The Pros and Cons of Unlimited PTO

Unlimited PTO is the new hotness at tech companies. It’s a great marketing/recruiting tool: “wait I get UNLIMITED time off???”, but many people in the industry are skeptical, with the belief that peer pressure will mean no one will take time off. After all, an employee can’t literally take unlimited time off, or can they…? After working at a job with unlimited PTO for a couple of years, I thought I’d give some perspective from my experience.

With unlimited PTO, can you finally go to Australia?

For the Employee

Pros

1. New employees don’t have to worry about building up a bank of leave. On day one you can in theory start taking days off without losing pay.
2. Junior employees are able to take advantage of more vacation time than they would otherwise not get. In America, it’s typical that junior employees get two weeks of PTO, while senior employees get somewhere between 3-6 weeks of PTO. At my last company, which offered unlimited PTO, it was not unusual for 24 year olds to take two weeks in the fall, another two in the spring, plus random weekend buffer days, which definitely added up to over a month.
3. Sick people don’t come to work. Most of the time sick people would work from home rather than completely being off, but you almost never saw a sick person at the office because people weren’t worried about using vacation time.

Cons

1. Without a bank of leave you are withdrawing from, it’s very easy to lose track of how much time you took. At the end of my first year, I was genuinely unsure if I had even taken two weeks.
2. Senior employees probably take less vacation than they would otherwise. When you have a bank of leave, if you have unused leave at the end of the year, typically someone realizes and either forces you to take leave, or acknowledges you haven’t taken enough time off and compensates you in some other way. Because senior employees usually can’t take a month or three weeks off at a time, they end up taking smaller vacations, and I’m certain I used less than I would have if I had a bank of PTO.
3. PTO isn’t paid out. I realized at some point I hadn’t taken enough vacation, so I planned a few weeks later in the summer. Then I was laid off in the early summer, and got nothing paid out for time not used. Getting PTO paid out is a nice bonus when you switch jobs, but it’s especially nice if things go south.

For the Employer

Pros

1. You don’t carry liabilities of PTO on your books. In a typical PTO scenario, you have to recognize all the unused leave as a debt. In the world of unlimited PTO you don’t! If you need to let employees go or get acquired, it’s all straightforward.
2. Marketing. It’s obviously a great marketing thing to say you have unlimited PTO, especially because you still get the right to enforce limits. I have a friend that worked at an unlimited PTO place which told their workers flat out they shouldn’t take more than 18 days a year…
3. Sick people don’t come to work! Don’t underestimate how much flu season kills productivity. I’ve seen it sweep through offices and lower everyone’s productivity. In my experience in the unlimited PTO world, sick people would end up working from home anyway, where if they used PTO they would feel entitled to not work.

Cons

1. People treat leave less seriously. Everywhere else I’ve worked people “put in” for vacations, where this last place people would just put leave on the calendar, sometimes even the week before. That may have just been a cultural thing, but I got the feeling it had a lot to do with the unlimited leave policy.
2. Employees may take too much or too little leave. If one employee is taking 6 weeks of year and another is taking 2 days, you are going have imbalance. You can correct that imbalance either by forcing one person to take more, or having the other person take less (but then everyone starts realizing the unlimited PTO is not unlimited…).

Summary

• In general I think the pros of unlimited PTO are such that every employer should offer it. It probably costs them less in the end (since you can still deny leave), and it works great for marketing.
• As an employee I think junior employees should recognize unlimited PTO as a perk. For senior employees, I’d be more dubious and expect your compensation and especially severance to be higher than a comparable workplace which has regular PTO.
• If your employer does not track the leave you take at an unlimited PTO workplace, make sure you track it yourself. You need time off.