Microsoft is providing its employees in the United States with uncapped vacation time. Today, Kathleen Hogan, Microsoft’s chief people officer, sent a statement to the company’s employees in which she made the revelation.
All salaried employees in the United States will be eligible for what Microsoft dubs “Discretionary Time Off,” which is their unlimited vacation time policy.
Hogan explains in the message they sent around the office that “how, when, and where we do our duties has changed tremendously.”
It was only logical for us to update our vacation policy to a model that allows for more flexibility as we went through this transformation process.
Because of the changes, which will take effect on January 16th, even newly hired employees at Microsoft will no longer have to wait before beginning to accumulate vacation time.
Alongside its new policy of providing employees with unlimited vacation time, Microsoft will also provide employees with ten paid holidays, leaves of absence, time off for illness or mental health reasons, time away for jury duty or mourning, and other types of time off.
Employees with a vacation balance that has yet to be used will get a one-time reimbursement in April.
The limitless time off will not be granted to hourly workers at Microsoft, nor will it be offered to staff working outside the US.
According to Microsoft, it is challenging to offer unlimited time off to hourly workers because of federal and state wage and hour laws.
However, employees working outside of the United States will keep their current vacation benefits because other countries have different laws and regulations.
Microsoft is not likely the first large technology business to implement limitless vacation time for its employees.
Employees at Salesforce, Microsoft-owned LinkedIn, Oracle, and Netflix have access to equal amounts of available vacation time according to the companies’ respective policies.
The new policy comes after Microsoft made it possible for more workers to work from home permanently and after the company awarded employees a pandemic bonus of $1,500.
Microsoft will amend its policy so that employees in the United States can take as much time off as they want.
This move is intended to give employees more leeway, but it will also have the unexpected effect of saving money for Redmond.
In a statement to employees, Microsoft’s Chief People Officer Kathleen Hogan stated that “how, when, and where we conduct our jobs has fundamentally altered.”
The Verge was the first publication to report on Hogan’s comments. It was only logical for us to update our vacation policy to a model that allows for more flexibility as we went through this transformation process.
The world’s largest maker of computer operating systems will stop offering paid vacation of four weeks per year to salaried workers in the United States beginning the week after next.
Workers will receive ten paid holidays each year from the company and free vacation time. In addition, they will be eligible for time off for reasons such as illness, issues related to mental health, grief, and jury duty.
There will be no waiting period for newly hired Microsoft employees to begin accruing holiday pay.
Microsoft has announced that employees who have a holiday entitlement but have not utilized it will receive a one-time payment in April.
This policy will not apply to independent contractors who are paid hourly.
This action is not unprecedented: it aligns Microsoft with LinkedIn, which it purchased for $26.6 billion in 2016, and a slew of other large corporations such as Oracle, Salesforce, Goldman Sachs, and Netflix. The move brings Microsoft into line with these companies.
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Controversial
Some tax experts consider unlimited paid time off (PTO) to be a “highly problematic topic,” and the “result of such a policy greatly depends on the company’s internal climate and implementation,” according to the website John The CPA.
Tech mills that grind as much as they can out of their personnel – think of Twitter 2.0 as an example – may not see employees favorably if they ask for discretionary leave an excessive amount of the time.
Companies that offer unlimited time off typically do not have tiered policies and require less maintenance of financial and HR schedules for paid time off (PTO) hours. Companies that offer unlimited time off typically do not have a liability on their balance sheet for paid time off.
On Hacker News, there is a heated discussion taking place about the matter. When taking time off is seen as an approval bestowed by management rather than an entitlement inherent to the agreement when you started working, it is very likely that the workers will face social pressures when doing so.
This is because taking time off is seen as an approval bestowed by management.”
Another person pointed out that a company, “If a manager puts enough so-called “important work” in front of you, they won’t be able to agree to your request for some discretionary time off.
Therefore, the firm controls the amount of time off that employees receive since it establishes unreasonable deadlines and workloads.”
On Blind, marketed as an anonymous community app for the workplace, it was brought to the user’s attention that paid time off is recorded on the company’s accounting books under the compensation section and is added to the cost of labor.
“That sum of money is unavailable to the corporation for use in any other capacity. Because unlimited PTO does not have an impact on the company’s finances, management is free to reallocate those funds however they see fit.
Assuming that each of your employees earns $100 per hour and has 160 hours of vacation time to use, you will have $1.6 million in untapped resources if you have 100 workers earning $100 per hour.
If you implement unlimited paid time off, that frees up $1.6 million for the corporation to use in other areas.”
An expedited route to exhaustion and stress? Possibly. According to the conclusions drawn by John, The CPA, “Good HR departments will keep track of the amount of leave taken by employees under the new policy and compare it to the amount of leave taken under the previous policy to understand how changes in employee behavior can impact the organization.”
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Taking place a growing number of times
Nevertheless, support for such programs is continuously on the rise. According to research published by the job search website Glassdoor in July 2022, many firms are providing limitless paid time off for employees, and employees are clamoring for it.
The percentage of benefits reviews that mentioned unlimited policies increased from 3.7 percent in 2017 to 10.7 percent the following year, and 88 percent of employee reviews of unlimited time off policies in 2022 were positive. In 2017, the percentage of benefits reviews that mentioned unlimited policies was 3.7 percent.
The employees may experience a variety of outcomes as a result of this change. It may help maintain a healthy work-life balance and increase morale.
However, this also produces an atmosphere in which expectations must be clearly communicated and places the responsibility for determining the amount of time off that employees should take on their shoulders.
This can result in scheduling conflicts and employees feeling pressured to take fewer vacations.
According to the recruiting services company Zippia, employees at companies with discretionary time off policies typically take less time off than those working for organizations that offer regular paid time off benefits. This can lead to increased worker burnout.
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Microsoft is going to provide employees with an endless amount of vacation time.
Microsoft is getting rid of its paid time off (PTO) vacation policy in favor of an unlimited one, freeing employees from the obligation of accumulating vacation time or keeping track of paid leave days.
Policies offering so-called unlimited paid time off (UPTO) have become a popular instrument for luring and retaining talent in industries such as technology, finance, and other fields experiencing staff shortages.
The phrase “Discretionary Time Off” will refer to Microsoft’s policy, as reported by The Verge, which has seen the document.
The new policy will take effect on January 16 and apply to all employees, including new hires, who will no longer be required to accumulate vacation time before using it.
Microsoft will continue to observe its ten official company holidays in addition to its various types of leaves of absence. Every employee will get a lump-sum payment in April for unused vacation time.
The new rule does not apply to hourly workers but only to salaried personnel in the United States.
Hogan explains that the newly implemented DTO policy is the next phase in the company’s transition to more flexible working circumstances, which was done in reaction to the epidemic.
Hogan explains in the message they sent around the office that “how, when, and where we do our duties has changed tremendously.”
It was only logical for us to update our vacation policy to a model that allows for more flexibility as we went through this transformation process.
According to Cate Chapman, the editor of LinkedIn News, Microsoft owns, Microsoft will implement LinkedIn’s DTO policy.
Following in the footsteps of Netflix, which in 2003 adopted unlimited paid vacation partly to obviate the necessity for a system to monitor employees’ PTO, LinkedIn converted to DTO in 2015.
Netflix was the company that inspired this change. Goldman Sachs only recently began offering it to its partners and managing directors.
