By Jeff Schmerker and Emily McCrary-Ruiz-Esparza
More companies are offering unlimited paid time off (PTO), which can offer you the freedom to take the vacation you need. But there are downsides, too, like plenty of ambiguity and unstated pressure to stay at work.
Here’s what you need to know—the good and the bad—about unlimited PTO policies.
In the past few years, companies like HubSpot (4.3 stars), Grubhub (3.4 stars), and Netflix (3.9 stars) have made news by unveiling unlimited paid time off (PTO): the ability for employees, to a certain extent, to take as much vacation, sick, and mental health days as they need as long as performance goals are met.
The fine print varies by company, but unlimited paid time off policies typically include the stricture that time off must be approved.
So what does “unlimited” PTO really mean?
There’s still a lot of gray area. No, you can’t jump on the next flight to Paris on a whim, and don’t try to show up on Monday only to announce you’ll be out of office Tuesday through Friday.
Typically, the gist is that vacation days won’t be capped or tallied. You won’t have to wait to accrue vacation time, and you won’t have to barter for time off you haven’t yet earned.
It’s key to realize that employers aren’t necessarily offering this out of the goodness of their hearts—there can be real bottom-line benefits to companies, from padded perks packages that attract top talent to bottom-line savings when it comes to accounting and vacation pay-outs.
How common is an unlimited PTO policy?
Unlimited PTO may not be for everyone—you’ll need to hear what your prospective employer has to say about it. Even getting to the point of pondering it may not even happen – SHRM reports that only about 4 percent of employers in the U.S. offer unlimited vacation, and that number is higher than other estimates.
Companies offering unlimited vacation tend to score highly among InHerSight users—paid time off (though not necessarily unlimited) is the number-one predictor of women’s overall job satisfaction.
Pros of unlimited PTO
Americans are not good at taking time off from work. Productivity culture means employees feel pressured to be always on, and the build-up of work while they’re out of the office means that many workers don’t take time off. Many European countries mandate time off for workers—some as many as 25 days every year. There’s no such thing in the U.S.
There are so many benefits to taking time off from work: better productivity, boosted morale, better engagement from employees, and even improved mental and physical health. So while Americans are still getting used to the idea of unlimited paid time off, it is a step in the right direction.
Some pros of having unlimited paid time off include:
Rest when you need it
Less stress about missing time at work (or at least, for some)
Better productivity when you are on the job
No need to wait to accrue vacation days
What are the downsides of unlimited PTO?
Unlimited paid time off does have its hiccups.
Lack of clarity from the top about how much time can really be taken off: some employers have unspoken caps on PTO even if their policies read “unlimited”
Competition among workers to show dedication to their job by not using taking time off
Inability to use vacation days in your compensation negotiation
If you quit, it’s unlikely you’ll receive any untaken vacation pay
How to know what you’re really signing up for
Unlimited paid time off is still a relatively new practice in the workplace. Here’s how you can get a realistic sense of what a company’s paid time off policy really entails.
If you’re new to the company
Ask current employees whether they feel comfortable taking time off
Ask HR to show you the average number of days an employee takes off each year
Ask HR or your hiring manager their policy and process for requesting and approving PTO
If your company has a new unlimited PTO policy
Ask outright whether there will be caps on PTO
Ask about the policy and process for requesting and approving time off
Ask whether there will be payouts for any unused PTO