As a child on Halloween night, if you came across an unattended candy bowl on someone’s porch step, how much candy would you take? Would you check to see how much others were taking before making your choice? If you had the opportunity to take all the candy, would you? Would it result in a stomach ache or other consequences? Or would it simply be fantastic?
The same dilemma, but with much less sugar, applies to the current trend of offering employees unlimited paid time off (PTO) as work and workplaces evolve to prioritize employee well-being. However, providing unlimited PTO does not necessarily mean that employees are utilizing more PTO. In fact, some individuals are unsure of how much time off to take and are observing the company’s norms. This confusion can create challenges around a benefit that was intended to be relaxing.
Employees favor an unlimited PTO policy
A survey conducted by Joblist in 2022 revealed that 75% of employees support unlimited PTO. Additionally, a survey by the International Foundation of Employee Benefit Plans in October 2023 found that 52% of employees who have access to unlimited PTO do not utilize it due to heavy workloads.
Alison Lancaster, the co-founder and CEO of Pressat, a PR agency in the UK, acknowledges that an unlimited PTO policy “sounds fantastic in theory.” Who wouldn’t want more time off? However, the concept involves deeper considerations, such as what it truly means to be “off.” For instance, according to a 2023 Ceridian/Harris Poll of employees in the US, Canada, and the UK, 47% of employees claim to disconnect from work during their time off. So, are these individuals taking time off while still working in some instances?
Here’s how to navigate this complex issue when making decisions for yourself or your employees.
Unlimited time off communicates a culture of trust—when there is one
Similar to a Band-Aid, a single policy will not correct a toxic or flawed work environment. Ekaterina Walter, an author and international speaker, shared her experiences of working at a Fortune 50 tech company where salaried employees were not officially tracked for hours or vacation, as well as at three other companies that transitioned from limited to unlimited PTO and offered flexible, remote, and hybrid work environments.
“I am a big advocate of unlimited PTO for numerous reasons… It demonstrates trust in employees—this is significant. It reduces stress and eliminates unnecessary reporting. [And] it allows employees to take additional time off when they truly need it,” she explains. “One critical point to note is that for an unlimited PTO policy to be effective, the company must possess the appropriate culture and leadership that trusts their employees.”
People might take too much time off
When companies grant employees more autonomy with PTO, there is a risk that individuals may take excessive time off or more than what is deemed normal within the company culture. However, Walter states that such instances are rare. “As a leader, I have observed that people hardly ever misuse this privilege,” she notes. “In rare situations where individuals exploit unlimited PTO without a valid reason, there are usually other warning signs, indicating that the person does not align with the company culture or does not enjoy their work. In such cases, they typically do not remain with the organization for long.”
Lancaster adds, “You might encounter a few employees who interpret the ‘unlimited’ aspect too literally and pursue every whim to travel, while their overwhelmed colleagues take minimal time off to cover the workload. This scenario is not conducive to fostering a harmonious, well-functioning team.”
These discrepancies can foster resentment among team members.
People might take too little time off
Conversely, some employees may feel anxious about determining the appropriate amount of time off when there are no clear rules or guidelines regarding the company’s expectations.
“Some individuals may be so concerned about appearing to exploit the system that they essentially never disconnect, even during their designated PTO days,” Lancaster observes. “This behavior defeats the purpose of having time off entirely.”<
Despite the trend, Glassdoor reported a 75% increase in job postings mentioning unlimited PTO compared to pre-pandemic levels in 2022. Opinions differ on whether employees take insufficient time off with an unlimited PTO policy, as the perk remains relatively uncommon across various industries and job levels.
However, employees may initially require encouragement and permission to fully utilize their time off. “I occasionally need to strongly advise people to take more time off,” Walter says. “I am particularly mindful of this aspect when individuals have significant events occurring in their lives, whether joyous occasions like a wedding or somber ones like the passing of a loved one.”
Keeping an eye on the legal ramifications
Similar to any exceptional policy, certain fine print considerations must be taken into account. “There is no federal law mandating PTO, but some states necessitate employers to compensate employees for unused accrued vacation upon termination,” explains Jonathan Feniak, general counsel at LLC Attorney in Denver. “This situation entails some complexities because you will not receive payment for an unlimited amount of unused PTO if you resign from a job with unlimited PTO. Typically, employers offering unlimited PTO are not obligated to provide compensation for vacation time when employment concludes, as PTO days do not accumulate—they are continually available until they are not.”
Feniak further states, “Failure to regularly utilize your unlimited PTO could result in missing out on compensation or time off when leaving a position. Additionally, in states with compulsory paid sick leave, PTO and sick leave cannot be combined under the same category, as sick leave must be compensated separately.”
Employers and organizational leaders contemplating this policy should thoroughly evaluate and communicate with their employees about these specific scenarios.
Unlimited PTO might not make sense for every industry
There are certain industries where offering an unlimited PTO policy may prove to be excessively challenging or detrimental to the financial bottom line. “Who wouldn’t want their team to have the flexibility to take time off whenever necessary for rejuvenation without being constrained by bureaucratic time-off policies?” Lancaster questions. “Employees who are well-rested typically exhibit greater focus, motivation, and productivity while at work. However, we are discussing the fast-paced world of PR here—a domain where we are consistently managing tight deadlines, resolving crises, and meeting our clients’ needs around the clock.”
She emphasizes that “PR professionals are virtually always ‘on’ to some extent,” similar to individuals in other industries with erratic schedules—thus, the notion of her team taking unlimited vacation days whenever they please gives her pause.
If there’s an issue, it extends beyond unlimited PTO
The workplace culture will become evident, for better or for worse, upon implementing this policy. “I have seldom heard managers or employees express negative views about the policy,” Walter comments. “There have been instances where managers did not adhere to the policy, but these leaders were not suitable for their roles (they were either micromanagers or originated from a very rigid, controlled environment). Once again, such individuals did not remain with the organization for long because the culture eventually drove them away.”
