Is Unlimited Paid Time Off (PTO) Really Unlimited?

Unlimited PTO is a company policy that doesn’t assign a set number of vacation days to employees each year. Rather, employees can take as much time off as they need as long as they meet their performance goals and ensure their absence won’t disrupt the flow of business.

Theoretically, the policy trusts employees to manage their own workloads and schedules, although there are limits to this freedom. Most companies set parameters to keep operations running smoothly.

How does unlimited PTO actually work?

Employees with unlimited PTO can’t usually take time off at will, even if they’ve finished their work. They must request it in advance and wait for management’s approval.

Additionally, some companies have other guidelines, such as setting restrictions on taking back-to-back days off or prohibiting vacations during peak seasons. 1

These regulations show that “unlimited” plans can still be somewhat limiting, especially when an employee faces a manager with strict standards for approving PTO requests.

Unlimited PTO is still quite rare in the US, although it’s been around for over two decades. (It was first popularized by Netflix back in 2003.) 3

The 2025 Employee Benefits Survey from the Society for Human Resource Management (SHRM) found that only 6% of employers offer this benefit, marking the second consecutive year of decline (down from 8% in 2023 and 7% in 2024). 4 5

The plan is most prevalent in knowledge-based sectors like tech, finance, and creative media, where performance is measured by results rather than hours logged, according to an article by PTO Exchange.

Advocates of unlimited PTO believe the policy fosters a culture of trust and boosts employee performance.

Netflix, the trend’s trailblazer, states on its website, “We don’t set a holiday and vacation schedule, so you can observe what’s important to you—including when your mind and body need a break. … We believe in taking the time you need so you are bringing your best to work.”

Work-life balance

Emma Brudner, the director of people operations at the travel management app Lola.com, told SHRM that most employees value unlimited PTO for the flexibility it offers to help them manage their daily lives.

Rather than enabling people to take long vacations, the policy is more often about “a parent taking an afternoon off to see her child in a school play, or someone with a chronic illness not having to carefully allocate vacation time so they can go to regular doctor’s checkups,” Brudner said.

Unlimited PTO can be helpful in attracting and retaining talent that needs frequent but irregular out-of-office time to fulfill personal obligations.

Productivity

When employees have “autonomy and control over their schedules,” they are more “invested in business outcomes,” according to Victoria Kelleher, lead survey specialist at Brightmine.

Workers may be motivated to work more efficiently when they “understand that they will be rewarded with time off as soon as they reach milestones and cover their obligations,” she wrote.

This perspective aligns with findings from Jiayi Bao, an assistant professor at Texas A&M’s Mays Business School. Her research for the Mack Institute found that this sense of ownership attracts high performers and increases workplace productivity.

Eliminating PTO expiration dates

Employees with traditional PTO plans typically must use their vacation days within a set timeframe.

While some companies allow employees to carry over a limited amount of PTO (e.g., a 40-hour cap with a two-year expiration), others enforce a strict “use-it-or-lose-it” policy where any unused time expires automatically at the end of the year. 6

With unlimited PTO plans, employees don’t have to worry about losing accrued time and rushing to use their remaining days before certain dates.

Critics have argued that unlimited PTO benefits employers more than employees.

“Unlimited vacation is a scam,” Facet co-founder Robert Sweeney wrote in a 2020 LinkedIn post. Companies profit from this policy, he said, because it pressures employees to take less time off.

Why employees may be hesitant to take time off

Sweeney worked as a software engineer for Netflix in 2011 and 2012. He later told The New York Times that despite having worked overtime for weeks to launch a new product, his manager scolded him for asking for a vacation because another deadline was imminent. This made him feel ashamed for requesting time off in the first place.

Despite his demoralizing experience, Sweeney mirrored Netflix’s unlimited PTO model when he founded his company, Facet, in 2012. He eventually discovered that without clear boundaries, his employees struggled to take breaks and suffered from burnout. Eight years later, he scrapped the policy in favor of a 25-day minimum.

Sweeney isn’t the only employer who has walked back an unlimited PTO policy.

A London-based recruiting company called Unknown changed its unlimited holiday policy to a 32-day plan in 2021 after finding out that its employees felt guilty requesting vacations and didn’t take enough time off. 7

According to Peter Cappelli, professor of management at the University of Pennsylvania’s Wharton School, employees may feel more empowered to use accrued vacation time, as it serves as an “explicit contractual obligation” that companies owe them. By contrast, unlimited PTO shifts that dynamic into a murkier “moral obligation.”

No compensation for unused leave

Most employers who offer traditional PTO plans pay out unused vacation as mandated by state laws or the company’s policy. 2

This has “long posed a financial challenge to employers,” particularly when high-salaried senior executives depart with large balances of accrued time, as noted in The New York Times. (According to data from Fintech startup Sorbet, US employers owe a total of $272 billion in unused vacation days, averaging $3,000 per employee.)

With unlimited PTO, employers don’t have to pay anything. That’s why critics have alleged that the policy is a cost-saving move for many companies. 8

According to Veehtahl Eilat-Raichel, chief executive and co-founder of Sorbet, Goldman Sachs’s 2022 policy allowing its senior bankers to take unlimited time off “was completely driven by financials.” The policy is “positioned as if it’s an amazing benefit for employees,” when the true winner is the employer, she said.

Wells Fargo banking analyst Mike Mayo agreed, noting, “The reality is it’s not going to make any difference. It’s like telling a restaurant owner you can have unlimited vacation—will that change how the restaurant owner works?”

Unless firms like Goldman Sachs, characterized by The New York Times as having a “hard-charging culture,” actively encourage time off, switching to unlimited PTO may simply deprive employees of earned compensation. 9

After weighing the pros and cons, some people may still prefer unlimited PTO plans. But before accepting a job that promises employees can take all the time they want, it’s important to verify certain policy details to ensure that the benefit isn’t just a corporate buzzword.

First off, check whether the company clearly defines how much time employees can take at once, how far in advance requests should be made, and what constitutes an acceptable reason for refusal (e.g., staffing shortages or product launches).

Additionally, ask whether the company’s unlimited PTO plan has a minimum requirement. 10 For example, employees may be required to take at least 14 days off per year (and once this threshold is reached, the policy remains unlimited).

This type of “minimum time off” policy creates “a culture where unplugging is the norm, not the exception,” Carta Chief People Officer Suzy Walther wrote in an article for HR Dive.

These guardrails replace ambiguity with accountability, suggesting that a company actually values work-life balance. Without this level of clarity, “unlimited” often ends up meaning “none,” so make sure the rules are clearly spelled out in writing before signing an offer letter.