What Is Unlimited PTO, and How Does It Work? (Pros, Cons, and Example Policy)

Imagine being able to take time off whenever you need, without counting vacation days or worrying about using up your leave balance. Sounds luxurious, right? 

That’s the promise of unlimited PTO, a growing trend that lets employees decide when and how much time off they need—so long as deadlines and responsibilities are met.

With no set vacation limits, employees gain more freedom to recharge and manage personal responsibilities, while employers benefit from higher job satisfaction and retention rates. Whether you're looking to reduce burnout, build trust, or streamline HR processes, unlimited PTO could be the key to creating a more flexible and engaging work environment.

But with all its perks, unlimited PTO requires careful planning to ensure it fits your company culture. Let's explore how this policy can impact your organization and what it takes to implement it successfully.

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What Is Unlimited PTO? 

Unlimited PTO is a company leave policy that allows employees to take off from work when they like, so long as it doesn't impact deadlines and responsibilities. Rather than prescribing employees a specific amount of leave, employers let their workers decide how much time they can take off. 

Many employers emphasize unlimited PTO as part of their commitment to employee wellbeing. It can also make an employer's workplace more attractive to top-tier candidates, helping them to both recruit and retain talented staff. 

How Does Unlimited PTO Work?

While policies can vary from company to company, most organizations allow workers to take off when it suits them, as long as it doesn't impact the worker's productivity. Companies may require employees to request time off in advance to avoid any hiccups that impact overall workplace deadlines, especially if the employee plans to take off for an extended period, such as a week or more.

To take unlimited PTO, the employee notifies their manager directly or submits a time off request through the company's Human Resources Management System (HRMS). Workers can move forward with their vacation plans if the manager approves the request.

Of course, some workers may sometimes need unplanned PTO if they're sick or need to care for a family member. Most companies include time off like this within the unlimited PTO policy rather than splitting it out into a separate bank since ‘time off’ doesn’t need to mean vacation. 

An unlimited PTO policy can promote a healthier work-life wellness and encourage employees to take time off when needed. Employees who are happy and healthy tend to get more work done and express higher levels of job satisfaction. 

What an Unlimited PTO Policy Means for Employers

Employees tend to love unlimited PTO. 50% of workers would exchange a higher salary for unlimited PTO, according to Build Remote. However, unlimited PTO isn't always a perfect solution, so weighing the benefits and drawbacks before implementing it at your company is essential. It’s advisable to consider how this policy impacts the entire organization before introducing it as a benefit. 

Benefits of Unlimited PTO

What employees get from unlimited PTO is pretty clear — time off! But what do companies gain from this policy? There are a few reasons, which is why this is a trending benefit. 

Potential cost reduction

It may seem strange, but uncapping PTO can actually reduce your benefit costs. This setup means accrue vacation time does not accrue, so if an employee decides to quit or you must lay them off, you won't owe them an additional payment for unused leave.

Attract talented workers

Talented workers expect good benefits from the companies that employ them, and an unlimited PTO policy is a great way to stand out among other employers — there’s a reason many companies offering unlimited PTO are big-name tech businesses like Automattic and Asana. When your organization provides a similar leave policy, you can boost awareness among job seekers seeking their next position. Plus, you can use unlimited PTO as part of a comprehensive narrative of your organization's commitment to employee wellbeing.

Enhance worker productivity

Employers may worry that unlimited PTO will hamper productivity, but it's actually the opposite. Most employees need time off to rejuvenate and avoid burnout. You may find your employees become more efficient since they know they can take time off if they take care of all their responsibilities.

Boosts trust between employers and employees

Giving your workers unlimited PTO may lead to a more trusting employer-employee relationship. When employees know you're putting them in charge of managing their responsibilities, it shows you believe in their ability to get things done on their schedule. That can strengthen employee-employer bonds in the workplace.

Save time on HR administrative tasks

Companies offering different buckets of leave for sick days, vacation, garden leave, and other time off must carefully manage employee time off requests and usage. With unlimited PTO, there's no longer any need to monitor employee leave since all employees can take time off when needed. 

No rush to use leave at the end of the year

Employers who offer a set number of leave days without an option for rollover may find that vacation time skyrockets in December as employees take any unused vacation days off to avoid losing them entirely. With unlimited PTO, there's no reason to take excess days off at the end of the year since there are no caps.

Reward employees based on results

In some offices, there's an unspoken belief that high-performing employees work long hours and rarely take vacations. By introducing unlimited PTO, employers can change the work culture and reward employees based on their performance rather than how many days they work late or skip lunch.

Challenges of Unlimited PTO

Like any company policy, offering unlimited PTO isn’t perfect. Here are a few drawbacks to consider.

Employees may feel wary of using PTO

One of the main reasons for offering unlimited PTO is to remove barriers to taking leave when an employee needs it. However, some workers may feel "less than" if they take off on a Friday or schedule a two-week vacation. It all depends on how employers promote the policy in the workplace. If managers regularly use their PTO and encourage their workers to use it, employees are more likely to feel comfortable taking leave.

There are caps on "unlimited" PTO

While an employer may provide unlimited PTO, that usually doesn't mean employees can take time off whenever they like. Most workplaces still require their workers to request time off before using PTO. If a manager disagrees with an employee's time off request, they can reject it. This can lead to confusion or a sense of betrayal among employees if they feel the policy actually means they take less time off in reality, so clear communication is required to ensure everyone is on the same page about what ‘unlimited’ means.

Potential for abuse

Some employees may abuse the PTO policy by taking too much time off and leaving their coworkers to handle their responsibilities and deadlines, according to Indeed. That can set a bad example for other workers and lead to resentment among team members. To avoid this situation, try setting a few ethical guidelines for your unlimited PTO policy, such as the minimum number of days you "expect" your employees to take off. 

May increase the workload for other employees

Any time employees take a day off, they're unavailable to answer questions or fill in knowledge gaps for colleagues. Their unavailability can lead to coworkers shouldering extra responsibilities in their absence, which may hurt group dynamics, especially if it happens frequently. 

Example Unlimited PTO Policy

Creating an unlimited PTO policy starts by defining its purpose, outlining to whom it applies, and defining the procedure for requesting days off. Here's a sample policy if you're considering introducing unlimited PTO at your organization.

Overview of Unlimited PTO+

[COMPANY NAME] is proud to introduce an unlimited PTO policy for part-timeand full-time employees. Under the policy, employees can feel free to take leave whenever needed. We firmly believe every employee should have the opportunity to rest and rejuvenate away from work, and we hope that by introducing the policy, we'll see increased efficiencyand job satisfaction among our team members. Remember, while there are no caps on leave time, we expect all employees to fulfill their assigned duties.

Leave Tracking

While there are no limits to how frequently employees can take off from work, we expect workers to take [NUMBER OF DAYS] of leave annually, at a minimum. To further encourage participation in the unlimited PTO plan, employees will receive [INCENTIVE] if they take the minimum leave time. However, no [INCENTIVE] will be available for workers who fail to take the designated number of minimum leave days.

Under the policy, employees will not accrue time off, so no compensation is available for unused leave. The unlimited PTO policy does not impact leave available through federal and state regulations.

How To Request Time Off

We request all employees abide by the following guidelines when using unlimited PTO:

•  Please do not abuse unlimited PTO. Ensure you fulfill your work responsibilities to avoid placing undue hardship on the organization.

• Collaborate and coordinate with colleagues and supervisors to avoid interruptions to company operations. 

• Provide supervisors with at least two weeks' notice before using PTO, except in emergencies, such as illness or bereavement. 

Supervisors retain the right to reject time off requests if it strains worker capacity or if other employees with similar duties have already requested time off. 

Case Study: Unlimited PTO in Action

Kronos is a software company that provides B2B time and attendance management systems. It introduced an unlimited PTO plan in 2015 after experiencing difficulty recruiting talented workers. The company's CEO, Aron Ain, did a lot of research before approving the policy, and one concern he noted was the potential cost savings to companies since they no longer needed to accrue unused leave time. 

Rather than benefit from the savings, Ain reallocated it to other employee benefits by increasing paternity and maternity leave time, Kronos' 401(k) match, and offering child care assistance. 

After implementing the policy, Kronos tracked employee vacation time and compared it to previous years. It asked managers to promote unlimited PTO across departments to ensure everyone had fair access to the program. After a year, no employee abused the policy, and vacation time increased by an average of 2.6 days per worker. Employee job satisfaction increased to nearly 85%, and turnover decreased significantly. 

Best Practices for Implementing an Unlimited PTO Policy

Offering unlimited PTO is a surefire way to attract attention among employees and job seekers. But how can you be certain of its success? Consider these tips.

1. Get Everyone on the Same Page

When introducing unlimited PTO, consider providing employees with a one-pager that describes the policy, your expectations, and how to request time off. You might also hold a company-wide meeting to explain the policy and answer any questions. That way, you can avoid any misunderstandings between workers and managers.

2. Consider Mandating a Minimum Number of Days Off

Some employees may feel uncomfortable taking leave for fear of "looking bad" if they take more days off than coworkers. You can set a benchmark for minimum days of expected leave as a general guideline and encourage workers to take off more if needed. For instance, Automattic sets a minimum of 25 days of leave each year and asks workers to take off more if they want.

3. Allocate Cost Savings To Other Benefits

Since employees no longer accrue vacation time under an unlimited PTO policy, you may recognize cost savings from unbanked leave. To avoid giving the impression that you're introducing unlimited PTO to save money, consider allocating the savings to other employee benefits. For instance, you might up your 401(k) match like Kronos or introduce a corporate wellness program.

Boost Employee Wellbeing Through PTO Flexibility

Unlimited PTO can empower employees to take time off when they need it, improving work-life wellness and boosting job satisfaction. However, employees might still hesitate to fully utilize this benefit due to workplace culture or unclear guidelines. If your goal is to create a truly supportive environment, it’s important to address these concerns head-on.

Integrating a comprehensive employee wellbeing program, like Wellhub, can enhance the impact of unlimited PTO. With access to fitness and wellness resources, your team will feel encouraged to recharge, reducing burnout and improving productivity. Plus, companies with wellbeing programs see a 40% reduction in turnover and save up to 35% on healthcare costs.

Speak with a Wellhub Wellbeing Specialist to create a culture where your employees thrive both inside and outside the office.

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Key Terms:

What is an Employee Leave of Absence?
There are two main leave of absence (LOA) categories: mandatory and voluntary. Mandatory leaves of absence are situations when the employee has a right to take leave, per federal standards. A voluntary leave of absence is an employee benefit or perk. Read More.

Mental Health Days at Work
A mental health day is a day off from work, taken to prioritize mental well-being and reduce stress. It's about recognizing the need for a break to recharge and prevent burnout. Read More.

Flexible Time Off vs. Paid Time Off: What’s the Difference?
Flexible time off refers to plans that let employees take time off when for the reasons they choose, rather than having the days be allocated by sick days, vacation days, etc. Paid time off (PTO) is time a worker is compensated even though they are absent from work. Read More.

What is a Sabbatical?
A sabbatical is an extended paid break from work, typically six to 12 months in duration, granted to employees periodically throughout their career. During this time, employees are relieved of their regular job responsibilities. They take time to rest, recharge, and pursue personal or professional development opportunities. Read More.

What is a Floating Holiday?
A floating holiday is a type of paid time off that allows employees to choose when they take a day off within a certain timeframe, rather than being tied to fixed, predetermined holidays. Read More.