The Productivity Paradox: Do Employees Really Take Time Off with Unlimited PTO? 

Unlimited Paid Time Off (PTO) has quickly become one of the most talked-about trends in workplace benefits. From startups to large corporations, companies are touting unlimited PTO as the ultimate expression of trust, flexibility, and progressive culture. But as enticing as it sounds, this policy comes with an unexpected twist: employees often take less time off under unlimited PTO than under traditional accrual systems. 

This phenomenon — known as the productivity paradox — has caught the attention of HR professionals and business leaders alike. In this article, we’ll explore why unlimited PTO sometimes backfires, what the research says, and how companies can strike the right balance between flexibility and productivity. 

What Is Unlimited PTO? 

Unlimited PTO is a leave policy in which employees are not assigned a fixed number of paid days off per year. Instead, they are entrusted to take as much time off as they need, provided they meet their responsibilities and performance goals. This policy removes the need to track accrued vacation or sick days, simplifying administration and signaling trust in employees. 

As outlined by SHRM, unlimited PTO is most commonly found in industries with knowledge workers, such as tech, finance, and creative fields, where output is not measured by hours on the clock but by deliverables and outcomes. 

Why Do Companies Offer Unlimited PTO? 

The rise of unlimited PTO reflects broader cultural and generational shifts in the workplace. Employees — especially millennials and Gen Z — increasingly value flexibility and autonomy over rigid policies. 

Benefits of Unlimited PTO: 

• Attracting and retaining top talent: A Glassdoor survey found that flexible vacation policies are one of the most desired perks for job seekers. 

• Reducing administrative burden: HR no longer has to track accruals or carryover balances. 

• Cost savings on unused PTO payouts: In some jurisdictions, companies with unlimited PTO avoid having to pay departing employees for unused vacation days. 

Examples of companies embracing unlimited PTO include Netflix, HubSpot, and LinkedIn, all of which use the policy to reinforce their progressive, high-performance cultures. 

The Productivity Paradox: Why Employees Take Less Time Off 

Despite its advantages, unlimited PTO is not without its downsides. Perhaps the most surprising is that employees tend to take fewer vacation days under unlimited PTO policies than under traditional ones. 

What the Data Shows 

A Namely study revealed that employees with unlimited PTO took an average of 13 days off per year, compared to 15 days for employees with traditional accrual-based PTO. 

Similarly, Harvard Business Review noted that employees often feel unclear about how much time off is “acceptable,” leading them to err on the side of taking less — not wanting to appear less dedicated than their peers. 

Why Does This Happen? 

1. Ambiguity and Lack of Benchmarks 
Without a set number of days, employees don’t know what’s expected or what their peers are doing. This ambiguity can lead to decision fatigue and guilt about taking “too much” time off. 

2. Cultural Pressures 
In high-performing environments, employees may feel pressure to appear committed, particularly if managers themselves seldom take time off. As SHRM explains, the effectiveness of unlimited PTO depends heavily on organizational culture. 

3. Fear of Falling Behind 
In industries where workloads are heavy and deadlines tight, employees may worry that taking time off will leave them overwhelmed upon return. 

Real-World Examples 

Some companies have learned these lessons the hard way. 

• CharlieHR, a UK-based HR software company, rolled back its unlimited PTO policy after noticing employees took less time off, citing confusion and burnout as unintended consequences. 

• On the other hand, HubSpot pairs unlimited PTO with active encouragement from leadership and a “no vacation shaming” culture — resulting in higher utilization and employee satisfaction. 

These examples underscore that unlimited PTO is not a silver bullet; it requires thoughtful implementation and leadership modeling to succeed. 

Pros and Cons of Unlimited PTO 

✅ Pros: 

• Flexibility for employees to take time off as needed 

• Signals trust and autonomy 

• Simplifies HR administration 

• Potentially lower payout liability 

❌ Cons: 

• Ambiguity can discourage use 

• Potential for unequal application across teams 

• Challenges with workforce planning and coverage 

• Cultural misalignment if not properly managed 

For a more detailed breakdown, see Workable’s guide to unlimited PTO pros and cons. 

Best Practices for Overcoming the Paradox 

If your organization is considering — or currently offering — unlimited PTO, here are some strategies to ensure it delivers on its promise:

1. Set Expectations

Define a baseline (e.g., employees are expected to take at least three weeks annually) to normalize usage and avoid ambiguity.

2. Lead by Example

Managers should model the behavior by visibly taking time off themselves. This reassures employees that PTO use is supported. 

3. Monitor and Measure

Track time-off trends to identify underuse or disparities between teams. Tools like PTO Exchange can also help employees see value in their unused time by allowing them to convert it into retirement contributions, loan payments, or other financial benefits. 

4. Communicate Frequently

Reinforce messaging about the importance of rest and time off through regular internal communication and check-ins. 

Conclusion 

Unlimited PTO is a bold and modern time off policy that aligns with today’s emphasis on flexibility and trust. But it’s not without risks. The productivity paradox — where employees take less time off and risk burnout — is a real concern that can undermine the policy’s intent. 

With clear expectations, cultural reinforcement, and tools to support employees in utilizing their time, companies can turn unlimited PTO from a risky experiment into a sustainable, employee-centric perk. 

For more insights on implementing effective time-off policies, schedule your free consultation to gain industry best practices, unique strategies and more! 

This article is part of our “Unlimited PTO Debate” series, exploring the impact, benefits, and challenges of modern leave policies.