Are your unlimited PTO policies actually working?

Having access to unlimited paid time off may seem like the dream, but without the right management from organizations, it could be the same PTO nightmare employees are used to. 

As of 2023, less than 10% of companies in the U.S. offered unlimited PTO, according to a survey by the Society for Human Resource Management. And while an increase in employee flexibility is ultimately a good thing for workplaces, it's possible that the effort ends up doing more harm than good without the right measures put in place by employers.  

"[Unlimited PTO] caught on quite quickly, especially in the United States," says Catilin Collins, organizational psychologist and talent strategy director at performance management platform Betterworks. "And over the last decade and a half or so, the companies that piloted the concept turned out to be quite successful. But unfortunately, it came up against findings of actual PTO usage, which wasn't as successful." 

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Netflix was one of the first U.S. companies to pilot unlimited PTO in 2003, allowing full-time employees to take as much time off as they want, without tracking or allotting vacation days. This marked a significant break from the traditional workplace leave structure, which has an average of 11 paid vacation days and eight sick days per year, according to the U.S. Bureau of Labor Statistics. But while unlimited PTO was created as a wellness initiative, employees are still hesitant to actually take advantage of it.  

Even though 70% of workers said they preferred the idea of unlimited PTO, according to data from insurance company Metlife, on average, workers with unlimited PTO only take 10 days off, according to findings from job search platform Joblist. Those statistics make it hard for employers to understand the payoff, according to Collins, but it's all about context. 

"If you work in an organizational culture where vacation time is already not prioritized, like the U.S., putting this new policy in place doesn't automatically mean that people are going to figure out how to manage their work-life balance and take time off when they need to," Collins says. "In order to put a policy in place that positively influences that culture, you have to be intentional." 

The first step for organizations — regardless of the sector they operate in — is communication and transparency, according to Collins.  

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"Make it very clear that they have unlimited PTO, and that it's for them to use how they want to when they want to as long as they have approval from their manager — who should have guidelines in place so that not everyone is taking PTO at the same time," Collins says. "Suggesting time off works, too. If you see signs of stress and they haven't taken any time off in a long time, use that in your one-on-one conversations." 

Employees' wellness isn't the only benefit to expanding leave policies. Making PTO unlimited also means that employers are not carrying those earned hours in their books, and it's one less expense line item they have to account for. They also don't have to worry about paying employees out at the end of the year or upon employment termination, making the process much simpler than before. 

"What's good for people is usually good for business," Collins says. "If we take a people-first approach on things, it often lends itself to improved outputs for the company. We don't need to micromanage our employees. If we give them freedom to be adults and have autonomy over how they work, we see positive results across the board."