The Tech Big Microsoft has decided to drop its model of paid time off for US employees, and has shifted to the “discretionary time off” system that lets employees have time off when they want to.
As per an email released to Microsoft’s chief human resources director Kathleen Hogan and viewed by Fortune full-time US employees are no longer required to keep track of their vacation time. From January 16 the employees will no more accumulate vacation hours and carry a balance on their vacation or carry over vacation they have used to the next year. The email states that the change in policy is only applicable to US employees, and does not apply to non-exempt or hourly employees.
Microsoft with 122,000 US employees at the end of June is one of the largest companies to have adopted the model of discretionary time off.
“While we’re implementing an approach that is more flexible to taking time off and you don’t have to track time off, we need to ensure we adhere to the highest standards in our work and fulfill our promises,” the email said.
A Microsoft spokesperson could not immediately respond to a request for information. News about the changes was first announced in The Verge.
Prior to the introduction of the new system of time off at a discretionary rate, Microsoft employees received 4 weeks of paid time off each year. Additionally, they was granted an extra week every sixth year, which could be up to six weeks. The two major Microsoft companies, GitHub and OpenAI have already have a system of PTO that can be used in a discretionary manner.
Companies in the tech industry like Netflix as well as Oracle are among the companies that have the same discretionary time off system, although it’s not as common for large corporations.
The system is often referred to in the context of “unlimited time off” it’s not widely adored by employees. Some critics say that the model could lead to employees taking less time off than they would in an official system with a set amount in annual days off due to social pressure that causes employees to be afraid to leave work. Employees could also be penalized in the event that their employer has previously compensated them for vacation days they did not use.
“Whole it feels like cutting costs and we have to verify that you’re doing your job’,” a person at Microsoft spoke about the new policy. “Unlimited PTO is essentially never Net Positive.”
Microsoft keeps the 10 company holidays paid for each year, and their leaves of absence won’t change according to a source in Fortune. Microsoft also plans to maintain “Holistic Health Time Off” which was previously known as mental health and sick days. The leave of absence option are not changed, according to an image of the new regulations as seen through Fortune.
Employees who have not used their vacation days that expire before January 15th will be able to receive one-time payments on their April 14th checks, according to the email.