Last updated on July 10, 2025
A Step-By-Step Guide To Building An Unlimited PTO Policy That Works
Unlimited paid time off (PTO) policies are becoming more common in today's workplace. These policies are often discussed in conversations about flexibility, employee satisfaction, and modern company culture.
But the idea of unlimited PTO may raise many questions for HRs. How does it work? What are the boundaries? What makes a policy effective?
This article explains what unlimited PTO is, why some companies are adopting it, and how to build a policy that works clearly and consistently.
What Is Unlimited PTO And Why Adopt It
Unlimited PTO is a time-off policy where employees aren't given a fixed number of vacation or personal days each year. Instead, they can take paid time off when needed, as long as their work responsibilities are met and their manager approves the request.
This differs from traditional PTO systems, where employees earn a specific number of days over time. With unlimited PTO, there are no accruals to track or unused days to roll over. The focus shifts from counting days to measuring results.
Companies adopt unlimited PTO for several practical reasons. It reduces administrative work since HR doesn't need to track accruals or calculate payouts for unused time. It also helps attract and keep talented employees who value flexibility in how they manage their time.
How Popular Is Unlimited PTO?
In the U.S.
According to a recent Mercer report, about 20% of U.S. employers now offer some form of unlimited vacation policy. Companies like Netflix and HubSpot have made this approach popular, especially in tech, marketing, and creative industries.
For a growing team, unlimited PTO can be particularly helpful. It eliminates the need to track different accrual rates for employees with varying tenure while creating a culture where people are trusted to manage their own time.
Globally
Globally, however, unlimited PTO is still relatively uncommon. According to our 2025 Leave Management Report, only 36% of companies using Vacation Tracker offer some form of unlimited PTO. And in over 60% of countries, fewer than 1 in 10 companies have adopted it.
It’s most common in countries like Switzerland, the United States, and the United Kingdom, but rare in many other regions. If you’re considering rolling it out, it’s worth checking how common the practice is in your area. Your team or local talent market might not be familiar with the concept, or fully trust it yet.
Pros And Challenges Of Unlimited PTO
Unlimited PTO offers several clear advantages for both employers and employees. When implemented thoughtfully, it can improve workplace culture and operations.
Pros
For employers, it simplifies administration by eliminating the need to track accruals, carryovers, and unused balances. This saves HR time and reduces paperwork. It also removes the financial liability of paying out unused vacation days when employees leave the company.
For employees, unlimited PTO provides greater flexibility to handle personal needs, family obligations, and vacation plans without worrying about running out of days. This flexibility often leads to better work-life balance and job satisfaction.
Cons
Unlimited PTO also comes with challenges that organizations should prepare for. The most common issue is that employees may actually take less time off when there's no clear entitlement. Without a specific number of days to use, some people worry about taking "too much" time or appearing less committed than their colleagues.
It can be difficult to ensure fair and consistent application across different teams and managers. Without clear guidelines, some managers might approve time off more generously than others, creating inequity within the organization.
The transition from a traditional system can also be difficult, especially for employees who've saved up vacation days or those who are used to having clearly defined benefits. Some may view the change with skepticism, wondering if it's a way to reduce benefits rather than enhance them.
To learn more about the downsides of unlimited PTO, read our article: Why Unlimited PTO is a Scam
Traditional PTO | Unlimited PTO |
Fixed number of days | Flexible, based on needs |
Accrues over time | No accrual tracking |
Unused days may roll over | No rollover concerns |
Paid out when leaving the company | No payout liability |
Clear entitlement | Requires clear usage guidelines |
How to Implement An Unlimited PTO Policy
1. Assess Culture and Readiness
Before implementing unlimited PTO, evaluate whether your company culture supports this approach.
Ask yourself: Does your organization value results over face time? Do managers trust employees to make good decisions? Is there open communication between team members?
Signs that your company might be ready include:
- Teams already focus on outcomes rather than hours worked
- Managers evaluate performance based on results, not presence
- Employees demonstrate responsibility and accountability
- Communication channels are well-established
If your culture currently emphasizes strict schedules or physical presence, you may need to address these aspects before rolling out unlimited PTO. Consider starting with more flexible work hours or remote work options to build trust gradually.
Gather input from employees through surveys or focus groups to understand their concerns and expectations. This feedback will help shape a policy that addresses real needs rather than assumptions.
2. Define Clear Usage Guidelines
The most effective unlimited PTO policies include specific guidelines that help everyone understand how the system works. Without these boundaries, employees may feel uncertain about what's acceptable.
Your policy should clearly outline:
- Request process: How far in advance employees should request time off (e.g., one week for short absences, one month for extended leaves).
- Approval criteria: What factors managers consider when reviewing requests, such as team coverage, project deadlines, and business needs.
- Communication requirements: How employees should document their time off and communicate with teammates about their absence.
- Minimum expectations: Some companies recommend or require employees take a minimum number of days off each year (often 10-15 days) to prevent burnout.
- Blackout periods: Any times when time off requests may be limited due to seasonal business demands or critical projects.
Document these guidelines in your employee handbook and make them easily accessible through your company's internal communication tools.
3. Train Managers on Approvals
Managers play a crucial role in making unlimited PTO work. They need training on how to review and approve requests consistently and fairly.
Provide managers with clear criteria for evaluating time-off requests, such as:
- Impact on team workload and project deadlines
- Advance notice provided
- Coverage plans during the absence
- Employee's recent performance and reliability
Help managers understand how to have productive conversations about time off without making employees feel guilty or hesitant to use the benefit.
Encourage managers to use tools like shared calendars or leave management systems to track team availability. Vacation Tracker integrates with Slack and Microsoft Teams, making it easy for managers to see who's available and plan accordingly.
4. Communicate The Rollout Plan
Clear communication is essential when introducing unlimited PTO. Employees need to understand not just how the policy works, but why the company is making this change.
Announce the policy several weeks before implementation to give everyone time to adjust. Use multiple channels such as team meetings, email announcements, and your company intranet to share information.
Address common questions directly and proactively:
- How does this affect current PTO balances?
- Is there a limit to how much time off I can take?
- How will time off requests be evaluated?
- Will this affect my benefits or compensation?
Frame the policy in terms of trust and results rather than rules and restrictions. Explain how unlimited PTO aligns with your company values and goals.
5. Monitor And Adjust
Once your unlimited PTO policy is in place, track how it's working and be prepared to make adjustments. This ongoing evaluation helps ensure the policy achieves its intended goals.
Monitor basic metrics like:
- Average days taken per employee
- Patterns in time-off usage across teams
- Any impact on productivity or project timelines
Schedule reviews after three and six months to assess how the policy is working. Use these checkpoints to address any issues that arise and refine your approach.
Collect feedback from employees and managers about their experience with the policy. Anonymous surveys can help uncover concerns people might not express directly.
Be willing to adjust guidelines based on what you learn. If you notice employees aren't taking enough time off, you might need to strengthen your minimum usage recommendations or have managers more actively encourage breaks.
How To Prevent Underuse and Overuse
One of the biggest challenges with unlimited PTO is finding the right balance between underuse and overuse. Surprisingly, underuse is typically more common than overuse.
Many employees hesitate to take time off when there's no clear entitlement. They worry about how their absence might be perceived or feel uncertain about what's considered appropriate. This hesitation can lead to burnout and defeat the purpose of the policy.
To encourage healthy use of unlimited PTO:
- Lead by example: When managers and executives take regular time off, it signals to everyone that using PTO is acceptable and expected. Have leaders share when they're taking vacation and how they're disconnecting.
- Set minimum expectations: Some companies establish minimum time-off requirements, such as at least 10 days per year or at least one day per quarter. This creates a floor that helps prevent burnout.
- Track and follow up: If you notice employees who haven't taken time off in several months, have their managers check in. Sometimes, a simple conversation can help people feel more comfortable planning breaks.
- Celebrate time off: Create a positive culture around taking breaks by acknowledging their importance for well-being and creativity. Avoid praising people for "never taking time off" as this reinforces unhealthy patterns.
While overuse is less common, it can happen. Clear guidelines about advance notice, team coverage, and performance expectations help prevent potential issues. If someone's time off begins affecting their work quality or team dynamics, managers can address this through normal performance conversations.
How To Measure Success And Maintain Accountability
For unlimited PTO to work effectively, organizations need ways to measure its success and maintain accountability. This balance ensures the policy provides flexibility while supporting business needs.
1. Track PTO Usage Metrics
Even with an "unlimited" policy, tracking basic usage helps identify patterns and potential issues. Simple metrics to monitor include:
- Average days taken per employee per year
- Distribution of time off across teams and departments
- Seasonal patterns in time-off requests
This tracking doesn't contradict the unlimited nature of the policy. Instead, it provides visibility into how people are using the benefit and whether additional guidance might be needed.
Tools like Vacation Tracker simplify this process by automatically recording time-off requests and approvals. These systems provide useful reports without creating administrative burden.
2. Evaluate Performance Outcomes
The ultimate measure of an unlimited PTO policy's success is whether it supports or enhances performance. Regular performance reviews should focus on results and impact rather than time spent in the office.
Compare key performance indicators before and after implementing unlimited PTO. Look for any changes in:
- Project completion rates
- Customer satisfaction scores
- Employee engagement metrics
- Retention rates
If performance remains strong or improves while employees enjoy greater flexibility, the policy is likely working as intended. If certain areas show decline, you can address specific issues rather than abandoning the entire approach.
3. Collect Feedback and Refine
Regular feedback helps identify what's working and what needs adjustment. Use simple surveys or team discussions to gather input about:
- How comfortable employees feel requesting time off
- Whether the approval process works smoothly
- Any confusion about policy guidelines
- Suggestions for improvement
This feedback loop allows you to refine your approach over time. For example, if employees report confusion about how much time off is appropriate, you might add clearer examples or guidelines to your policy documentation.
Shaping Your Future Time-Off Culture
Unlimited PTO represents more than just a policy change. It's part of a broader shift in how organizations think about work, time, and performance. When implemented thoughtfully, it can help create a culture where trust, results, and well-being are prioritized.
The best unlimited vacation policies evolve over time based on real-world experience. As your team grows and changes, your approach may need to adapt as well. Regular reviews and open communication help ensure the policy continues to serve both organizational and individual needs.
For growing teams, tools that simplify time-off management become increasingly important. Vacation Tracker integrates with the platforms your team already uses, making it easy to request, approve, and track time off without adding administrative burden.
One company that’s put unlimited PTO into practice successfully is SharpLaunch, a commercial real estate marketing platform with around 20 employees. Before using Vacation Tracker, they had no formal procesS, people would simply take time off without documentation or visibility. With an unlimited PTO policy in place, they needed a system to bring structure and transparency without adding complexity.
Vacation Tracker gave them exactly that: an automated way to manage time off, integrated directly into their existing tools, with no extra training required.
Many organizations find that unlimited PTO works best as part of a comprehensive approach to flexibility that might include remote work options, flexible hours, or even four-day workweeks. These practices share a common foundation: trusting employees to manage their time effectively while delivering results.
By focusing on clear guidelines, consistent application, and ongoing evaluation, you can build an unlimited PTO policy that truly works for your organization.
