Is Unlimited PTO Losing Its Appeal as a Benefit?

Unlimited paid time off (PTO) has been an advertised perk for some employers looking to attract job seekers and retain incumbent workers. Having the freedom to take a break from the workplace, whenever the need arises, can be viewed by some workers as a differentiating benefit.

But, given American workers’ general reticence for taking PTO and maxing out their traditional time off benefit, is such a benefit program realistic? And, given all the potential pitfalls to address — from the perspective of both the employer and the employee — is it possible to move from attention-grabber to leading-practice application?

Is There Less Interest in Unlimited PTO?

A recent Revelio Labs study found that while the number of U.S. job posts advertising unlimited PTO increased significantly from late 2020 to mid-2022, specific mention of that benefit is on the decline. Data for July 2024 showed 1.5 out of every 1,000 job postings mentioned unlimited PTO, down from a peak of 3.1 in May 2022.

Despite fewer mentions of unlimited PTO in job postings, employers do not appear to be stepping away entirely from this perk. Instead, they may be using other naming conventions more aligned with the benefit, said Alex Henry, the group benefits leader at WTW.

As Henry explained, omitting unlimited PTO as a label and using a name that doesn’t imply unlimited time off may help reduce some of the confusion surrounding these policies. He said naming conventions such as “discretionary time off,” “non-accrued time” and “flexible paid time” tend to be more aligned with the program.

No matter the name, what is the true state of the unlimited PTO offering?

WTW’s 2023 Leave, Disability and Time-off Trend Survey found that 12% of surveyed organizations have an unlimited PTO policy (in name or function) in place (up from 9% two years ago), and 16% plan to offer the policy to exempt employees in the next two years. Additionally, 31% of organizations have an unlimited PTO program for executives and directors, with an additional 9% planning or considering offering it in the next two years.

“I don’t think this is a trend that is moving in a different direction; I think it’s a trend that is getting more prevalent. This is not fading out of vogue,” Henry said.

Other studies appear to support this statement. According to Mercer’s 2024 Absence and Disability Management survey, employers offered flexible/unlimited PTO to:

10% of executives (compared to 8% in 2021)
11% of executive and exempt employees (compared to 8% in 2021)
11% of all employees (compared to 4% in 2021)

Rich Fuerstenberg, a senior partner in Mercer’s health and benefits practice, said, as those numbers show, the biggest change has been shifting the benefit’s recipient base beyond simply executives.

Pros and Cons of Unlimited PTO

Unlike traditional PTO, unlimited time off is, in theory, just that — unlimited. However, asking U.S. workers to alter their vacation-taking habits and mindset could be a tall order.

Pressure to meet deadlines, guilt about asking coworkers to shoulder the workload and struggling to disconnect from work are just a few of the barriers keeping workers from taking more time off, according to a May 2024 Harris Poll. These concerns may conflict with the policy’s intended benefits of improved work-life balance and flexibility.

“If this is the type of benefit where employers don’t talk about it or use it [or have plans to solve concerns over it], then it can be seen as something that should not be taken,” Henry said.

A recent WorldatWork study found only 51% of surveyed employees reported using all the PTO they accrue in a year, indicating many workers do not prioritize — or feel empowered to fully maximize — their PTO.

Both Henry and Fuerstenberg said possible downsides to unlimited PTO include discrepancies in how different cohorts use the policy, the potential for abuse on both sides and a decrease in organizations paying out for unused time.

Employers that can mitigate these and other issues may find distinct advantages from such a program.

“It certainly addresses the diverse needs of an increasingly diverse population,” Fuerstenberg said. “Inevitably, some people need a little less [time off] and some need a little more, so it gives you flexibility within the policy to address those individual needs.”

Henry and Fuerstenberg shared factors that may contribute to a successful unlimited PTO program:

Consider your workforce, job architecture and industry. Ideal work environments for this type of benefit are those where there is a strong correlation between performance results and the employee’s compensation (e.g., sales-based roles, director-level roles and professions where compensation is heavily dependent on billable hours).
Encourage and support policy usage. When HR and total rewards leaders as well as functional leaders encourage, support and communicate the policy and how it works, employees may be more apt to participate (and do so in a prescribed manner). Leaders can increase the likelihood of success by personally taking extended time off.
Initiate ongoing manager training. Leaders need to understand and have the tools to effectively manage the policy. If this is lacking or absent, the results may be uneven. HR and total rewards professionals can accomplish this through training modules, refresher courses and toolkits.

“It’s like playing Jenga,” Fuerstenberg said, regarding employers who currently have unlimited PTO policies in place or are considering it. “You can’t push all the pieces out of the way; you have to look at how all the pieces fit together.”

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