How Does Unlimited PTO Work ? | 4 Pros & Cons


Quick Summary : In this article you will know

  • What is unlimited pto?
  • How does unlimited pto work?
  • Pro and cons of unlimited pto
  • List of companies offering unlimited pto

Table of Contents

How Does PTO Unlimited Work?

Before going in details first we should know what is unlimited pto :

What is Unlimited PTO?

Unlimited PTO is a structure in which employees don’t get the number of paid days off at the beginning of the year. The employees have the freedom to get the time off when they need it as long as it will not clash with the business. It leads to significant flexibility as an employee and rewards productive use of work hours.

So, as long as the employee’s work has met their employer’s expectations and their leaves are coordinated with others to ensure that absence doesn’t hinder their work, they are free to take leaves. Most companies still have the rules for requesting PTO as unlimited PTO does not mean that workers should take an off intentionally if they have nothing to do. So, this policy gives flexibility to the period employees can take in a year.

4 Pros of Unlimited PTO | For Companies

1-Better employee morale and happiness

According to Fortune 50% of workers believe it is essential to have a job that helps them have an excellent work-life balance. So it is not about a salary anymore. Nowadays, employees prefer job benefits that give them an integrated life that includes activities beyond work. Unlimited PTO makes employees feel trusted and would like to work for an employer who respects various aspects of their life, developing loyalty at the workplace.

2-Saving money with unlimited PTO

During the resignation, the companies lose a considerable amount of their revenue to PTO encashment. Although the companies have rules for the number of PTO an worker can avail at a time, there are no restrictions on the annual PTO they can get so long as they meet their deadlines and perform consistently. Employees can no longer accrue PTO, and companies are not required to track and pay employees for unused PTO

3-Save time on administrative tasks

Tracking PTO is a task with a dedicated HR personnel who handles PTO approval, PTO tracking, leave encashment, PTO reporting, and much more.
While companies may have a PTO approval procedure, Unlimited PTO eliminates the hassle of tracking PTO, thereby saving time and money for the HR team.

4-Attracting and retaining talent becomes easy

According to Indeed, the number of job postings advertising unlimited PTO has grown 178 percent from 2015 to 2019, making it a popular and sought-after employee benefit.
When work-life balance is a priority, employees are willing to forgo salary raises for better employee perks. Employers have understood this trend and are willing to offer what the employee seeks to attract and retain top talent. According to 2017 Employee Engagement & Loyalty Statistics it shows that  33% employees approve thier trust level on company  

Read Also : PEO VS EOR

4 Cons of Unlimited PTO | For Companies

1-There is a high risk of abuse

With no mechanism to track PTO, employees will likely be exploiting the benefits of unlimited PTO. Employees may frequently take time off, their deadlines will be affected, and their team will have to take an unexpected workload. It is where a PTO approval process and PTO notice would help.  

2-PTOs can’t be used as rewards anymore

Workers look forward to reaping the benefits of their excellent work as paid time off. However, with an unlimited PTO policy, time off can no longer be used as a reward, leading to employee resentment.

3-Difficult to maintain employee schedule

With no means to learn about the availability of employees, team managers would find it challenging to plan their work or collaborate with team members, eventually affecting the team’s performance. Available workers may overwork, leading to dissatisfaction, burnout, and even resignation.

4-Unsure about compliance

While providing paid time off to employees is not compulsory, sure leaves are mandatory under the FMLA act (such as sick leave, maternity leave, etc.). To avoid business lawsuits, companies must learn about the compliance requirements and draft their unlimited time off policy accordingly.

List of Companies Offering PTO

  1. Netflix.
  2. Sony Electronic.
  3. GrubHub.
  4. Evernote.
  5. Roku.
  6. VMWare.
  7. Oracle.
  8. LinkedIn.
For more details click here
Read Also : Employer of Record

Unlimited PTO Policy Benefits for Employees

Accrual :

In this policy, employees get time off based on their work hours. The amount of time off is mainly determined by the worker’s tenure. For example, a current hire may earn 2 hours off for every 40 hours worked. But that employee who has been with the company for ten years may earn 4 hours every 40 hours. 

Allotment or Bank :

This method allows the employees to start every period with a specific number of PTO hours. Mostly this period is January 1st, but sometimes it can be a work anniversary or the starting of the fiscal year.

Unlimited :

There is no limit on the number of hours an employee can take off in this policy. It gives the employees the freedom to take as many off as they want as long as they have finished their projects and received approval. Startups use this PTO policy, like Netflix, Dropbox, and Evernote. But only 4 percent of businesses will use unlimited paid time off in 2021.

Mandatory :

 It is the new and least common system. So in this system, the worker should take a certain number of days off. This method addresses the research that employees often feel overworked and are unsure about taking time off.

Accumulated Paid Time Off :

Some different ways are there to handle the accumulated days. In some jurisdictions, there are clear rules about what employers can do with these banks of leave days.

Roll Over Plan :

In this plan, the accumulated paid days off from one period to the next. So the employee has 5 days remaining on December 31st and those on January 1st. It provides both freedom and challenges for worker. The leaves can accumulate by the employees for years, and they can take off a month or even more while getting the total salary. Some employers can also include rollover limits or need to give notice far in advance for an extended period off.

Use-it-or-lose-it : 

In this method, the employees’ days off do not carry over to the next period. So an employee having 5 leaves left on December 31st will have zero on January 1st. So the employees are encouraged to have their time off, but also they can get a cluster of time off requests at the end of the year. Another variant of this method includes the pay a year-end bonus for each unused day, although this could lead to employees piling up days instead of taking time off.

Read Also : What is AOR


Unlimited PTO allows the companies to take as many vacations as they want as long as their ability to complete their work is not affected. The time the employee takes off is not limited in this policy, so the employee has no restriction on how much time they can take off. The employer looks more appealing to the worker with this unlimited PTO policy. It gives an image that the company cares about the well-being and mental health of the employees.


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A human resource management policy provides employees with a number of bankable hours that can be utilized for any other reason. The complete form of PTO is personal time off, which is generally used to describe any period an employee is paid as they take leave from work.
It is a type of Human resource policy that includes vacations, sick and personal time for employees to utilize as paid time off from work. PTO is mainly accumulated over time and is attributed to a worker’s bank of hours every pay period.

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