Your Ultimate Guide to Unlimited PTO (+ Policy Template)

In recent years, many companies have adopted a new approach to paid time off policies by implementing unlimited paid time off (PTO) for their employees. Netflix, LinkedIn, Sony, and Oracle are just a few.

This trend has sparked a debate among employers and employees alike, with both sides presenting compelling arguments for and against this innovative policy.

On the one hand, unlimited PTO offers benefits such as increased flexibility and productivity, but there are significant potential drawbacks like abuse and ambiguity.

So, if you want to understand if unlimited PTO is right for your business and make its implementation as smooth and stress-free as possible, our guide is meant for you.

And there’s more to it – a free unlimited PTO policy template included!

What Is Unlimited PTO and How Does It Work?

Unlimited PTO, or Paid Time Off, is a policy where employees are allowed to take as much time off as they need, within reason, without accruing a specific number of vacation days.

Unlimited PTO gives employees more flexibility and autonomy in managing their time off, rather than having a set number of days allocated for vacation, sick leave, etc.

In practice, the way in which unlimited PTO works can vary between companies. Some organizations have respective guidelines and policies in place to ensure that employees take a reasonable amount of time off and that work doesn’t suffer as a result.

In essence, unlimited PTO allows employees to manage their time off schedule as they see fit.

Under such a policy, organizations do not have a set schedule for accruing vacation or other forms of paid time off. Instead, employees can take time off as needed and for as long as they need, so long as they meet the set performance goals and business productivity is not compromised.

Let’s see how unlimited PTO is different from traditional and flexible PTO policies:

Let’s delve into the specifics of each type to understand their distinctions better.

Traditional PTO

Traditional PTO policies allocate a fixed number of days off per year, typically combining vacation days, sick leave, and personal days into one pool. Employees accrue PTO based on their tenure with the company, with seniority often determining the number of days granted. For example, an employee might start with 10 days of PTO annually, increasing incrementally over the years. If an employee takes 5 vacation days and 2 sick days on their first year, they have 3 days remaining.

Flexible PTO

Flexible PTO policies offer employees more autonomy in managing their time off. Instead of a set number of days for each cause (e.g. sick days or vacation days), employees can take time off as needed, subject to manager approval. For example, an employee may have 21 PTO days and allocate them as 14 vacation days, 3 sick days, and 1 personal leave day.

Unlimited PTO

Unlimited PTO aims to promote a culture of trust and results-driven performance. So, unlimited PTO policies grant employees the freedom to take as much time off as they need without a specific limit. This means an employee may decide to take 14 vacation days after a big marketing campaign to recover from stress.

Unlimited PTO Stats and Facts

Being able to get as many PTO days as you wish sounds like a dream, doesn’t it?

MetLife found that 72% of employees see unlimited paid time off as a must-have workplace benefit. It turned out to be the most desirable benefit above wellness programs, retirement plans, on-site medical care, and paid sabbaticals.

According to another source, unlimited paid PTO is the most desirable benefit among 80% of Millennials, 70% of Gen Xers, and 63% of Baby Boomers.

Besides that, flexibility remains one of the most significant workplace trends these days, with more and more job seekers (55% as of 2022) considering it a pivotal factor in favor of an employer.

And of course, a vast number (72%) of employees who work at a company that encourages them to take time off are happy with their companies, compared to just 42% of employees who work for companies that discourage breaks. (Source)

Despite that, the 2023 SHRM Employee Benefits Survey showed that only 8% of employers currently offer paid unlimited PTO to their staff members. Surely, this number is rather low now, but it continues to grow slowly.

Pros & Cons of Unlimited PTO

This employee benefit was created to improve employee satisfaction and talent acquisition. But is it really so?

Let’s find out:

The Pros

• Improves individual and team productivity. Workplace stress leads to disengagement, lower productivity, and higher rates of absenteeism. Unlimited PTO can help to combat these negative effects by encouraging employees to take a break when they need it. Besides, in a more relaxed and positive work culture where employees’ well-being is prioritized, they will feel that they’re trusted and valued by the company and become more invested in work as a result.
• Allows employees to have greater control over their schedules, enabling them to manage their work and personal lives more effectively. This flexibility can lead to increased job satisfaction and overall well-being.
• Attracts top talent. Modern employees are increasingly seeking out perks and benefits that allow them to enjoy more flexibility and autonomy in their personal and professional lives. And the freedom and flexibility that comes with unlimited PTO policies is hard to beat.
• Boosts team morale and helps with staff retention. Implementing an unlimited PTO policy is a great way to demonstrate your commitment to creating a healthy and supportive working environment for the team. And when employees feel that their employer cares about their mental and physical health, they are more likely to be motivated to show their best at work. They are also more likely to become more attached and loyal to the company, so you can rest assured that they have your back too.
• Reduces administrative burden. Unlimited PTO policies eliminate the need to maintain complex accrual systems and the calculations necessary for paying out unused leave when an employee leaves the company. The money saved this way could be reinvested in employees through higher salaries, retirement benefits, health insurance, or other programs designed to attract top talent.

The Cons

As you can see, unlimited paid time off offers plenty of pros. But there are some negatives too. For example, you can notice the opposite effect and have a distracted team.

• May discourage employees from taking time off and create a culture where employees feel pressured not to take time off for fear of appearing less committed or dedicated than their colleagues. This can lead to presenteeism and ultimately harm employee well-being.
• Increases the risk of PTO policy abuse. On the other hand, it might be tempting for some of your employees to start abusing the newly gained freedom. So, it’s important to document cases that are considered leave abuse in your unlimited PTO policy.
• May result in unequal workload distribution. If some employees take more time off than others, it could burden their colleagues who have to cover for them. This could lead to resentment or burnout, ultimately harming productivity and employee morale.
• Can be difficult to manage. Companies need to have a well-established system in place to request and keep track of time off. Failure to do so could lead to confusion and disputes between employees and management. Besides, it can impair productivity, especially in small businesses or those with limited resources.
• May lead to confusion regarding expectations around time off. Employees may be unsure about how much time off is appropriate to take or when it is acceptable to do so, leading to uncertainty and potential conflicts.

Examples of Companies with Unlimited PTO Policies

1. Netflix

Netflix offers a 100% flexible schedule for employees, which allows them to freely decide when to work and when to have time off. On top of that, the company prioritizes its staff members’ mental health, so an unlimited PTO policy fits into the picture quite well.

“We don’t have a prescribed 9-to-5 workday, so we don’t have prescribed time off policies for salaried employees, either. We don’t set a holiday and vacation schedule, so you can observe what’s important to you – including when your mind and body need a break. We believe in working smarter, not harder.” – Work Life Philosophy at Netflix

2. HubSpot

HubSpot employees are also not limited to a set number of days off per year. Instead, they are encouraged to take time off whenever they feel they need it, provided it does not disrupt the work process.

To ensure equal opportunities for all team members no matter their position, HubSpot also provides Vacation Quota Relief (VQR) – it lets salespeople at the company take a break from work without stressing out about losing a deal and how it could affect their paychecks.

These unlimited vacation perks are just a small part of HubSpot’s people-oriented work culture. On top of that, it offers multiple remote work options, ample healthcare benefits, and a four-week sabbatical leave for long-term employees:

“After five years with HubSpot, you get a four-week paid sabbatical and a sabbatical bonus. Some employees take vacations with their families, while others learn how to play the guitar, or enjoy month-long honeymoons.” – HubSpot Benefits

3. Bending Spoons (Evernote)

At Bending Spoons (the owner of Evernote), employees’ experience is all about autonomy. They have all the freedom to decide when to work and when to have days off. And there’s no limitation on vacation time as long as the set goals and deadlines are met.

“Things we hate: Micromanaging. Inflexible hours. Demanding you’re always on-site. Pressure to conform. So there’s none of that here.” – Careers at Bending Spoons

How to Create an Unlimited PTO Policy?

Every PTO policy should be created in accordance with the unique demands and strategies of a particular business. Below, we offer the key points to consider and define in your PTO policy to make it work.

• Who is eligible to use unlimited PTO?
• Are employees required to work a certain amount of time before they can use the benefit?
• What time off can be used for? Are vacations, illnesses, emergencies, bad weather conditions included? Check with your state and regional legislation to avoid violations.
• How long-term are leave requests processed?
• Does your unlimited PTO policy allow for recurring time off (e.g., time off every Friday)?
• What is the procedure for requesting short-term and long-term leaves?
• How far in advance employees are obligated to submit their requests?
• In what tools are employee requests made and processed? Is it leave management software, emails, corporate chats, paper or online applications?
• Are employees required to provide reasons or explanations for time off?
• In case of unplanned sicknesses, are employees obliged to provide doctor’s notes?
• How overlapping requests will be handled?
• In which instances PTO will not be granted?
• What cases will be considered policy violations and what repercussions will follow?

Sample Unlimited PTO Policy

Policy overview:

We at [Company Name] are committed to providing our employees with a healthy work-life balance and believe that an unlimited PTO policy will help us achieve this goal.

Our policy is designed to encourage employees to take time off when they need it, without feeling guilty or stressed about missing work.

General rules and terms:

Under our unlimited PTO policy, employees are free to take as many vacation days as they need, provided that they have approval from their manager and that they do not leave their workload uncovered. If an employee chooses to take time off, they are expected to hand over their pending tasks to a colleague or to their manager to ensure seamless workflow.

We understand that productivity is key to meeting business goals, and thus set clear expectations for our employees under the unlimited PTO policy. We encourage communication among coworkers and managers to ensure that there are no lapses in productivity while an employee is away.

Eligibility and approval:

All employees, including full-time and part-time staff, are eligible for unlimited PTO, provided that they have served at least six months of continuous service.

To avoid disrupting operations and ensure adequate coverage, employees must request approval from their immediate supervisors and obtain confirmation before taking time off.

PTO requests:

PTO requests must be submitted using the company’s online PTO request form.

The form must be submitted at least ____ days before the requested PTO start date.

Emergency requests for PTO must be submitted as soon as possible and will be reviewed on a case-by-case basis.

PTO balances:

Unlike traditional PTO policies that provide a set amount of paid leave days, unlimited PTO grants employees the freedom to choose when and how much PTO to take.

By eliminating the need to track accrued PTO or worry about running out of days, unlimited PTO empowers employees to manage their time off according to their respective needs and workloads.

Reasonable use:

While we encourage our employees to take a break to rest, relax, and rejuvenate, we also expect them to act responsibly and use their time off in a reasonable and respectful manner.

Inappropriate use of unlimited PTO includes but is not limited to:

• Engaging in fraudulent activity, such as submitting falsified time-off requests or documentation.
• Failing to comply with approval procedures or taking time off without notice or permission.
• Misusing PTO for personal gain or private business activities, such as running a sideline gig.
• Disrupting operations or causing significant inconvenience or workload issues for coworkers or management staff.

Unlimited PTO does not mean unlimited absence, and employees need to ensure that their time off does not jeopardize their job responsibilities or team collaboration.

Supervisors reserve the right to deny PTO requests that would unduly hinder mission-critical activities or cause significant stress or workload imbalances.

Free Unlimited PTO Policy Template

Looking to implement an unlimited PTO policy in your company? Open this free unlimited PTO policy template, make a copy to your Google Drive, and customize it according to your business needs!

Download this free unlimited PTO policy template

Key Tips for a Successful Unlimited PTO Policy

• Set clear expectations. It’s important to clearly communicate to employees what the unlimited PTO policy entails. Make sure they understand how the policy works, including how to request time off and how much notice is required. Additionally, make sure they understand that taking time off should not negatively impact their performance or job security.
• Establish guidelines. Although the policy is unlimited, that doesn’t mean there are no guidelines. Establish clear guidelines around what constitutes “appropriate” PTO usage, such as taking time off for vacations, personal days, and sick days. Make sure employees understand the limitations around PTO, such as requiring approval from a manager before taking extended periods of time off.
• Train managers. Managers need to understand how to manage employees under an unlimited PTO policy. This includes understanding the guidelines and expectations around PTO usage, as well as being able to manage employee workload when employees take time off effectively. It’s important to teach them to analyze resource capacity and provide them with tools that help to track ongoing performance progress and allocate work in a simple way.

Allocate work, track work progress, and manage team workloads with actiTIME

• Always plan ahead. Encourage employees to plan their time off well in advance and organize their workload, ensuring their responsibilities are covered before leaving. This will help everyone on the team avoid last-minute emergencies, allowing for a more seamless transition from work to vacation time.
• Establish a safe work environment. Employees who are fearful to take time off won’t help your time off policy be successful. In order for the policy to work well, your organization needs to establish trust. Remember that the companies that implement unlimited PTO successfully have people-oriented cultures built around employee autonomy and flexibility. They use psychological safety as the bedrock for trust. Thus, make sure you’re investing in the psychological safety of your employees as well. This includes providing access to resources that help to unlock human potential, stimulate growth, and promote individual well-being.
• Be ready for questions or concerns. Make sure your HR team is prepared for questions and concerns. Your HR team should be able to serve as a guide for managers and employees alike. This requires some extra support for managers, especially if your policy requires approval.
• Implement a leave management system. It’s important to monitor PTO usage to ensure that employees are not taking advantage of the policy. And with a high-quality tool like actiPLANS, you will be able to monitor how much time off employees are taking and make sure that employees don’t go absent all at once or for too long. actiPLANS streamlines the entire leave management process (from requests to final approval). It allows you to keep tabs on employee availability, analyze staff absence data in depth, and make better productivity improvement decisions.

Leave management in actiPLANS – provide your team with simple tools to request and plan their time off, review employee availability, and get informed to plan out workloads in a way that boosts productivity

• Gather feedback. Once the policy is launched, make sure to continue to nurture it. Ask your managers how it’s going for them. Gather feedback from employees. Where can you improve your internal communication? How are you adjusting for the feedback received?
• Assess the policy regularly. It’s important to regularly assess the unlimited PTO policy to ensure that it’s meeting the needs of employees and the company. This includes measuring the effectiveness of the policy, assessing the financial impact, and ensuring that it’s in compliance with state and federal laws.

Summary

There’s no one-size-fits-all approach for a vacation policy – especially when you’re thinking of implementing unlimited PTO. So, if you consider modifying your company’s vacation policy, take into account its benefits and drawbacks, and analyze them thoroughly to see if this innovation will work for your business.