Unlimited paid time off gives employees flexibility to take time off from work. With an unlimited PTO policy, employees can take sick days, personal days, or vacation time as they see fit rather than having to accrue hours or days for paid time off. These adaptable policies are becoming more popular in today’s modern workforce, especially in large companies.
While unlimited PTO has its disadvantages, I’m also aware of the benefits it offers and why some companies choose to implement it. So, I rounded up a few unlimited PTO policy examples to review as you decide which type of PTO policy to use at your company.
1. Unlimited PTO Policies with Allowable Reasons and Specific Rules for Leave
Unlimited PTO may allow unlimited time off, but it can still have some restrictions surrounding its usage. That’s not necessarily a bad thing. After all, virtually all employee benefits have rules.
Some companies place restrictions on how an employee can use their unlimited time off. However, these rules typically are based on state and federal law. For example, the federal Family and Medical Leave Act (FMLA) specifically states that covered employers must give employees at least 12 weeks of leave in 12 months to have or adopt a baby or care for a family member.
However, this leave does not need to be paid. Therefore, an employer might state in its policy that only some of an employee’s unlimited PTO applies to circumstances covered by the FMLA. For example, a sample PTO policy created by the Agency Management Institute allows employees up to two weeks of their PTO to cover FMLA-related leave.
Another similar policy from Payroll Management, Inc. has a paragraph dedicated to specific reasons for leave:
If an absence is due to injury, illness, or a temporary or ongoing medical condition, or it is deemed to be a qualifying leave under a state or federal law or program, then the absence will be unpaid after ten (10) work days of PTO, per occurrence, in accordance with applicable law.
In the next paragraph, the policy also specifies how employees should request time off and whether they might need to indicate a reason for their absence. For cases of sick leave, this policy states that employees must include the reason for continued sick leave and provide an estimated date of return to the company.
Although these policies can feel a bit more restrictive than other unlimited PTO policy examples, they leave little room for ambiguity for the company and employees. Some employees may even prefer having clear guidelines to follow compared to a more flexible policy.
2. Unlimited PTO with Required Breaks
In 2020, the president of Chatbooks, Dan Jiminez, tweeted that the company would be getting rid of its unlimited PTO policy in favor of a mandatory PTO policy. What Jimenez meant by that was that employees would now be required to take at least one full week off each quarter rather than have a more open-ended PTO policy.
This aligns with one of the reasons I dislike unlimited PTO: it can actually cause employees to take less time off than they would with a clearer, more stringent policy. Chatbooks likely went through something similar, causing the company to rethink how to handle unlimited PTO.
With the restructured benefit, employees still have a lot of PTO available. In fact, there’s nothing stating that employees can’t take more than what’s required, but they’ll have at least four weeks of paid time off each year, whether they want to use that for vacation, sick time, or personal time.
A small study reported in Harvard Business Review found that making at least some time off mandatory can increase productivity, happiness, and creativity among employees. Additionally, employees tend to rate their required time off as rewarding, allowing them to see places and try things they normally wouldn’t have.
If you want to implement unlimited PTO with mandatory breaks, be sure to outline the following information in your policy:
- How often employees must take a break
- How long each break should last
- Whether employees get additional PTO beyond what’s required
- Whether employees are allowed to complete any work activities during their time off
There’s another way you can approach mandatory PTO, too. Rather than state that employees must take time off, some companies with unlimited PTO policies have company-wide breaks to ensure that each employee has time away from work. For example, Relatively has two weeks off each year for rest and relaxation breaks.
3. Flexible PTO Policies
Flexible PTO, also known as flexible time off (FTO), is becoming an increasingly popular version of unlimited PTO. Unlimited PTO tends not to have barriers or restrictions regarding paid time off, aside from possibly being offered only to specific roles or tenures. However, flexible PTO usually does have some boundaries.
Like traditional unlimited PTO, FTO policies don’t require employees to accrue PTO hours or days over time. Instead, employees can take time off when and for the reasons they want to. However, there may be a cap on how much time an employee can use.
For example, company A offers an unlimited PTO policy. An employee at company A usually takes four or five one-week vacations or personal breaks each year but could take more time, if approved.
Meanwhile, company B has a flexible PTO policy allowing a maximum of 20 days off per year. Still, an employee at company B can use those 20 days how they’d like, such as two 10-day leaves or four separate weeks off. It’s relatively flexible, but there are still limits.
Because FTO and unlimited PTO are similar, some companies use the terms interchangeably, especially when they don’t cap how much paid time off an employee can take. For example, Alliant Credit Union’s PTO policy names both in its policy: “Alliant also offers a Flexible Time Off (unlimited time off) policy for Sr. Managers and above.“
From a company standpoint, it’s best to provide a clear distinction of the type of unlimited PTO you offer. If there are genuinely no caps or restrictions, call it unlimited PTO. Otherwise, it may be best to call it a flexible PTO policy.
4. Truly Unlimited PTO Policies
Another unlimited PTO policy example is the truly unlimited PTO policy, which opens the doors for employees to take virtually as much time off as they need.
Although many companies advertise unlimited PTO, there are usually some limitations involved. But, truly unlimited PTO policies may not have any restrictions regarding PTO aside from requiring that employees request time off for approval.
This type of policy usually works best for exempt employees because they get paid the same salary regardless of the number of hours worked or used for leave. However, businesses can also offer this policy to hourly workers.
The Society for Human Resource Management shares an example policy for truly unlimited time off. The policy includes no restrictions but states that employees using their time off must not interfere with their ability to meet their work goals, expectations, and obligations.
Twin Health is an example of a company with a truly unlimited PTO policy. In addition to eight paid holidays each year, employees can take the time off they need without restrictions other than being pre-approved by management. Netflix also has an open policy, allowing employees to decide which holidays and vacation days to take for their own well-being.
Creating Your Unlimited PTO Policy
Only your company can decide which type of unlimited PTO policy works best for your organization and its employees. This largely depends on the company’s hours of operation and the type of work it does. Some businesses are simply able to be more flexible than others.
Despite being called “unlimited,” unlimited PTO policies aren’t always truly unlimited. As you can see from the above examples, there are ways to allow unlimited PTO while still having some rules and restrictions in place to keep everything organized and projects on track.
When creating your policy, be sure to consider FMLA regulations and your state’s laws surrounding paid time off. Your unlimited PTO policy should outline any paid leave your employees have available, with clear guidelines for each.
