Unlimited PTO: Great in theory, but does it fit your company’s culture?

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“When I got my last job, I was told that I had unlimited PTO. It sounded great, but I soon learned that the reality was far different. No one told me it would be difficult to take any given day off, but it really was. The feeling I always got was that I was letting the team down by taking time off.
“When I switched jobs, it was a relief to get 25 days of PTO and I’m actually able to take the time off. It made me think that unlimited PTO really has become code for ‘don’t take time off.’ Is my experience an aberration”

You might think that your experience with this is unusual, but it’s not.

Unlimited Paid Time Off (PTO) has become a perk in demand at a time when flexibility at work is valued more than ever. If you need time off, you still need to get approval for it, but the thought is that you can take the time you need as long as you’re accomplishing what you need to do. The idea behind unlimited PTO is that the employer recognizes that time off is important not only to improve employee morale and mental health but to help boost productivity and performance.  For an employee, unlimited PTO theoretically eliminates the worry about working when you’re ill or taking time off when you need that mental health day.

Today, many well-known companies including Microsoft, Goldman Sachs, Netflix, Zoom, Salesforce, Adobe, Oracle, LinkedIn and more have proudly adopted Unlimited PTO policies.

But the statistics on Unlimited PTO seem to tell another story. While there is a lot of buzz around it, the unlimited PTO policy has not been widely adopted. According to the 2023 Society of Human Resource Management Employee Benefits survey, just 8 percent of employers offer paid open or unlimited leave. One study reported by Forbes found that employees with unlimited PTO took an average of 10  days of PTO per year, compared with the average US worker who takes about 17 days per year.

Marina Galatro, executive human resources consultant at Newfront Insurance, told HR leaders at a recent SHRM conference that unlimited PTO  is helpful for recruitment and retention of employees. It not only allows employees to recharge as needed, but also promotes trust and flexibility at work, and has the potential to improve employee satisfaction and loyalty. From a practical HR standpoint, it avoids that annual year-end crunch when managers try to figure out how much time off employees have left and encourage them to “use it or lose it,” since many traditional PTO banks do not roll over from year to year.

“It avoids this forced usage of time off at the end of the year,” she said. “It is also cost-efficient by reducing administrative burdens on management and reducing balance sheet liabilities.”

But that’s precisely the problem, argued Brian de Haaff, co-founder and CEO of Aha! a software startup, in a piece on LinkedIn. As it reduces the administrative burden on the company, it shifts the burden to the employee.  “Every person is left to negotiate it on their own. Without a defined amount, how much PTO is enough becomes a constant negotiation between managers and teammates.

“Some managers will be more lenient than others in approving leave requests. More junior teammates may feel pressured to prove their status as meaningful contributors and feel uncomfortable taking advantage of the policy. Many managers in organizations with unlimited PTO despise the burden of this governing responsibility.”

Whether the employee can take as much of their unlimited PTO as they would like depends on the culture and whether employees believe they can take the time off. If it doesn’t — and workers feel they will be poorly regarded or considered lazy or greedy if they take time off — they won’t do it. In that case, HR experts say, employees might be better off with a more traditional limited vacation policy.

Geoffrey James, contributing editor for Inc., has called unlimited PTO “the scam of the century,”  which takes vacation which most people consider a “right” and turns it into an “option” that must be constantly negotiated. And that’s very difficult in jobs where people work way more than 40 hours. “While you might daydream about taking a month off, chances are you won’t have the chutzpah to actually do so.”

“On the contrary, you’ll quickly realize that you’ll earn management’s displeasure if you take any vacation at all, because then you’re not being a team-player, which is the exact same logic behind management’s demand for the 100-hour work week.”

Despite the criticism, some companies have found unlimited PTO useful. StaffBuffalo, LLC, a small staffing firm, told Buffalo BusinessFirst that unlimited PTO is especially helpful for scheduling appointments and  things that come up at the last minute. “In positions I’ve held in the past,” I wouldn’t want to take a half-day for something like a doctor’s appointment that came up,” says Co-founder and Partner Lauren Lewis. “I would want to save that PTO for a true vacation and recharge.”

It’s not about taking a week-long vacation every other week – It’s about having flexibility when you need it. “If an employee has to leave a couple hours early for an appointment or to see their kid’s kindergarten graduation, they don’t have to worry about it cutting into their PTO.”

In her discussion, Lewis emphasized that unlimited PTO requires exceptional communications between managers and team members.

Employers don’t want to be in a position to deny time off, but at the same time they don’t want productivity to be hurt. So, they need to check in with their people frequently and maybe even encourage employees to make their requests for time off farther in advance. “You really have to keep communication open around time off, performance and workload,” she says.

So, if you’re thinking about implementing this, experts at SHRM suggest carefully assessing whether unlimited PTO would be a good fit for your company’s culture or not and researching local and state laws around paid sick leave and time off. “Does it work for your whole workforce or just some workers?” Galatro asks.

“Are employees ready for this change? Understand what your employees want and what they value,” she says. “Take time to assess, analyze, plan, design and communicate.”

Educating managers about expectations and how it works is absolutely vital. “It’s flexible — meaning that as a valued employee, we want to encourage you to take time off, but we still need you to get work done,” she said, noting that “unlimited doesn’t mean limitless.”

Although there are no specific allotments to check under unlimited PTO, be sure to track whether employees are actually taking the time off. That way, managers can encourage people to take it. Be sure to market the value of it to employees. And it’s OK to change your mind if it doesn’t work.

“You might try this out, but sometimes it doesn’t work for every organization,” Galatro says. “And that’s OK. You can revert to a previous policy.”

Managers at Work is a monthly column exploring the issues and challenges facing managers. Contact Kathleen Driscoll with questions or comments by email at [email protected]