Too Much of a Good Thing: The Truth About Unlimited PTO
Pictured: Desk chair with a sign attached that reads, "Out of office."/SergeRandall, iStock
In recent years, many companies have adopted a new approach to paid leave: unlimited paid time off.
On the surface, unlimited PTO may sound like a dream come true, offering employees the freedom to take as much time off as they need. But is unlimited PTO truly unlimited, or is there a catch?
What is Unlimited PTO?
Instead of limiting the number of PTO days employees can take, an unlimited PTO policy encourages staff to take time off as needed, assuming they will exercise good judgment and not abuse the privilege.
Companies may implement this policy to shift the focus from tracking days off to measuring productivity and results.
Perception versus Reality
Indeed reported that between 2015 and 2019, job postings advertising unlimited or open PTO increased 178%. One of the likely reasons for this sharp rise in the policy’s adoption is its use in attracting job candidates and retaining staff.
Still, many employers may be wary of an unlimited PTO policy because they don’t want employees to take advantage of it and burden the rest of the staff.
But in practice, many employers have the opposite issue: employees aren’t taking enough time off. Forbes reported that as of 2023, the average American takes 17 PTO days a year, while workers with unlimited PTO take 10.
Ulises Orozco, the co-founder of PTO Genius, told BioSpace that this is often due to a company’s culture. Even if it’s unintentional, employers can create underlying expectations that discourage employees from taking time off. Factors like peer pressure, workload demands and fear of falling behind can make employees hesitate to take time away from work.
Indeed, Orozco said unlimited PTO has quickly become less attractive to his clients.
“The issue with unlimited is that a lot of folks just simply don’t know how to administer it,” Orozco said. “Folks were told, ‘Hey, you have unlimited PTO,' but it really isn’t unlimited."
This perceived pressure to under-utilize vacation time is only exacerbated in more competitive, fast-paced fields like the life sciences, even though unlimited PTO policies are much more common in the industry. According to BioSpace’s 2023 Benchmarking Paid Time Off report, 22% of respondents said they have an unlimited PTO policy at their jobs in the life sciences, compared to just 4% of all employers in the U.S., according to Forbes.
But only half of all respondents in BioSpace’s report said they take all the PTO they’re entitled to.
Kendra Fuller is an HR consultant for Swift HR Solutions who frequently works with biotech companies. She told BioSpace that many of her clients are shifting away from unlimited PTO for two primary reasons: “One, the concept is pretty ambiguous to team members, and two, there’s a tendency for people not to take PTO. . . . No one wants to be the person who is seen as dipping too much into the PTO.”
A Language Shift
Despite these challenges, Fuller said there are upsides to unlimited PTO policies, especially for employers. One of them is cost. In many traditional PTO policies, workers can accrue unused PTO. If they leave the company before they use the accrued days, the company may have to pay out large sums to those employees to account for them. Such arrangements would not apply to employers that offer unlimited PTO.
Companies may also want to keep an unlimited PTO policy to ease the burden of keeping up with each employee’s total number of days they’ve taken. As many traditional PTO policies require employees to separate their days off into different categories like sick leave, vacation and personal days, Fuller said unlimited PTO may seem attractive to employers who don’t want their employees to always feel the need to disclose their reasons for leave.
For these employers, Fuller said the solution is simpler than they may think. Instead of changing the policy entirely, they could change their language instead.
Fuller added that many employees see the word “unlimited” and don’t realize they will still be expected to ask their managers to approve their time off. She said one option for companies that don’t want to return to a traditional policy with a set amount of days off is to swap the word “unlimited” for “inclusive”—time off for any reason, as long as your manager approves the request.
“I think we have to not be so concerned with what people are doing in their in their time off and their personal lives.”
For employers who are ready to move on from the unlimited model entirely but don’t want to give up the advantage it gives in hiring and employee morale, Orozco said to start with the basics.
No matter what PTO model an employer puts in place, he said the most important thing to remember when writing the policy is to ensure the guidelines are clearly communicated.
“You’d be blown away by how many policies we review that are written in such a way that it makes it complicated to know if you even have time off,” he said.
Orozco said another way to improve employee retention and morale without an unlimited PTO policy is to encourage staff to use their time off with actions, not just words. This could mean implementing a minimum number of days off that a company expects or requires each employee to take. For example, if an employee is allotted 15 paid days off every year, employers may want to require or encourage staff to take at least 10.
He added that including this policy in the job ad is an easy and effective way to attract candidates, especially those who may be wary of companies promising unlimited PTO but not following through.
While the idea of unlimited PTO seems promising, the reality is often more nuanced. Cultural factors, managerial influence and employee perception all affect the extent to which employees feel comfortable and empowered to take advantage of this policy.
Though the data suggest that unlimited PTO does not lead to a significant increase in time off, it highlights the importance of fostering a supportive work culture and encouraging employees to prioritize their well-being. But this intention falls flat when it isn’t supported by action.
Ultimately, Orozco and Fuller agreed that whether unlimited PTO truly lives up to its name depends on the organization’s commitment to fostering a culture that supports employees in taking time off when needed. By addressing the underlying cultural and managerial factors, companies can create an environment where PTO becomes an empowering and beneficial employee benefit, regardless of the policy.