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Microsoft is shedding its paid time off (PTO) vacation policy for an unlimited one where staff don't need to accrue vacations or log paid leave days. 

Microsoft's chief people officer Kathleen Hogan announced the move in an email to US employees, detailing how it's bringing a more "flexible model" to its vacation policy.

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So-called unlimited paid time off (UPTO) policies have become a popular tool to attract and keep talent in tech, finance, and other sectors facing staff shortages. According to The Verge, which viewed the memo, Microsoft is calling its policy "Discretionary Time Off". 

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The new policy kicks off on January 16 and applies to new employees too, who no longer need to accrue vacation time. Microsoft is maintaining its 10 corporate holidays, and others categories of leaves of absence. Employees will get a one-time payout in April for any unused vacation balance. 

The new policy only applies to US employees and does not apply to hourly workers. 

Hogan explains the new DTO policy as the next step in its move to more flexible working conditions it introduced in response to the pandemic.  

"How, when, and where we do our jobs has dramatically changed," explains Hogan in the internal memo. "And as we've transformed, modernizing our vacation policy to a more flexible model was a natural next step."

As Cate Chapman, editor of Microsoft-owned LinkedIn News, notes, Microsoft is adopting LinkedIn's DTO policy. LinkedIn switched to DTO in 2015 following Netflix, which introduced unlimited paid leave in 2003 in part to avoid the need for a system to log employees PTO. More recently, Goldman Sachs introduced it for partners and managing directors. 

Until now, Microsoft workers had four weeks PTO and an extra week every sixth year, Chapman notes. Microsoft can save on administrative costs as it moves to more flexible working schedules. 

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According to a story on the BBC, some surveys have also found that staff take fewer holidays after their employer introduces UPTO, and some firms have cancelled the policy after employees developed guilty feelings about taking holidays. 

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