I honestly can’t wrap my head around this no matter how much I read.
In: Economics
It generally benefits the employer, though it can be decent with good management.
Management generally has a lot of ability to refuse PTO requests. With bad management, they can basically refuse any PTO requests, making unlimited PTO look a lot like no PTO. This can also be a problem with accruing PTO, however there are often more legal protections for accruing PTO, and it will be better documented.
Without good guidance on how much PTO they should take, employees are likely to request less PTO to avoid feeling like they are over requesting. This might result in employees only requesting 3 weeks instead of using 4 weeks accrual, and this can easily occur without the employee even noticing it. At the same time, the employer is likely to track request amounts and penalize employees who use too much.
There is then the fact that some jurisdictions have PTO payout rules. For example, in California, PTO is considered earned wages and *cannot* be legally reduced without reasonable ways for the employee to use the time first – generally, the rule is you can accrue 1.5 times your PTO per year. Upon termination, any outstanding PTO accrual *must* be paid out in California at final wages in the same manner as any other wages. However, unlimited PTO is legally treated as no PTO, and thus has no accrual and no legally required payout.
That final point is actually *why* unlimited PTO started to be a thing. On paper, unlimited PTO sounds good to employees, and much better than an offering of, say, 4 weeks of PTO per year. However, the loss of protections in California lead to a lot of tech companies preferring unlimited PTO as it leads to less liability on the company balance sheet.
On the other hand, if you have a good employer, unlimited PTO *can* be a net win. If applied well, it gives the employee a lot more flexibility as to how to use PTO then an accrual system does.
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