Unlimited PTO - more vacation time! - is a great recruiting pitch. Who wouldn't want to take more time off through out the year? Recruiters like unlimited PTO because it reduces benefit package negotiations over vacation time. Theorectically, it should help fight employee burn out too because employees can take time off to recharge any time.
From an employer perspective it also has benefits. A defined vacation package requires employers to payout unused time if an employee leaves the company. The Wall Street Journal, in March 2015, reported that this cost employers of less than 500 workers approximately $1,900 per employee. For employers of over 500 workers, this jumped to over $2,600 per employee. Unlimited PTO isn't accrued, so the company doesn't owe this payout if the employee leaves.
"Unlimited" doesn't truely mean "unlimited". An employee isn't going to get 6 months of vacation approved by management. A survey conducted by Namely in 2022 showed that employees that were offered unlimited PTO took as many or fewer days of vacation time compared to peers at companies with a defined number of PTO days. On average, this survey showed that US employees are taking about 12 days a year off.
Another downside, is management failure to implement unlimited PTO fairly. I recently read a story of a worker that had been denied a two week vacation this summer that they requested in May to take place in August. Other than a day off for an illness earlier in the year, they hadn't taken time off in 2023. However, a team mate had just come back from a two week vacation and had taken another two week vacation over the winter.
This company is exposing themselves to a potential leave discrimination claim. According to what I've been told, it sounds like one employee is allowed to take a leave but others are not.
One of the jobs of a manager of teams is to prevent to many overlapping vacations. With an unlimited policy, how do you justify allowing one person time off and not another? Worse, how do you justify a month of time off for one employee and only one day for another?
The flip side of this is how a manager determines when abuse occurs. Is a month of PTO in a year abuse? Two months? Two weeks? Where is that line and once defined how do you continue to present this as "unlimited"?
I've worked at companies that have "unlimited PTO", a set number of days of PTO and "minimium number of days of PTO". Personally, I prefer the last two. Unlimited PTO - as an employee - very quickly becomes a game of determining how much is to much, and stressing out about having time off denied over a vague policy.
A set number of days is nice because you know exactly how much time to take. Management, in my experience, has been way less picky about time off in these environments because once you hit that number of days, you are done taking time off. The trade off here is that unused time either has to be rolled over to the following year (company policy may prevent this) or extended vacations start cropping up at the end of the year. As an employee, I had several month long end of the year vacations, which worked out nicely for me. From a project planning perspective though, this means that those time periods mean that work slows to a crawl. Company culture has to allow for this and fortunately, it did in my case.
The last option is, essentially setting a minimium and maximium number of days to take off. This isn't quiet "unlimited", but in my experience was labeled that with an asterisk. The important part though is that the company required you to take a minimium amount of time off and it had to be in blocks of time, not one off days. This encourages downtime and better work/life balance.
My thoughts on unlimited PTO¶
I left a company with a well defined PTO policy that granted more time with more seniority. I left this company to join one with unlimited PTO. At the time I thought that I'd be using more time off and enjoying the benefits of this unlimited PTO policy. Unfortunately, like many others, didn't do that. Instead I took fewer days than my defined policy had allowed and even lost some company holidays that the previous employeer had that the new one did not. In short, I worked more. It took a long time and a lot of push back within the company to get people to take the time they needed to recharge. Sadly, by the time I left that role, it was still uncommon for people to take extended vacations.
Unlimited PTO is as much a benefit as it is a company culture thing. During interviews, applicants should be asking questions about how much time their potential coworkers are taking off. Are these truly times off or are they expected to be able to take a phone call? These answers will help them determining if "unlimited PTO" is a benefit the company offers or recruiting buzzwords put in place to lure in new employees and it's actually a scam.