Why Unlimited PTO Doesn’t Work, and What You Can Do About It

A few years ago, unlimited paid time off (PTO) became all the rage among HR and total rewards (TR) teams as well as many organizational employees. As the demand for flexibility in work arrangements and benefits surged, many employees viewed the concept of unlimited PTO as a logical next step. The idea of “taking what you need” always was going to appeal to certain employees, as it sounded like a generous policy that could be tailored to their individual circumstances. Meanwhile, employers liked that they didn’t have to worry about expensive accruals or tracking obligations. 

But the reality of unlimited PTO has turned out to be much less appealing than the concept. Many employees actually end up taking less time off under an unlimited scheme, as they are:

• Concerned about the perceptions of their managers and colleagues;
• Unclear on how much time off they can actually take; and,
• Often overwhelmed by a corporate culture of overwork.

There’s no such thing as truly “unlimited” PTO, as there are commonsense limits on how much time employees can be out of the office. When these limits are undefined, they will be subject to different interpretations by employees and create confusion and frustration. 

HR/TR teams must make core benefits like PTO more flexible without creating a vague policy that will be abused by some employees and underused by others. Fortunately, there are more ways than ever to do just that. 

Better in Theory Than in Practice

According to data from jobs website Indeed, the number of job descriptions offering unlimited PTO spiked by 167% from June 2020 to June 2022. However, this number has fallen precipitously since its peak. In the summer of 2022, nearly 9% of all job listings on Indeed offered unlimited PTO, but that proportion has now decreased threefold to just under 3%. While this percentage is still higher than it was before the pandemic, it’s clear that the infatuation with unlimited PTO seems to have worn off. 

Some organizations that once offered unlimited PTO now have abandoned the policy. For example, checkout and payments technology company Bolt recently switched from unlimited PTO to four mandatory weeks of paid leave for each employee (a number that grows with tenure). Bolt CEO Ryan Breslow argues that unlimited PTO “sounds progressive, but it’s totally broken. … When time off is undefined, the good ones don’t take PTO. The bad ones take too much.” Beyond the risk that unlimited PTO policies will be abused, they also are subject to different good-faith interpretations that make them inherently unequal. 

Studies about the use of unlimited PTO vary — some have found employees take a bit more time off, while others have found they actually take less. But any benefits these plans offer are marginal, while the harm they inflict on corporate culture and the confusion they generate among employees can be substantial. 

Addressing a Real Problem in a Superficial Way

There’s a reason Bolt decided to make PTO mandatory. As Breslow explained, “When we saw in our own data that our ‘A’ players weren’t taking enough time away, we knew we had to fix it.” PTO underuse is a problem that has plagued HR/TR teams for years. Research firm Harris reported a remarkable 78% of surveyed workers don’t use all their allotted PTO, even though 75% report they wish they could take this time. Employees cite many reasons for this — from the dreaded work backlog that awaits when they return to the pressure they feel to remain productive. 

Nearly two-thirds of employees polled by Harris said they find it difficult to strike a balance between their work and personal lives. This issue is particularly urgent at a time when work-life balance has never been more important: A recent survey of 26,000 workers by HR consulting firm Randstad found it’s even more of a motivator than pay. Instead of addressing the problem of overwork and PTO underusage, unlimited PTO tends to exacerbate it. Beyond concerns about falling behind, employees also are preoccupied with the perceptions of colleagues and managers. Nearly half of workers interviewed by Harris said they get nervous when asking for PTO, while 47% said they feel guilty when they take time off. A report by research firm Pew showed 43% of polled employers feel bad about employees taking on additional work. 

Unlimited PTO likely will make these problems even worse. Instead of clearly articulating how much time employees are entitled to, unlimited PTO can shroud decisions about time off in a cloud of uncertainty. Employees may allege their colleagues are taking too much time, while managers may be suspicious of requests. These factors may discourage employees from taking the time they have earned. 

Consider Alternatives to Unlimited PTO

Many HR/TR teams may be abandoning unlimited PTO, but flexible benefits should still remain a top priority. A survey by insurance company MetLife showed 70% of workers said customizable benefits would increase their organizational loyalty, and the demand for a better work-life balance will only become more important in the coming years. This is particularly true as the transition away from remote and hybrid work — a significant source of flexibility in recent years, and one that employees aren’t eager to lose — picks up momentum.

While it’s critical that HR/TR teams focus on building a corporate culture that values time off, it’s also necessary to provide alternatives for employees. Pew reported that more than half of workers take less time off than they’re offered because they simply don’t feel that they need it. Instead of an “unlimited” scheme that will give the employees who do use time off a greater benefit than those who don’t, HR/TR teams can offer solutions like PTO conversion to ensure fairness. PTO conversion plans allow employees to reallocate the value of their unused time off toward a wide range of financial priorities: retirement contributions, student loan payments, charitable contributions, health savings accounts (HSAs) or even shared-leave pools. 

As HR/TR teams move away from unlimited PTO, increased creativity about flexible benefits could be the answer. Done right, this may ensure all employees get the full value of their hard-earned benefits.

Editor’s Note: Additional Content

For more information and resources related to this article, see the pages below, which offer quick access to all WorldatWork content on these topics:

• Employee Benefits
• Total Rewards
• Well-Being