Unlimited PTO (paid time off), also called unlimited vacation, is one of the top emerging benefits among start-ups and high-growth organizations in particular competing for talent. By now, most of us have seen it on job listings, heard about it from friends switching jobs or even experienced it first-hand. However, if you are among those still wondering “what is unlimited PTO?” or “how does unlimited PTO work?” and its pros and cons, you’ve come to the right place. In this article you’ll find answers to these and more questions about this benefit that for many has become more important than earning a higher salary.

The United States is a great country with an advanced economy, but when it comes to guaranteeing its workers paid vacation days, paid sick days, and paid holidays we fall short. As per the Fair Labor Standards Act (FLSA), there are in fact no national requirements for businesses in the U.S. to offer their employees any sort of regular, let alone unlimited, paid time off policy. While workers in the European Union are legally guaranteed at least 20 to 30 paid vacation days per year, in the U.S. close to 1 in 4 workers do not receive any.

American workers in the private sector with any sort of PTO policy enjoy an average of 10 days of paid leave in a year. This numbers goes up to 23 days per year for those who’ve worked for over 20 years. Research also show that Midwest and Southeast states offer the lowest number of PTO days, while states in the Northeast offer 18% above the national average.

What is Unlimited PTO?

An unlimited paid time off policy allows employees to take as much time off as they want for sick leave, vacation days, and personal leave. Employees agreeing to an unlimited vacation policy must, however, keep an adequate level of productivity. This means that their absence must not have any negative effect on the company and their work must meet their employer’s expectations.

How Does Unlimited PTO Work?

To better answer the question “how does unlimited PTO work?”, you must forget traditional policies which, on top of offering limited days, compartmentalize employee time off into categories. With an unlimited policy, employees must still formally request and seek approval for their time off, however, there is no difference between a vacation day or a sick day, and no limit to the time. Employees are free to use their time off any way they want to.

Unlimited paid time off policies aren’t all the same as every company establishes its own rules. It is thus imperative to always read carefully each company’s regulations, discuss any “unwritten rules” with HR and of course, not abuse the system. This type of policy is based most of all on a relationship of trust between the company and their employees.

The Pros and Cons of Unlimited PTO

There are several unlimited PTO pros and cons but before reviewing a few of them, it is important to keep in mind that these are all subjective. Unlimited vacation policies don’t work well for every company or employee out there. What one person considers a positive aspect, another might see as a negative one. Not everyone thrives in a work environment with an unlimited policy, but the following list of pros and cons might help you understand if it is right for you.

Pros of Unlimited PTO

  • More productivity: it might seem like a contradiction, but employees who take more time off to relax are often more productive than those who spend more hours working in the office. When given the chance to take the time they need for their mental and physical health, personal growth, relationships, or personal matters, employees are happier and more motivated to give their best when working.
  • Better health: aside from being more productive, those with an unlimited vacation policy are less at risk of being hit by the infamous plague that is employee burnout. Employees also don’t feel the pressure to come to work when they’re sick, lowering the chances of viruses lingering around in the company’s hallways ready to infect all coworkers, in turn lowering productivity.
  • More flexibility to do what you want: imagine being able to be there for your kid’s recital or your friend’s debut on Broadway, to help your parents move, take your pet to the vet or finally learn how to play guitar. All without the stress of running out of PTO days or the fear of getting fired. An unlimited policy gives employees flexibility to be able to take care of their personal matters with little to no guilt or stress. Companies with an unlimited vacation policy trust and rely on their employees’ decision making and time management skills.

Cons of Unlimited PTO

  • Taking less time off: once again, what seems like a contradiction turns out to be true for many employees who prefer a more structured policy with clear directions. When given unlimited days of vacations, not everyone feels comfortable, and for some such a benefit might even have a reverse psychology effect. One of the reasons employees take less time off is the fear of looking bad, especially if coworkers don’t take many vacation days too.
    Another reason that people take less time off can just be confusion about the policy: not knowing what amount of consecutive vacation days in a month or year would be considered acceptable. And lastly, many are unsure of their company’s expectations during their vacation time so, even if they do take PTO, they end up spending part or most of it hustling anyway. To avoid this issue some companies have introduced mandatory PTO days within their policy, so that employees are forced to take a certain number of days off every few months or during the year.
  • Abusing the system: not everyone is responsible enough to not go overboard with an unlimited paid time off policy. And when that happens, not only can it create issues for companies but it can also be a problem for other employees who feel overworked and like they can’t take a break as well because they’re picking up the slack. When on an unlimited policy, communication and coordination with managers and coworkers are more important than ever.
  • No accrued days: not being able of rolling over days off each year and potentially use PTO days as part of a severance package when leaving the company, for some could be considered a negative aspect of unlimited paid time off policies. If your company decides to switch from a regular to an unlimited policy, try negotiating this value to avoid loss.

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Elizabeth Muenzen Career Advice Writer

Elizabeth Muenzen is a Certified Professional Resume Writer (CPRW) and member of the Professional Association of Resume Writers & Career Coaches who empowers job seekers to take control of their career paths using Monster’s comprehensive job search and resume tools.

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