Some companies’ Unlimited Paid Time Off (UPTO) policies cost each employee $2,000 annually, according to data from the startup company Sorbet, which manages employee vacation days for companies.
Declaring an unrestricted vacation creates in employees a false sense of concern for their well-being. Still, in practice, it is a financial ploy for the company’s benefit under the guise of a generous benefit.
According to the data, employees in those organizations take approximately 13 vacation days each year, compared to 15 vacation days in companies with a vacation quota. This is due to either a lack of desire to utilize the benefit provided to them or a perception that they have already “been overused,” in the absence of a clear and agreed-upon quantity on all sides.
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In most companies that regulate the vacation days, employees are entitled at the end of the year to compensation for unused days, out of the average quota of 20 vacation days given to them, or to save the remaining days for subsequent years. The financial implication of an unlimited vacation policy is a loss of income of $ 2,000 per employee and a cumulative profit of hundreds of thousands and even millions of dollars to those companies that give unlimited vacations.
Beyond the obvious financial cost to employees, according to Vital Eilat-Raichel, CEO of Sorba, an unlimited vacation policy causes a hidden tension among employees, as it is regarded as exploitation and a lack of motivation. Employees who took time off for medical or other personal reasons have been singled out by corporations and, in some cases, dismissed.
Sorbet’s platform analyzes company vacation records and provides personalized recommendations to employees on when to take vacation days in a way that best suits both their plans and company constraints and thus reduces the harm to staff activity and goal achievement.
The system developed by Sorbet resulted in a 15% increase in vacation day utilization, benefiting both parties. Employees and a corporation that genuinely cares about their well-being.
Additionally, the system enables employees to convert unused vacation days into immediately available money. The advantage for the companies is the reduction of future liabilities in the balance sheet, which are linked to an increase in the employee’s salary and sometimes add up to huge sums and an increase in the company’s tax refund in the current year. Sorbet was founded in 2019 by CEO Vital Eilat-Raichel, CTO Eliaz Shapira, and Rami Kesterstein. The company raised $ 21 million from funds led by Group 11 of Dovi Frances and featuring Maron Capital and Viola Ventures. The company employs 45 people at the development center in Tel Aviv, New York, and Kiev
