation time doesn’t mean you can disappear and take time off forever. This vacation policy comes with benefits for employees and employers: employees are free to go on a vacation whenever they please and don’t have to worry about using up their PTO. And it doesn’t matter if you’ve been with the company for nine months or nine years—everyone is treated the same under these guidelines.  Employers find that an unlimited vacation policy minimizes work on their end. Administrators no longer have to keep tabs on every single employee’s PTO days, and if an employee resigns, the need to issue payment for his or her PTO is eliminated.

As an employee, all you need to do is notify management of your vacation. Unlimited vacation time may sound like a dream come true, but this policy comes with some drawbacks that you should be aware of, whether you’re an employee or an employer. Although employees are welcome to take time off whenever they want, they will have to keep up with the demands of their workload. An unlimited vacation policy favors salaried or full-time employees who usually receive paid vacation time. On the managerial end of things, employers need to consider how an unlimited vacation policy will work with mandatory time-off policies, such as jury duty or military leave.