More companies are offering unlimited vacation to stay competitive

A growing number of companies are offering the benefit of unlimited paid time off, in part to stay competitive in a tight hiring market. Some call it “flexible PTO.” Basically, it means there’s no hard and fast limit on how much paid leave an employee can take or when they take it.

Sounds like a dream, right?

A couple of years ago, Patrick Weber took a job as an analytics engineer for a startup tech company that offers unlimited vacation. Generally, he considered it a “nice perk.” 

But Weber said he’s been working long enough to know that it can be tough to balance his responsibilities with actually going on vacation. 

“You can fall into the trap of not taking time off at all,” he said.

It demands more self-discipline, Weber said, to take leave when it isn’t a required or prescribed amount of time. 

And to be clear, “unlimited PTO” isn’t a free-for-all. 

“So, like, you can’t just show up once a week, every once in a while type of thing,” he explained.

Weber’s company told him three or four weeks of vacation a year would be “appropriate.” There’s wiggle room though, and he does appreciate that flexibility.

Weber said his co-workers all the way up to the CEO do generally take their vacations. And that can set a workplace standard.

“A lot of employers are going through a time-off transformation right now,” said Shauna Bryngelson, who works with the human resources consulting firm Mercer.

Bryngelson said the “time-off transformation” is one of a whole host of workplace shifts after the pandemic. Partly, she said that’s to cater to the changing needs of workers. But it’s also about being a competitive employer.

According to a recent Bloomberg survey, a majority of investors said they believed companies who offer unlimited paid time off compete better on the stock market. Bryngelson said it helps companies recruit. And it saves them money when employees leave their jobs with unused vacation hours. 

“By changing to an unlimited or flexible time off that’s un-accrued, you’re no longer paying that out,” she explained.

Unlimited PTO is still a niche benefit, often reserved for executives and salaried workers in tech and finance. But even in those sectors, some workers feel anxious about these policies. 

“Let’s say you take your employer seriously on unlimited time off. What are your prospects for promotion?” said Danny Schneider, a social policy professor at the Harvard Kennedy School and co-director of The Shift Project.

“What are your prospects for performance pay?” he said. “And does it work differently if you’re a person who identifies as a woman who’s an engineer at one of these big firms versus someone who’s a man? Who gets the benefit of the doubt?”

For some workers, Schneider said, taking advantage of all that vacation could be a career risk.