Unlimited PTO sounds like a great benefit on paper, but after working with several companies who were considering Unlimited PTO, I have firsthand seen why this policy does not usually work well in practice. There are several reasons but by far I believe the biggest reason for moving away from this policy is people's behavior. That is, people are wired to want to know our "score," by reacting to scarcity. For instance, when we see how many "lives" we have left on a video game, or how long a training program video runs, or how many more points until we earn a free taco, we tend to be more motivated to keep going, earn more, and utilize what we have earned. Marketing professionals know this and utilize it with "limited edition" runs of products to create demand. Unlimited PTO removes this "limited edition" mindset by removing the "scoreboard." When people are unaware of how many days they have taken off or how many you have remaining, psychologically it makes you use less overall. Virtually every company I have experience with who has moved to unlimited time off has seen a drop in time off taken, not an increase. So if the purpose is less time, then it is working, but if the purpose is increased wellbeing and increased engagement, it is not working. The better solution, when you have people asking for either unlimited or simply more time, is to, simply, give more time. Yes, there is a balance sheet cost but in reality it is a very small cost compared to other benefits with a very high upside. Creative approaches like additional recognized company holidays, floating holidays so people can celebrate religious or family occasions that aren't otherwise recognized, giving an extra day off in the month of your birthday or your company anniversary, and giving an extra week or two as an earned "sabbatical" every few years, all go far in employee appreciation without adding a large cost burden. Additionally, leading by example helps. People pay attention to what their leaders do. So when they see leaders not taking off their allotted time, they will do the same. Conversely, leaders I work with who use their time off have employees who do as well, and are healthier and more engaged as a result.
One of the most consistent challenges I've heard over many years of practice is that PTO policies--despite their intended flexibility--often lack clear structure and guidance. This absence of clarity can lead to uncertainty around what's considered acceptable, making team members hesitant to fully utilize their time off. While teams appreciate the flexibility their companies provide, they also place high value on clarity--they want to know what success looks like and how time away aligns with performance expectations. Unlimited PTO policies, in particular, tend to fall short in this regard. Though well-intentioned and often introduced to help companies elevate their total rewards, they can leave people wondering how much time is "too much," which leads to underutilization and inconsistent experiences across teams. What's especially challenging--and somewhat counterintuitive--is that this happens despite our clear understanding that time off is critical to our team members' ability to do their best work. We know it supports mental health, overall wellness, creativity, and long-term performance. Yet without the right structure, even the most flexible policies can miss the mark. In response I've often implemented an approach called "Life Leave" that complements traditional PTO policies (e.g., vacation). This framework offers flexibility with intention. It empowers team members to take time off in ways that are personally meaningful to them whether for rest, volunteering, professional development, cultural observances, or family responsibilities. What makes Life Leave most effective is its balance as it supports individual needs while reinforcing clear expectations around performance and accountability. I've found it particularly impactful to provide explicit guidance on how much time is available, which helps create clarity and confidence for team members leading to more usage and engagement. At the same time it remains flexible enough to allow people to lean in when and how it makes sense for them--and it evolves as the team's needs evolve.
Data suggest that the popularity of these plans may be waning. Why? Job postings offering unlimited paid time off (PTO) have decreased by 50% from 2022 to 2024, according to Revelio Labs, from 3.1 per 1,000 to 1.5 per 1,000. Employee perception is also waning; companies offering unlimited paid time off (PTO) were rated 3.24% lower in work-life balance compared to those with traditional PTO policies. While unlimited PTO sounds like the ultimate perk, our research revealed that, when deciding whether to adopt this type of plan, employees generally take less time off than those with a traditional PTO plan. Research suggests that these policies are underutilized due to ambiguity surrounding acceptable usage and concerns about appearing less dedicated. At Reve Consulting, we have instituted a "use-it-or-lose-it" PTO policy to encourage our team members to take their full time off to recharge and rejuvenate. Also, we award a paid week's sabbatical every 5 years of service. As companies rethink traditional time-off models, flexible PTO and mandatory minimum PTO policies are emerging as more innovative alternatives to unlimited leave. Flexible PTO offers freedom with a light structure, appealing to organizations that trust employees to manage their well-being. Meanwhile, mandatory minimum PTO ensures employees take the time they need to reset, which protects against burnout and boosts long-term productivity. Increasingly, companies are realizing that spending time away from work is not enough to recharge their team. They have to design for it. Structured time-off policies backed by leadership modeling and clear expectations are proving far more effective than the "you figure it out" approach of early unlimited PTO experiments.
Unlimited PTO policies are losing popularity with BOTH employees and employers. This is largely because the "logic" of such policies is faulty. For such policies to make sense, extremely accurate KPI's are required (both lagging and leading) to assess all aspects of the employees' jobs. In theory, any employee who is performing at or over 100% of all job responsibilities with no risk of performance slipping, should be supported in taking as much time off as they desire in exchange for the continued performance. Unfortunately, it's nearly impossible to identify highly accurate lagging and leading KPI's for every aspect or responsibility of any given job/employee. Moreover, it's often difficult to track and report on all KPI's in a timely manner. Thus, employers and employees, alike, cannot be sure performance is truly where it should be, in support of such policies. Thus, Unlimited PTO policies has often caused conflict, which nobody likes. One alternative many companies are having success with is a fresh take on an old idea, Flexible Scheduling/Flexible Work. These policies often take the opposite approach . . stating the job performance goals, regardless of when or where the work is performed to achieve them, or how long it takes. These programs often do not distinguish between working vs. non-working hours or days of the week, or any amount of hours required . . just satisfactory completion of the requirements. So, just a different perspective to accomplish the same objective. Sometimes a different perspective changes everything.
Unlimited PTO policies are losing popularity because, in practice, they often fail to deliver the flexibility and wellness benefits they promise. While they sound progressive, the reality is that many employees end up taking less time off under these policies. Without a clear benchmark for what's considered "normal" or acceptable, employees often hesitate to use their time, fearing it might reflect poorly on their work ethic or commitment. This lack of clarity creates anxiety and inadvertently fuels a culture of overwork--exactly what unlimited PTO is meant to prevent. Another challenge is inconsistency. Some employees may feel empowered to take extended time off, while others are quietly discouraged, leading to inequities and resentment. In industries where consistent staffing is critical, the lack of structure makes planning difficult, and in some cases, managers may even override requests, further undermining the policy's intent. Additionally, unlimited PTO can't always be applied equally across salaried and hourly workers, potentially triggering claims of unfairness or noncompliance with local labor laws. As a result, many companies are shifting toward mandatory vacation policies, which require employees to take a minimum number of days off each year. This approach removes the ambiguity, helps normalize taking time away from work, and actively combats burnout. It's especially effective in high-pressure environments where employees may otherwise push through exhaustion or skip vacations entirely. By institutionalizing rest, companies see improved retention, better morale, and a more energized workforce. It's a simple yet powerful shift--one that sends a clear message: rest isn't a perk, it's a priority.
Unlimited PTO once promised freedom and flexibility, but it's increasingly clear that for many employees, especially those from underrepresented or historically excluded backgrounds, it's more of a mirage than a benefit. In my work as a senior HR leader in Tech and therapist and coach for underrepresented communities, I've seen how this policy, when poorly implemented, can erode psychological safety, blur boundaries, and increase inequity. One major issue with unlimited PTO is that it lacks structure. Without clear norms or leadership modeling, employees may feel guilty or uncertain about taking time off. Research shows that in organizations with unlimited leave policies, people often take less time off than those with set vacation days. This perceived pressure to "prove" one's commitment disproportionately affects women, caregivers, and marginalized employees who are already navigating imposter syndrome or subtle biases. It can make rest feel like a risk. Instead, some companies are shifting to collective rest models, structured, trust-based systems that prioritize equity and wellbeing. One alternative I've seen gaining traction in hybrid workplaces is "company-wide reset weeks" or seasonal shutdowns, where the entire organization takes time off simultaneously. These initiatives remove the ambiguity and competition of unlimited PTO and foster psychological safety by normalizing rest for everyone, not just the bold or burnout-resistant. This model supports all five elements of high-performing teams identified by Google's Research on Effective Teams, Project Aristotle: 1. Psychological safety is boosted when everyone logs off at once, minimizing the fear of falling behind. 2. Dependability grows when teams can trust that their colleagues will take breaks and return replenished, not burned out. 3. Structure and clarity are enhanced when time off is explicitly defined and coordinated. 4. Meaning is reinforced as employees feel that their wellbeing is genuinely prioritized, not just promised. 5. And impact increases when people return from true rest more creative, collaborative, and focused. In today's hybrid reality, where boundaries are already blurred, the future of time off needs to be as thoughtful and inclusive as our approach to work itself. Unlimited PTO may sound progressive, but the real innovation lies in creating policies that build trust, provide clarity, and prioritize collective wellbeing.
It kills operational clarity, to some degree at least. Simply because when time off isn't formally accrued or budgeted, teams struggle with planning. They can't accurately forecast bandwidth, coordinate coverage, or spot burnout risk if everyone's on an undefined schedule. Managers end up tracking PTO informally anyway, which then defeats the whole premise. Planned PTO cycles may hold the answer here. Instead of waiting for people to ask for time off, companies pre-schedule rest into the calendar. Something like two company-wide breaks a year (e.g., one week in summer, one in winter), plus a set number of flexible days. This works better because it removes the psychological barrier of "asking" and builds rest into the rhythm of the business. Teams recover together. No one returns to a backlog avalanche, and clients learn to expect and respect the cadence.
Having led HR in both small and large organizations--and now supporting growing companies as a fractional Chief Culture and Talent Officer--I've seen unlimited PTO policies lose their shine. On the surface, they sound empowering. But in practice, they often create confusion and guilt. Without clear guardrails or cultural norms, people take less time off, not more. Especially in fast-moving environments, there's this unspoken pressure to always be "on," which chips away at well-being over time. It sends the opposite message of what the policy was meant to stand for. One alternative I'm seeing work well is a minimum PTO policy, where companies actually require employees to take a certain number of days off--and in some cases, build in quarterly check-ins or company-wide breaks. It's a small shift, but a powerful one. It removes the guesswork, reinforces the importance of rest, and makes it easier for people to unplug without guilt. When time off is protected by the culture and the structure, people feel supported to show up fully--and that's where the real performance gains happen.
Unlimited Paid Time Off (PTO) was once hailed as a progressive, trust-based perk, but many companies are rolling it back due to unintended consequences: 1. Lower Actual PTO Usage - Without clear guidelines, employees often take less time off due to guilt, peer pressure, or fear of being perceived as slackers. 2. Manager & Cultural Bias - In practice, approval depends on managerial discretion, leading to inconsistency. High performers may avoid requesting time off to avoid scrutiny. 3. Legal & Financial Risks - Unlike accrued PTO (a liability on the books), unlimited PTO doesn't require payouts upon termination, which can feel exploitative to employees. 4. Burnout & Productivity Loss - Ironically, a policy meant to improve work-life balance can backfire by creating ambiguity, leading to overwork. A Better Alternative: Flexible Minimum PTO How It Works: - Guaranteed Minimum (e.g., 20-25 days) + Flexibility to Take More (with manager approval). - Mandatory Time-Off Requirements (e.g., "Take at least 15 days by Q3"). - PTO Payouts for Unused Days (partial or full, depending on company policy). Why It's Gaining Traction: Psychological Safety - Employees know they're expected (not just allowed) to take time off, reducing guilt. Fairness & Transparency - Clear benchmarks prevent favoritism in approvals. Retention Boost - Payouts for unused days act as a financial incentive to stay. Burnout Prevention - Enforced minimums ensure actual rest, unlike unlimited PTO where people self-restrict. Example: GitLab uses a "Flexible PTO" model with a 10-day minimum and encourages team-wide breaks (e.g., "No-Meeting Wednesdays"). Result: Higher employee satisfaction without productivity loss.
In many organizations, unlimited PTO can unintentionally create pressure on employees. Without defined vacation days, some employees may hesitate to take time off out of concern that they're taking "too much" compared to their peers. This can lead to guilt or fear of being perceived as less dedicated. In contrast, traditional accrued vacation policies encourage employees to fully use their earned time off, especially before the year ends. This structure can help prevent burnout by making time off feel both earned and expected. I have seen companies offering minimum vacation days that are mandatory for employees to take in a year, this is such a great initiative to actually encourage employees to take time off and let them know it is okay to rest every once in a while.
Unlimited PTO policies are on the decline-especially in eCommerce since operational consistency is key. Our team handles everything from customer service inquiries to logistics coordination -- and without structured time-off policies, scheduling goes haywire. Research and our own experience demonstrate that employees actually take less time off under Unlimited PTO because of ambiguity and guilt, which can lead to burnout--certainly not the path to a high-performance culture. Research is showing that unlimited PTO employees take 2-3 days less leave each year than their counterparts with a traditional accrual method. For us, the logistical stress of unplanned days off during peak sales periods (such as our holiday supplement launches) showed us that flexibility alone can be insufficient. Instead, we've implemented a hybrid PTO model-a minimum PTO requirement (e.g., 15 days/year) and the creation of 'recharge weeks' where the entire company takes synchronized time off. We have successfully rolled this out and realized a 20% increase in employee engagement scores, and no hiccups during large campaigns have occurred. Structured flexibility is not a compromise but rather a win for productivity and wellbeing in fast-moving industries like ours.
Flexibility and trust are essential to a well-run business, but Unlimited PTO doesn't always deliver on that promise. In my experience, it often creates more uncertainty than freedom. Team members can end up second-guessing whether it's really okay to take time off and in some cases, they end up taking less, not more. At Exclaimer, we've found that being intentional with time-off policies leads to better outcomes. Increasing PTO by adding flexible time out to meet individuals needs, whether that is them taking a birthday off, time out for a spa afternoon, or volunteering at a local charity, is a small but meaningful way to show appreciation and support a healthy work-life balance. Rather than vague perks, we focus on benefits that are simple, thoughtful, and genuinely help people unplug.
Unlimited PTO is losing its shine because it lacks intentional design. In theory, it promotes freedom, but in practice, it often creates guilt, ambiguity, and inequality. High performers hesitate to disconnect, and without leadership modeling time off, the policy becomes performative rather than empowering. A more innovative alternative companies are now adopting is the Recharge Rhythm model, structured rest cycles baked into the employee experience. Think: quarterly reset weeks, digital detox days, or company wide mental health closures. Why it works: it removes the decision fatigue around when to rest, reinforces a culture of recovery, and treats rest as a strategic asset, not just a perk. These rhythms sync teams, reduce burnout, and improve creativity and focus. When rest is expected and shared, it becomes part of how the company operates, not just an individual decision. Bottom line? The future of time off isn't unlimited it's intentional, collective, and regenerative.
As the founder of NetSharx Technology Partners, I've observed unlimited PTO policies losing popularity primarily because of accountability issues. Many organizations struggle to track and manage these policies effectively, leading to inconsistent usage across teams. A successful alternative I'm seeing technology companies adopt is "PTO banking" - allowing employees to convert unused vacation days into other benefits. One client saved 30% on employee-related costs by letting team members apply unused PTO toward healthcare premiums or retirement contributions. The banking system works better because it acknowledges different employee needs while still encouraging actual time off. Tech workers particularly appreciate this flexibility, as it transforms unused vacation into tangible benefits without the ambiguity of unlimited policies. From my experience helping organizations transform their digital environments, the policies that work best combine clear boundaries with individual choice. When employees see their time as a valuable resource they control, both satisfaction and productivity metrics improve substantially.
At the heart of the decline in Unlimited PTO is one core issue: operational trust. On paper, it sounds like a dream--take the time you need, when you need it. But in practice, especially at smaller companies or fast-moving startups, it creates more uncertainty than freedom. Unlimited PTO tends to work best in large organizations where overlapping roles allow teams to absorb time off without major disruptions. But in a 10-person startup where every individual wears multiple hats, one person's absence can slow the entire company down. In those cases, the ambiguity of "unlimited" often leads to people taking less time off--not more. To counteract that, some companies have tried to layer in minimum PTO mandates within their unlimited policies. But the reality? These are rarely enforced well and often leave employees just as confused. That's why a shift back to structured PTO is gaining traction. It's clear. It's compensatory. Employees know exactly how much time they have, and in many cases, they're paid out if they don't use it. It's no longer about abstract perks--it's about clarity and trust. Telling someone, "You'll be paid for 80 hours of time off," is vastly different from saying, "Take whatever you want!" One sounds like part of your compensation package. The other sounds like a vague promise--and most people know the difference.
The unlimited PTO policy, when first introduced, seemed too good to be true. As legacy and indeed common sense tell us, if something seems too good to be true, it almost always inevitably is. They've lost popularity for a number of reasons, including feelings of guilt, uncertainty, lack of cover, and more. I feel the biggest reason is trust, or lack thereof. It's not usually as simple as requesting a certain date and voila, you're off, whether it's for a few days, a week, or a month. In my experience, through conversations with my peers and frequent browsing of Glassdoor reviews, PTO is usually subject to the department you work in, not universal in the company. The coverage in that department needs to be available, or else the request can't be granted. Employees working in smaller companies with smaller departments often face challenges with unlimited PTO. However, this issue isn't limited to small businesses. Even in larger corporations, certain departments may have fewer staff or represent a smaller percentage of the total workforce. These employees, regardless of company size, often bear the brunt of unlimited PTO's shortcomings, struggling to balance time off with adequate coverage and workload management. While most companies seem to be abandoning unlimited PTO, some are trying a hybrid approach - which to me is the worst of both worlds. The only companies I have seen having some success are the ones who are "seasoning" their unlimited time off. This means only allowing unlimited requests during their traditionally quieter periods as less cover is needed during this time. Of course, this approach is limited to the kind of companies that have seasonal customers such as hotels and toy stores.
I believe unlimited PTO policies are declining because they often create confusion and actually discourage people from taking breaks, which I've witnessed across our franchise locations. After implementing a tiered PTO system where employees earn additional days based on performance and tenure at Cookie Cutters, we saw both better retention and higher productivity. The structure helps our team members plan their time off more intentionally, and they appreciate having clear metrics tied to additional vacation days.
A lot of times, these policies fall apart because there isn't enough clear communication and shared expectations around their use. When you give no guidelines around time-off other than saying, "Take it when you want," that creates ambiguity that's uncomfortable for most people. Instead of relying solely on the policy label, you need clear communication protocols and set expectations regarding time off, regardless of the specific policy type. Managers need to proactively discuss expectations, teams need to coordinate coverage proactively, and perhaps even suggest recommended minimums to encourage breaks. If employees aren't booking enough time off regularly, managers need to check in and reiterate that encouragement. You need to tackle the ambiguity head-on so that employees can trust the process. How you talk about and manage time off consistently matters far more for your team's well-being and preventing burnout than simply slapping an 'unlimited' label on the policy and hoping your team takes advantage.
Unlimited PTO sounded great in theory - freedom, flexibility, trust - but in practice, many employees ended up taking less time off, not more. Because without clear guidelines or cultural reinforcement, people feel guilty or uncertain about how much time is okay. It became a "benefit" that often backfired, leaving employees burned out and companies with retention issues. One alternative that's gaining traction is minimum PTO policies, where companies require employees to take a set number of days off each year. Some even shut down entirely for mandatory recharge weeks. It works because it removes ambiguity, normalizes rest, and sends a clear message: we want you to disconnect. It's structured flexibility, and it's proving far more effective at supporting real well-being.
Unlimited PTO often sounds great on paper but in practice, many employees end up taking less time off because there's no clear structure. It can create guilt or uncertainty about what's acceptable. One alternative we've seen work better is a mandatory minimum policy. For example, requiring people to take at least three weeks per year. It removes ambiguity and shows that the rest is part of the culture, not a perk you have to "earn."