I honestly can’t wrap my head around this no matter how much I read.
In: Economics
Just because it’s “unlimited” doesn’t mean there aren’t functionally consequences for using it. Actually using it will often be met with pushback or passive aggression in a way that limited PTO won’t (at least not as much). This could go on to more severe things like being denied promotions, being chronically talked to for low performance due to not being there, etc.
Typically the set point for acceptable performance will be when you take fewer hours than what other companies offer for PTO.
All this combined leads to people ultimately using less PTO than they do otherwise, this is why they do it. It’s not just in theory that the above could happen, it’s that it DOES happen
Honestly, unlimited PTO can be great if the culture around it takes advantage of it.
In some companies, people will absolutely use their unlimited PTO for multiple vacations, sick days, etc, and the real measurement is productivity.
However, by and large, when people are told you get 15 days of vacation and 3 sick days (what I received with my first company in 2011), people would take all 18 days – no one asked questions about it, and no one thought less or more of anyone based on the days taken.
That’s because there was a balance hanging over everyone’s head, and many companies had some extent of “use it or lose it” policies.
In an unlimited PTO world, the amount of PTO you can actually take is measured by how much others take. One workaholic or one abuser of the policy will drastically change the company’s sentiment toward what is acceptable.
And lastly when your PTO is accrued in a normal setting, it basically means you get your salary PLUS your PTO, so if you leave or are let go, you get paid out on those hours.
Unlimited PTO can essentially be a pay cut if you’re not actively taking it, and leave or are laid off.
From my experience, its usually not actually unlimited. Its just a sales tactic to entice new hires.
There is usually some unspoken limit that will get you fired and nobody knows what that limit actually is, so everyone is scared to take more than a few days of PTO at a time, and in the long run people either abuse the hell out of it and get fired or are scared to use it and end up getting less time off than they would have in another job.
Generally the places with these types of sales tactics either have high turnover or have a hard time finding candidates in general.
1. It is not unlimited
2. Without accrued PTO there is no payout if you leave the company
Unlimited PTO is just a way for companies to not have to keep accrued PTO as debt.
It is totally advantageous for companies to eliminate PTO accruals as it is literally debt off their books
In return, employees get screwed as their PTO is not unlimited but is in fact strictly controlled by other policies.
It’s just another way to fuck over employees
It’s a trick.
People who have unlimited PTO end up taking less days off total than people with an allocated PTO. Your co-workers will be annoyed if you disappear for weeks at a time, and I’m sure your boss would say something to you about “dedication” when you get back.
Additionally, there are laws about PTO. In some states a certain amount rolls over to the next year and if you’re fired they have to pay out your unused PTO.
Unlimited PTO means if you’re fired you actually have 0 PTO accrued. So if it’s a high churn company or a company about to make huge lay-offs, it works out to be cheaper overall, even if a few employees have actually been using a ton of PTO.
Quite simply, you’re entitled to PTO. It’s like earned wages and had special legal protections. When it’s “unlimited” you’re not entitled to anything because it becomes discretionary.
It was part of my wages that I earned. Now, it’s like someone breaks into your house and steals your TV. But, it’s okay because you can use it anytime you want still. Just ask. It used to be yours, but now they took it back and are letting you use it sometimes.
I had a job that told me I had “unlimited PTO” and what it actually meant is that it was 100% my responsibility to figure out how to cover my own time off. The position was extremely stressful and my department was constantly understaffed, I was constantly under pressure to trim labor costs. There was literally no one in the company who could cover for me for more than a day or two.
So, yeah, in theory I could take time anytime I wanted the only problem with that is that the entire operation would basically go to crap if I wasn’t there to hold it together, and that would be my fault. “Unlimited PTO” actually meant “No PTO”
In some places when you leave a job that accrues PTO, the company is required to pay you for all your accrued PTO. For example if you have worked at a job for ten years and taken very few vacations, you might have 500 hours (about 60 days worth) of saved PTO. When you leave that job, your final paycheck has to include a payout for all of that PTO at your base pay rate. If you make $20/hour you quid get an extra $10,000!
If a company has unlimited PTO, you will never have a PTO balance, which means when you leave that job, they don’t have to pay you for your PTO balance.
Many companies have decided that saving this money is worth the difficulties of giving employees unlimited PTO especially when most employees who receive unlimited PTO choose to use less PTO than employees who have set PTO allowances. Also, you can discourage people from taking PTO by giving them so much work they feel like they will never catch up if they take any time off.
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