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.
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.
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.
Examples of companies embracing unlimited PTO include Netflix, HubSpot, and LinkedIn, all of which use the policy to reinforce their progressive, high-performance cultures.
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.
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.
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.
Some companies have learned these lessons the hard way.
These examples underscore that unlimited PTO is not a silver bullet; it requires thoughtful implementation and leadership modeling to succeed.
✅ Pros:
❌ Cons:
For a more detailed breakdown, see Workable’s guide to unlimited PTO pros and cons.
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.
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.