Unlimited PTO From the Employee's Side: How to Use It Without Penalty

A leave policy with no limit still leaves you a number to pick, and you pick it in front of your team. With unlimited PTO, your employer sets no fixed number of paid days off: you ask, your manager approves, and nobody keeps a balance for you. Company data on whether people end up taking more or less leave under such plans points both ways.

Where the law sets a floor, the choice has limits: in the UK and across the EU, unlimited PTO cannot go below the legal minimum. From the employee’s side, five habits keep the policy working for you:

1. Read the policy for the approval rule and blackout dates
2. Set your own minimum number of days
3. Book early and put it in the team calendar
4. Hand over with a coverage plan
5. Track every day you take

How much leave you take is one of the most concrete levers in balancing work against everything else.

How does unlimited PTO work?

Under unlimited PTO, paid days off do not build up as a balance; instead, each request is approved or refused on its merits. Illinois Legal Aid Online describes it as a policy that does not define how much time an employee may take off.¹ It is still a minority arrangement: SHRM’s 2024 benefits survey found that 7 percent of US employers offered it.²

Every request still has to fit the work, and a manager still says yes or no. Jessica de Bloom and three colleagues, writing in a 2022 review in Frontiers in Psychology, describe the shift this way: under unlimited PTO, leave stops being an individual good you trade and becomes a collective one, shared with the team.³ When you take a week, someone covers it, and no balance says the week was yours.

Some employers with unlimited plans still record leave, while others, such as Microsoft, do not ask staff to track it.⁴ Aron Ain, then chief executive of Kronos, a US workforce software company that switched in January 2016, told the radio program Here & Now that the company kept track of time off because everybody could not go at the same time.⁵

1. Accrued leave: a balance that belongs to you: you can count it, plan against it and, under some laws and contracts, be paid for what is left when you go
2. Unlimited PTO: no balance of your own; each request is weighed against the team’s workload and what colleagues take, which is where informal pressure can creep in

A designer moving from a job with 25 days a year to an unlimited plan loses the one number she planned around, and gains the job of deciding how much is reasonable. Her first task is to pick that number herself, before the team’s habits pick it for her.

How much time off should you take with unlimited PTO?

A useful answer is at least what you would have had without the policy: your country’s legal minimum, the allowance in your last job or the market norm for your role, whichever is highest. GOV.UK says almost all UK workers are entitled to 5.6 weeks of paid holiday a year, which comes to 28 days for a five-day week, and an employer may count bank holidays within it.⁶ EU law sets at least 4 weeks of paid annual leave a year.⁷

Elsewhere, the International Labour Organization’s Holidays with Pay Convention of 1970 sets a floor of three working weeks for a year’s service for workers in ratifying countries.⁸ US federal law sets no floor: the Labor Department says federal wage law, the Fair Labor Standards Act, sets no pay requirement for time not worked, such as vacations.⁹ As a market reference, SHRM’s 2024 survey found US employers offered an average of 12 paid vacation days to a full-time employee after one year.¹⁰ If you work outside these places, your labour ministry’s website will give your national minimum.

A target of 25 days is roughly two days a month, but leave works better in blocks: a week in spring, two in summer, a week at year end and a few single days. Write the target down before the year starts, so you are measuring against your own number rather than against whoever takes the least.

How to use unlimited PTO without penalty

Each step protects your time off, your standing with the team, or both. No study has tested them; they apply the ordinary mechanics of planned leave.

1. Read the policy for the approval rule and blackout dates

Find three things in writing: who approves leave, how much notice they expect, and any blackout periods (quarter end, peak season) when leave is restricted. A policy whose blackouts cover most of the year is unlimited in name only.

2. Set your own minimum number of days

Use the floor from the previous section and tell your manager early in the year. Saying “I plan to take about five weeks, mostly in blocks” turns an open question into a plan they can schedule around.

3. Book early and put it in the team calendar

Requests made months ahead are easier to approve because the work can be planned around them. Put every approved day in the shared calendar, so colleagues see it as part of the plan.

4. Hand over with a coverage plan

List what is in progress, who covers each item and what can wait. A short handover note and an auto-reply written so you can stay offline do most of the work.

5. Track every day you take

Keep your own log of dates requested, approved and taken, even if HR keeps one too. De Bloom and colleagues argue that a leave record is essential under unlimited plans, so that managers can step in when people take too little.³ Your log also matters if a payout question comes up when you leave.

Your unlimited PTO plan for the year

• Find the approval rule, notice period and blackout dates
• Write down your minimum number of days
• Tell your manager the target early in the year
• Book the first block of leave and add it to the team calendar
• Write a handover note before each break
• Log every day requested, approved and taken

If a manager keeps finding reasons to refuse, treat it as a planned conversation about raising a boundary with your manager, and bring dates, a coverage plan and the work’s priorities to it.

Do people take less time off with unlimited PTO?

Nobody knows for sure, because the only figures come from companies and surveys that disagree with each other. Namely, a US HR software company, reported in 2018 that employees on unlimited plans took fewer days than those with a fixed allowance, but its 2022 follow-up found the gap had reversed.¹¹ Neither analysis went through peer reviewpeer review: The checking of a study by independent experts, usually arranged by a journal, before it is accepted for publication. It screens for weak methods and unclear reporting, but reviewers rarely see the raw data, so passing it does not prove a finding is right.Full entry in the glossary.

Each figure in the table has a weakness. Namely’s figures cover only firms that buy its software, the 2024 survey records what employees said, and the Kronos figure is a company’s report on its own policy.

None of this predicts your team, so judge your workplace by what colleagues take.

The study

Limited evidence

Freedom and pressure in one policy: a 2022 review of theory

De Bloom, Syrek, Kühnel and Vahle-Hinz, researchers at universities in Finland, the Netherlands, Germany and Austria, reviewed theory and what they called very scarce empirical evidence on unlimited paid time off. They propose that it works through two routes at once: more control over leave, which should help wellbeing, and social pressure, which can turn the freedom to take leave into an obligation not to take too much. They offer five propositions for future research; the review collects no new data. It was funded by the Academy of Finland.³

On the authors’ account, which route wins depends on the team and its managers, who encourage or discourage leave by what they say and by what they take themselves.³

Why a policy without a number can shrink your leave

A fixed allowance answers the question “how much is normal?” for you; unlimited PTO hands that question to office culture. De Bloom and colleagues argue that people may feel they owe the employer something in return for the perk, and that taking leave can come with guilt and a sense of excessive responsibility for team goals.³ In the 2024 survey of US employees in the table, roughly a third reported anxiety about requesting time off, whatever their plan.¹²

A sales team where the manager takes three days in August and answers email throughout sets a norm that no policy document can undo. A new hire watches, takes even less, and the norm tightens. Nobody refused anyone’s leave, and yet the team takes less of it every year.

Myth

Unlimited PTO means you will get more time off.

Fact

It means nobody has fixed how much you get. Company data on leave taken points both ways, and the team's habits weigh heavily on what you take.

If you suspect this is happening, ask your manager how many days the team took last year. If nobody can answer because nobody records it, start your own record now.

Do you get paid out for unlimited PTO when you leave?

In most of the US, no: with no balance building up, there is usually nothing to pay out. A few states, among them Illinois and California, bar employers from forfeiting earned vacation, though, and their rules can reach unlimited plans. In the UK, untaken statutory leave must be paid when the job ends, whatever the policy is called, and EU law allows pay in place of the minimum leave only at that point.

The United States

Federal law does not require paid vacation, so payout rules come from the states and from your employer’s policy.⁹ Illinois’s Department of Labor says an employer must pay the monetary equivalent of all earned vacation to an employee who leaves, and a policy may not forfeit earned time at separation; its FAQ gives the same answer for a policy with no defined number of days, for the current year’s leave.¹⁴ Illinois Legal Aid Online adds that an unlimited plan may still be subject to a payout when an employee leaves.¹

California’s Court of Appeal reached a similar result in McPherson v. EF Intercultural Foundation in 2020. According to a summary by Mercer, a benefits consultancy, the court held that an uncapped policy must follow the state’s vacation-payout law if it has an implied cap and the employer fails to tell employees their rights.¹⁵ The holding is conditional, so it does not mean every unlimited plan in California pays out.

Payout costs can be one reason employers switch. In 2016, Kronos’s chief executive told The Boston Globe the company had paid out about 2.2 million US dollars a year in unused vacation; under the new policy, unused days are no longer paid at the end of employment, as Massachusetts law otherwise requires. Ain said the company redirected about the same amount into other benefits, such as a larger retirement-plan match.¹⁶ When Microsoft moved US salaried staff to unlimited time off in January 2023, it gave a one-time payout for unused vacation.⁴

The UK, the EU and elsewhere

An unlimited label does not remove the statutory minimum. UK government guidance on GOV.UK says employers must pay for untaken statutory leave when someone leaves, and that leaving is the only time payment can replace the leave itself.¹⁷ The EU summary of the Working Time Directive says the minimum period of paid annual leave cannot be replaced by an allowance except when employment ends.⁷ In other countries, check your national labour law or collective agreement for the minimum and for what is owed when you leave.

Is unlimited PTO a red flag?

Unlimited PTO is a red flag only when the signals around it say the time is not meant to be used. A healthier version records leave and has managers who take visible breaks, two conditions the 2022 review links to people using the policy.³

When you are weighing a job offer, ask the hiring manager how many days people on the team took last year and how far ahead leave is usually booked. A clear answer is a good sign; a vague one may mean the policy works mainly on paper.

Where to get help over leave or a payout

Outside help is worth seeking when money or a legal minimum is at stake. Act soon, within weeks, if you are leaving and believe earned vacation is owed, or if your employer is switching policies without saying what happens to your balance: put the question to HR in writing first. If that gets no clear answer, ask outside the company: in the US, your state’s labor department; in the UK, Acas, a workplace advice service, which says workers with questions about holiday entitlement can contact its helpline.¹⁸ Elsewhere, a union, your country’s labour inspectorate or an employment lawyer can explain your position. Routine questions, such as how much notice your team expects, start with the written policy and your manager.

The bottom line

Unlimited PTO gives you no allowance to fall back on, so the days you take depend on the number you set and how visibly you plan them. Pick a minimum at least as high as your legal floor or your last job’s allowance, book the first block of leave this month, and keep a log of every day you take.