How to Make an Unlimited PTO Policy Work for You

Rolling out an unlimited vacation plan requires a lot of trust in your coworkers. Here’s how to make it a smooth transition.

Written by Sunny Betz
Published on Jan. 12, 2022
How to Make an Unlimited PTO Policy Work for You

Shortly after Kerris Hougardy joined the people team at the AI company Ada, the U.K. gave the green light for international travelers. Hougardy was waiting for this moment. It had been two and a half years since she’d seen her family in the U.K., and she wanted to take advantage of the opportunity to finally see them. 

But she was only five weeks into her new job at Ada — she worried about whether it would be okay for her to take two weeks off so early into a new role. Thankfully, her new workplace prioritized work-life balance.

“As soon as I spoke with Chelsea MacDonald, our SVP of Operations, she was so encouraging,” Hougardy said. “I’d planned to take my laptop with me so I could check in about work, but she said to me, ‘Absolutely not. You haven’t seen your family for two and a half years. Go be with them, enjoy that time, come back rested, and then we’ll kick it off again.’”

How To Roll Out An Unlimited PTO Plan

  • Give plenty of advanced notice
  • Set a minimum number of required days off
  • Keep communication between management and employees open
  • Lead by example

Ada’s vacation time policy offered Hougardy unlimited PTO, which was something that was new to her. At first, the concept felt odd, but as time went on, she saw firsthand that the policy had an immensely beneficial impact on the company’s culture. 

“If someone needs to take their dog to the vet, or takes an afternoon off to nap because they’re feeling run down, nobody feels bad about that,” she said. “There’s much more acceptance around people’s physical and mental health. That’s a really positive cultural aspect that I haven’t experienced in other companies before.”

The concept of unlimited PTO might be unfamiliar to some, but signs are pointing toward it becoming much more common for the reasons Hougardy explained: When people aren’t afraid to take time off, they’re able to make more space for the things that are important to them, while still being themselves at work every day. Built In spoke with a few leaders about the future of unlimited PTO, how it works, and how HR teams can adopt it themselves. 

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Plan a Smooth Transition

In the U.S., it’s still relatively rare for companies to offer unlimited PTO — according to recent surveys, only around four percent include it in their policies. However, it is becoming gradually more popular, and big tech names like Netflix and Sony have adopted the unlimited PTO model to support their employees and encourage them to rest.

“Everyone wants to be within an organization that they feel appreciated and valued,” said Jonathan Fishman, founder of New York-based tech marketing company Bizydev. “To me, unlimited PTO is an extension of that.”

Just like with any major policy adjustment, keeping your team aware of expectations is the key to achieving a smooth transition. Any changes to PTO should be presented and introduced with plenty of notice.

The way you transition your PTO policy to unlimited depends on what your previous policy looked like. For instance, if your previous PTO policy was conditional based on tenure, it’s important to be mindful of your longest-retained employees who may feel they’ve earned more PTO than newer hires.

“One way to mitigate this is to ‘bank’ time that employees had earned from previous PTO policies,” said Danielle Tabor, chief people officer of L.A.-based fintech firm Emburse. “This can be saved and paid out upon exit from the organization, so people don’t feel like they were cheated out of earned time.”

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Set Minimum Expectations

In practice, employees at companies that adopt unlimited PTO tend to be more conservative with their vacation days than you might think. A study conducted by Namely found that, on average, employees with unlimited PTO plans only take 13 days off per year, two days less than those with traditional PTO plans. 

A likely reason for these stats is that without the structure of numbered vacation days employees aren’t able to gauge the amount of time they should be taking off. Employees might be concerned about taking too much time off, and opt instead to limit their vacation days to maintain good standing with their managers. 

“Nobody wants to be the person who took the most vacation during a year,” said Tabor. “At times, this can cultivate a tendency for people to take less vacation than before.”

Unlimited PTO plans only work if employees actually take advantage of them. When rolling out a plan like this, it’s important to encourage employees to take time off as much as possible. Requiring employees to take a minimum number of days off is a good way to make sure employees have the time they need to recharge.

“We don’t give a maximum holiday allowance, but we do have minimum expectations,” said Hougardy. “We actually close down the whole company between Christmas and New Year. So we almost force people to take that time off, giving them space and putting no business expectations on them.” 


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Encourage Open Communication

Communication around time off is always necessary regardless of your PTO plan, but it’s even more important under an unlimited vacation policy. Since these policies have more flexibility, the expectations and standards can be a little foggier, and employees may need added clarification around what they can and can’t do.

“There’s nothing worse when a policy is set and your team doesn’t know how to operate within that framework,” Fishman said. “That’s why communication and a good HR team are highly important.”

As a people manager, overcommunicating best practices around an unlimited PTO plan is imperative. Of course, employees taking days off have to be mindful of their workloads and their teams. Having time off-the-grid is great for your employees’ mental health and productivity, so long as they’re communicative about taking that time before they sign off.

“When you go on vacation, It’s important to let everyone know in advance so that the company is prepared to function without you there,” Fishman said. “It can’t just be an out-of-office email message. There’s deadlines and due dates and things that [you might not] be able to participate in. Plan for that, days and weeks before, so you can truly enjoy your freedom.”

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Lead by Example

So you’ve set the expectations and communicated the changes. Now what? Managers should take adequate time off themselves and remind employees to take days off, too.

“It’s kind of a psychological safety net,” said Hougardy. “If you see your leader doing something, it almost gives you that unwritten permission to feel okay about doing it yourself. Teams mirror the culture that their leaders have created.”

Leading by example when it comes to unlimited PTO could mean taking off-the-grid vacation days yourself or giving spontaneous team-wide days off. Hougardy explained that it’s important to the leadership team at Ada to not only model a balanced work and personal life, but to check in with employees to see whether they need an added push to take time off. 

“We do encourage people to log their vacation,” she said. “Not because we’re really tracking whether people take too much time off, but because we want to be able to intervene if someone has only taken three days PTO, and let them know they can take more time off.” 

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Worry Less, Trust More

Without the guidelines of numbered vacation days, managers may be afraid that their employees could abuse that freedom, or that it would be impossible to keep people in the office when they’re able to take off as much time as they want. 

But are those fears valid? At a healthy, functioning company, there shouldn’t be that concern, said Tabor.

“Remember that PTO still needs to be approved by managers, just as it does with earned time,” Tabor said. “There tends to be an initial reaction of fear from management when this policy is introduced. This concern can be eliminated when managers are comfortable with the policy and understand that business needs will continue to dictate who can and cannot take time off.”

However you roll out and manage your unlimited PTO policy, basing your decisions in trust is the key to making sure they work out. If your teammates are all driven, competent and engaged with your company’s mission, they’ll know the balance between taking time off and being present in their roles. 

“If you have a sports team, you might make practices optional, but your teammates will still show up and do the work,” Fishman said. “Your company is a team sport, and you’re all in this together.”


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Strategies to decode, maintain and improve company culture.


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