Unlimited PTO is one of those benefits that sounds great. No need to worry about a fixed number - or several fixed numbers - employees can just take as much paid leave as they need. So, should you offer it?

The answer, unsurprisingly, is it depends.

Most organisations place a limit on the number of paid vacation days or paid leave that an employee can take in any year. The number of days may increase with length of service. It may also have an upper limit.

Unlimited paid time off is where the organisation trusts its employees to take an appropriate number of days and pays them for those days without placing a limit and in some cases without placing guardrails around when the leave can be taken.

Unlimited paid time off should be distinguished from "unlimited" (where there is a soft limit) at the discretion of the employer and unlimited time off (note the omission of the word "paid").

The first is that it increases employee happiness. The State of the American Workplace report says that 53% of employees rank it very important to have a good work-life balance. This number will have only increased during and will increase following the pandemic.

It also allows your organisation to recruit top talent. Squarefoot, an organisation based in New York notes:

In the war for talent, having a strong employee value proposition is critical and an unlimited paid time off policy may help.

Finally, you can reduce your costs. If the employee is not strictly entitled to any paid time off then your organisation does not need to accrue for it, nor pay it out when the employee leaves. Of course, this would only be relevant in countries where there is no legal right to a minimum amount of paid time off.

It is widely recognised that the largest downside is that employees just don't take time off.

Josh Pigford of Baremetrics says:

Baremterics now insists that all employees take a minimum of 4 weeks' paid leave every year.

Similarly at Buffer, during their "unlimited leave" days, the most common bracket into which employees fell was 5-10 days paid leave per year. Since they have moved to a minimum leave policy, the average is approaching 20 days.

The consequence of employees not taking time off is of course the risk of burnout, underperformance due to stress and mental health issues. Nobody wants to feel obligated to be in the office when they are in desperate need of a break.

It's clear that experiences vary but unlimited paid time off is seen as an attractive benefit. And, companies such as Netflix, Github and Kronos have made unlimited vacation policies work for their organisations.

I would suggest that there is an approach to combine the best of both worlds. An unlimited paid leave policy with a mandatory minimum set as appropriate for your sector and geography.

You may want consider some informal guidelines to which employees can refer but be conscious that "informal guidelines" can quickly become hard and fast rules. Similarly, having a framework against which managers can make impartial decisions will be better than a fully discretionary model where each decision can be seen as "personal"

Perhaps the largest takeaway from this though is how to overcome some of the psychological issues around employees taking leave and making sure everyone feels that they can step away from the office to take a break.