It is first and foremost a cost saving measure for the company as it is a simple policy to create and enforce, in my experience, and it avoids payouts for accrued PTO when terminating employees in some cases.

This would be illegal in Europe. How does it work in the US?

I mean, *gestures at the US*.

There are no federal or state laws mandating paid vacations or holidays. That's entirely at the discretion of the company.

There is no federal paid sick leave mandate. Some states have them.

We have a federal right to 12 weeks of unpaid leave for qualified medical and family situations under a law called FMLA, the Family and Medical Leave Act. Even that has limitations - small businesses, highly compensated employees, and new employees are carved out.

When you are hired, all of these are defined by the companies policies or what you can negotiate. If you have paid vacation time that accrues it'll be paid out if you quit; most companies don't like that, so they give you "unlimited time" on the approval of management. But because we have no statutory protection, your unlimited time could legally be "zero hours".

> There is no federal paid sick leave mandate. Some states have them.

Or, you get states like here in Texas, where the state senate just passed a bill making it impossible for cities like Austin to require companies provide sick leave.

"Small government."

This is also illegal in Mexico: Your contract must say the number of vacation days you have, particularly because at the end of every year you get a "vacation bonus" (prima vacacional) that is proportional to your total yearly vacation days (25% or 50% pay of each day). If you don't use it, they still have to pay you. Of course if someone put that they give ∞ vacation days, the amount to pay yearly to each employee will be quit a bit haha.

I imagine it would depend on the state. In California, I believe they can get away with putting "0" as the number of vacation days you are entitled to, so any of the "unlimited" days you take off are really at the whim of your employer.

Where I am in Canada (and I imagine many states) there are legal minimum requirements so I officially get "3 weeks" vacation, but take a couple weeks on top of that using the "unlimited" policy. So "unused" vacation would be paid out according to the official 3 weeks policy in my case. I could see something similar being possible in Europe, but I think in practice europeans already take more paid time off than most North American's with unlimited vacation.

There's no accrued PTO. You just work it out with your mgr and then just...go. And you get paid for it (at least in the companies I've had it) and come back and just go back to work.

I believe different states have different laws, but at least in my state an employer is required to pay you for your accrued PTO when you leave the company. Therefore, they have to have (and accurately track) PTO on their accounting books.

Years ago, the company I work for switched from accrued to unlimited PTO at the end of the fiscal year in order to make the books look better. When it was announced, they basically told everyone to take the remainder of the month off. The fiscal year happened to be the same as the calendar year, so most people were taking huge chunks of time off due to the holidays anyway and didn't really care. For those who had more PTO than what was left, they were told to work with their managers to arrange for as much time off as they felt was necessary in compensation.

This only worked because it was a one-time deal and the managers were (and mostly still are) very reasonable and supportive people. A while later we were merged with another company and they switched us back to regular PTO to be in line with their own HT policies.

It basically makes time off an informal thing. You just don't show up for work when agreed with your manager.

At least at my company, they still do all the tracking of it. Not sure they are really simplifying admin.

It isn't meant to simplify admin, it's meant to prevent the company from having to pay out someone who worked for six years without taking a single vacation day, when they get fired/quit/die.

It's also why many companies hate carrying vacation days over - they don't want someone to save up three months of vacation that they earned at a low wage from getting promoted, and then receiving it in cash when they quit at a higher wage.

Given the choice, an employer will always prefer to keep payroll costs predictable.

> It's also why many companies hate carrying vacation days over - they don't want someone to save up three months of vacation that they earned at a low wage from getting promoted, and then receiving it in cash when they quit at a higher wage.

This can be a nasty carrying cost for companies.

I worked at a place that went from the standard accrual of vacation to "a minimum of 20 days/year, no carry-over."

To keep employees from engaging in open rebellion, they had to offer two tiers: either 1) you agreed to the new plan and gave your accrued time back, or 2) you keep your accrued time to date, received no more, and could join the new plan only when your vacation time balance hit zero.

The new employees, including me, quickly picked option one. The long-timers all picked option two, sat on their time, and cashed out when they went to other jobs.

I'd advise anyone in this situation to go with option 3) - find new employment and get the company to immediately pay out all that vacation time in cash possibly by booking your last three months with the company as solid vacation time. Once that's cleared up feel free to rejoin the company on option 2).

Earned vacation time is earned - companies trying to reclaim it are acting dishonestly and need to be avoided at all costs.

When my company switched to a use it or lose it system (with some extra days thrown in), they let everyone who had accrued vacation keep it in a separate category. I don't know if I'll ever use it but it's nice to know I have an extra bank of 3 weeks vacation if I ever want it.

Heh. $DAYJOB lets us accrue vacation and then get cashed out annually for anything over 160 hours (so it is "use it or we will cash it out for you"). It pays out at your new rate as well (since annual raises are on the same schedule). It used to be tied to your work anniversary date, but it is now "just after New Year's" for everyone to make budgeting easier. I understand why companies hate it, but I also like the way I get treated as a human rather than a nameless cog in a multi-billion-a-quarter monstrosity. I, personally, prefer the "let's be human" than "$$$ at all costs" end of the spectrum. Others seem to disagree.

As for how it gets used, apparently it's very bimodal and "everyone" is either a "keeper" or "flirts with having none".

Employers can always chose to force annual vacation payout - or have reduced hour rollover (i.e. halved if rolled over). I absolutely despise any sort of vacation reduction (or full disappearing on expiration) but having the hours paid out is a pretty equitable situation. If I want to take a vacation in January and am forced to take it using unpaid hours (I'll always talk to managers about carrying over hours for some fixed vacation if they're willing and usually get positive feedback) then I'll at least end up neutral at the end of the year (or employment) when those accrued hours get paid out.

Employers don't want to force payouts for the same reason that they don't want all the other sources of variability I listed. They budget for a payroll of X, not X + 7%.

I believe in California (and maybe one or two other states), you can't do use it or lose it. Though AFAIK, you can still cap accrual at some maximum. (i.e. once you've given someone a day of vacation you have to pay it out if they leave and haven't taken it.)

Personally I don't have a problem with "unlimited PTO" but (big but) there really does need to be a culture of people taking a reasonable amount which I would define as a month or so.

>>you can't do use it or lose it.

Which is why unlimited was born, because now you never "earn" any so you never "lose" any, and thus can never accrue any either

Right. Not that I personally care much for use it or lose it myself. It definitely requires more deliberate planning and potentially taking time at suboptimal times than an accrual/cap system assuming the cap is set at some reasonable level.

True, but this is an side effect once again of government meddling and it having unintended consequences

See the government saw employers with "use it or lose it" policy as "screwing over" the employee, so they ban it believing all companies would just accept they would have to allow accrual of PTO / Vacation time

Reality is that is not tenable for most companies and many people (like me) would just rack up years of time because we never take any off (when Possible I just cash out any PTO / Vacation I get, but many company stopped doing that as well)

So in response to the government banning employee lost their access to guaranteed number of days, instead how have this "unlimited" which is also an impossibility.

IMO "unlimited" is many many times worse than use it or lose it with a guaranteed number of days every year

Maybe you should take time off. In general, it seems pretty reasonable for companies to cap PTO and encourage people to take time off.

Most of Europe has 5 weeks of holidays. Funny how unlimited PTO in the US isn’t even close to the very limited time off we get in Europe.

Unlimited PTO should average 20 weeks a year to deserve to be called unlimited.

FWIW, I've had unlimited PTO since the start of my career and I've definitely averaged somewhere between 5-6 weeks every year.

I think it's still a huge perk comparative to other options in America; companies that don't give unlimited typically just give 2 weeks, and you have to work your way up from there via the career ladder.

20 weeks of 52 week year? Even my liberal American brain can't seem make that work.

We have uPTO and never had a manager say no. But still only have taken 12 days this year. We are so brain washed here in the US.

People should be able to take 365 days a year if it is unlimited PTO.

I hate the USA for this kind of stuff.

Europe has some of the highest amount of vacation time in the world. It is not "very limited". Of course we would all like to take more though. Here's a map of each country's minimum mandatory vacation time: https://en.wikipedia.org/wiki/List_of_minimum_annual_leave_b...

A 5GB data plan is very limited when compared to an unlimited one.

Not when at 1gig data used they drop you down in speed for the rest of the month.

You get more than 10% of your time off for work and that's "limited" to you? You expect your employer to pay you for not working 40% of the year?! Insanity.

> You expect your employer to pay you for not working 40% of the year?! Insanity.

Insanity is saying "You have unlimited PTO", when actually it's a very normal 20 days / year or whatever. Unlimited !=20 days. Just say you have 20 days leave and then it's clear to everyone involved.

I don't know about insanity, in Europe it is very clear what the contract and law says, and it is very simple. People usually have the holidays around the same time of the year. Then again the salaries are much, much lower than (some parts) of the US. You could see it as a tradeoff.

However it varies from country to country but in my understanding the difference to US is drastic.

To be honest, I think this is quickly becoming an outdated way of thinking that favors the business. There is room in our current model to respect that businesses, and the people who found and run them, have a bottom line and also need to grow. But there is also a lot of room for workers to be treated much more humanely than they are today. Why not try to give people 10%, 20%, or more of their time off? A major goal should be humans living their best lives, not just businesses achieving the highest valuation or dollar profit possible. And that is not the current paradigm. Even in Tech, where workers probably have some of the best bargaining power of any sector, most of the humane treatment is lip service. A more worker centric model is an inevitability - more time off, less hours per day, and less days per week worked. It's already happening.

1. I wouldn't call that necessarily insane, depending on the specifics of the work contract. 2. I think the objection to using the word "unlimited" is correct. The only way I can imagine a truly unlimited PTO policy working is if there were concrete performance metrics that I was expected to meet to retain my job. And if I manage to get a year's worth done on January 2nd, I can take off the rest of the year.

How is that insane? It's just a perk of the job.

And yes I agree with OP - 25 days of guaranteed PTO a year is pretty limited and nothing that special.

> You expect your employer to pay you for not working 40% of the year?!

No, but I expect if they won't that they do not call it "unlimited".

That’s priced in. It’s just fair that there is a mandatory amount for everyone and that’s the baseline.

It's not fair for people that don't want that and would rather work more for more compensation.

IMO payment is not needed, but I'd be happier in a world with 20 weeks of vacation per year.

That's called consulting. :)

It's not for everyone, but it's very flexible.

In accounting/finance terms the "unlimited" PTO equals 0 PTO, and this is why business loves it. Thus you don't earn it, and instead it is just like a bonus given [or mostly not] at the whims of the manager. The Atlassian HR response is a wonderful mix of the "more flexibility" BS and the true harsh reality of the "unlimited PTO" scam https://s3.us-west-2.amazonaws.com/secure.notion-static.com/...

Next thing is "unlimited" health insurance where your medical bills are paid [or not] at your manager approval :)

You're correct about unlimited PTO, it's absolutely a mixed bag.

I worked at Atlassian, and my experience was that people were actively encouraged to take between 20-30 days off per year, and that getting vacation was usually a mere formality - telling your manager "hey I'm planning to take the week of so and so off, any issue with that?" I never had vacation or sick time checked, never had any denied, and I very much took advantage of the benefit.

Still, the manager does have to approve it, so I have heard stories about teams that are understaffed declining vacation when they don't have enough people to be on call etc. I don't know how that would work out differently if you did have accrual vacation though... somebody does have to be on-call. It's tough.

I suspect that the same companies/teams that make it hard to take time under an "unlimited" plan would probably make it equally hard to take the 4 weeks of vacation you'd accrued under a traditional plan.

Even at a company that encourages it, unlimited pto was stressful. How much are others taking? Have I earned this?

On the bad end, I quit a company that wanted me to take a report to task for using too much unlimited pto (3 weeks in a year)

> wanted me to take a report to task

What does this mean?

Grandparent post was in management, higher management wanted one of his reports disciplined for using the unlimited time off (in an amount that's not uncommon for anyone in management or with 5+ years at the company to have as vacation)

It means to talk to them in a stern way about something they did wrong.

https://www.vocabulary.com/dictionary/take%20to%20task

I didn't even get the 'report' part. Thanks all.

Parent is a lead/manager of some sort, and they were directed to verbally discipline a person who "reports" to them (IOW, works under parent commenter's org).

Someone who reports to the poster took three weeks off and the powers that be wanted the poster to have a "talk" with that person.

Having worked at companies that do both, I prefer the explicitly accrued/yearly allotment. There's less of "I'm back in elementary school and need to raise my hand and ask permission to use the bathroom" and more "This is my time, as long as I'm responsible I can use it essentially whenever". And that's with the previous unlimited time company actually being fair with it, I can't imagine how difficult it would be to use with a company that discouraged it.

Unlimited PTO is always a passive-aggressive lie.

Companies that start out the relationship with dishonesty are bad places to work.

It's a cost savings measure for CA companies to avoid having to hold employee's earned vacation hours as a liability to be paid out if they are unused when the employee separates. This is also why they cannot set a minimum, as that would indicate an amount of earned vacation per year.

To be clear, this is still very disingenuous and I believe companies should stop the practice.

It is a loophole in labor laws that CA's legislature especially should close because it is against the spirit/intent of the laws that vacation time should be an asset owed to the employee as part of total compensation, not a whim to be managed (removed without recompense) by the employer.

There are some companies where it seems legitimate, especially larger ones. I hear that at Indeed for example it is very legitimate. The problem in smaller ones is not so much that it is a deliberate lie, but rather a promise the business cannot keep as the bus factor for lots of roles is 1.

It's not legitimate, otherwise you'd take 100% paid time off, get a second job, and collect two paychecks in perpetuity.

It's not unlimited. It's never unlimited. It's always a lie.

I don't fundamentally disagree with you that yes, of course there is always some ultimate limit, nor that it's generally done in bad faith as an accounting scam to get around legal paid time balance sheet requirements. That said, I don't think you're right here:

>otherwise you'd take 100% paid time off, get a second job, and collect two paychecks in perpetuity

Even if 100% genuine, "unlimited PTO" in no way implies PTO for any reason. It's not incompatible to offer it while at the same time having eligibility requirements and other continued employment requirements. At the most simple it merely means there isn't any set limit. A 25 year veteran who gets cancer can be treated differently then someone who just skives off to go party. The latter can just as easily be fired not for exceeding some arbitrary PTO limit, but absence from work without a listed reason in the contract, defrauding the business (if they lie about it), etc.

In practice I don't think "depending on the fuzzy discretion and good will of management/HR/whomever" is a good practical deal for employees in general vs actual hard PTO which translates to money, since at scale the incentives for the business just are not normally aligned that well and even on the employee side those who abuse it will inevitably arise as well further throwing the thing into a negative spiral. It wouldn't stun me though if someone could find a few real examples of companies that had it because they wanted to offer really good sick people more time, there are lots of ideas that depend on human factors which work very badly on average but well in instances.

Sure, if you approach everything in bad faith then yes it's not really "unlimited". That said, calling it unlimited is much easier than saying "we offer no set number of days, use what you need. you still work here though so you can't just not actually ever come to work. act in good faith, use good judgement" every time you open your mouth about a vacation policy.

Be honest. Your manager will decide how many days you get off = unlimited

>It's not legitimate, otherwise you'd take 100% paid time off, get a second job, and collect two paychecks in perpetuity.

This is not a great argument. Unlimited just means there isn't a pre-defined limit, not that every amount has to be approved.

Do you think there's unlimited amounts of money in the world? If yes, then by definition it's worthless (also, can I have a trillion dollars an hour?). If no, then what's the maximum amount of money?

> Unlimited just means there isn't a pre-defined limit, not that every amount has to be approved.

Do you work for my ISP's marketing department?

So you mean 'no defined limit but definitely not unlimited' or do you mean 'unlimited except with the following limitations'? You don't have a great argument.

Then it's not unlimited, it's flexible.

Fair. I agree that it is not truly unlimited.

I have unlimited PTO and have for quite a while and love it.

We are encouraged to take off at least 5 days a quarter / 20 days a year in addition to our holidays (which are flexible given culture, personal preference, etc). We don't count sick days or appointment time towards that. We can take off more, and frequently do, we just have to tell someone we're doing it.

We frequently are put on "nicely forced" vacations if our manager notices we have not taken off in a while. You'll usually get a message from your manager like "hey, schedule some time off in the next month, it's been a bit since you've been off".

This doesn't include parental leave as well, which is pretty solid compared to other places I've been.

The people I know with "Unlimited" PTO all take more than my 5 weeks of limited PTO.

Lie or not, it's still better.

> it's still better.

It _can_ still be better. Or it can be worse, as in the OP's situation.

So... bad companies are going to be bad companies.

Unlimited PTO has nothing to do with it.

I am a small business owner with unlimited PTO. It's not a passive aggressive lie. I want people to take time off. I just can't have large outstanding liabilities associated with accrued PTO.

Do your employees take more time off than they would otherwise get with accrued PTO? If yes, then I doubt it's the outstanding liability issue you are worried about, because you could just set aside revenue for that specific purpose, switch to accrued PTO and come out ahead. If your employees take less time off than they otherwise would with accrued vacation, then it sounds like a shit deal for your employees.

Are you okay with people taking off one week every month? How about two weeks every month? Is it really unlimited?

Why not require your employees to take the time off? You could even schedule it for them at the start of the year "Bob, you're off the first two weeks of May and last two in October" and make it easy for them to reschedule to times that suit them, but not to carry over unlimited amounts of it.

Can't you just force vacation time payout annually to avoid large liabilities? I've worked in places like that and it's usually received pretty well - there isn't any expectation of accruing half a year of vacation over several years of employment anymore - at least not in younger (under forty) folks.

Any company I've worked at with an accrual vacation system has typically had an accrual max, i.e. your vacation doesn't go away but you stop accumulating more when it hits the cap which is usually something like 1.5x annual accrual.

That's a good way to avoid the situation where employees need to take vacations as unpaid time in january but they still end up hitting the same issue in June (or whenever the cap kicks in). So if you accrued up to the max at one of these places would the additional time you would accrue just get immediately paid out? Or was no vacation time earned?

So let's say I earn 4 weeks per year. Don't take any vacation year 1 starting Jan 1. Still not taking vacation year 2. On July 1, I have 6 weeks in total. At this point, assuming a 1.5x accrual cap, I stop accumulating until I take some time off, at which point I start accruing again up to the same 6 week limit. (So no new vacation time is earned until you get below the 6 week cap. There's really no relation to the calendar year.)

I believe some places pay out unused while still employed but I've never seen this.

I worked somewhere where this was the case. A guy went on a two week vacation and called in every two weeks to extend it: for four months. Genius. After that, it was still unlimited, but after three weeks, it was unpaid.

You can cap the accrual. I'm not a lawyer, but I assume it's legal because many big companies have such a policy, in California and elsewhere in US.

Do employees take out more than the regular 5 weeks a year that most people in Europe do?

Yup. It becomes a negotiation, and the company by definition has orders of magnitude more negotiating power (arm-wrestling, etc) than you do.

But hey, "freedom", yay!

This is the unfortunate truth of a lot of US labour laws and why I prefer it up here in Canada. I know with certainty that my coworkers (even university coops!) have access to good healthcare and have provincially mandated vacation time. I work hard in my position and carry a fair amount of responsibility that I've accrued over the years - but I don't want any of my coworkers, no matter how junior and no matter how short their stay at this company may be, to struggle to live a healthy life.

Depending on local labour laws this can happen to you even without unlimited PTO. I have a coworker in BC who was denied the ability to exercise their vacation during a three month crunch period - and then the company refused to pay out the hours and disappeared them into the aether - this tends to be legal in a lot of places when labour laws confirm that vacation is at the convenience of the employer (which is totally reasonable) but fail to mandate either vacation carryover or vacation payout - a lot of jurisdictions can allow this sort of grey area and if your company leverages it... Quit Immediately.

At my current and former company, both of which offer unlimited PTO, vacation requests are approved by HR, not your manager. Managers are only allowed to challenge PTO requests if they can demonstrate that the employee is not getting their work done. (For on call employees, managers cannot challenge PTO requested for periods when the employee is not on call.)

If blocking people is the problem, could you not take unlimited PTO in sub-week increments? Plus maybe a couple actual vacations a year near the holidays when people are all blocking each other anyway.

Seems like the perfect intersection of policy and need, if you would like to work fewer hours a day or fewer days a week. (Which, ok, maybe isn’t for you.)