How To Create and Implement an Unlimited PTO Policy

How To Create and Implement an Unlimited PTO Policy

In this series of articles, we’ve been talking all about unlimited PTO, also called unlimited vacation time or free time off. At this point, if you’ve been following our posts, you’ve weighed the pros and cons and decided that it’s the right option within your workforce. The pros have outweighed the cons including the fact that unlimited PTO is an excellent recruiting tool, it gives employees autonomy and it reduces bureaucracy.

So what next?

The following are some things to keep in mind as you’re building and implementing an unlimited PTO policy.

Use a Leave Management System

First and foremost, before even thinking about a specific policy or outlining any guidelines, a business needs to have a leave management system in place.

You might think you can administer unlimited PTO without a leave tracker, but that’s not the case at all. In fact, an advanced leave management system will really become the only thing you need to manage this kind of policy, technology-wise.

A leave tracker will allow employees to submit their requests for time off in a timely way, as based on the policy you create.

It will make management of time off easier for managers, and they can avoid some of the pitfalls that come with unlimited PTO, such as being understaffed.

A leave management system should be the number one tool you use to administer your new time-off policy.

A leave tracker needs to be something that employees can log into and manage on their own, and managers should be able to do the same. This is good not only for keeping up with employee requests, but also approving requests. Managers can use self-service elements to handle all of this quickly and easily.

Two important things that can be derived from a leave tracker or attendance management system are whether employees aren’t taking enough vacation time, or they are abusing the policy.

Even though employees have the autonomy to decide how they’ll use their time off, it can also be important to have them use the leave tracker to record what type of leave they are taking, for compliance purposes.

Determine How You Will Measure Productivity

With unlimited PTO, it’s not about who spends the most time at work. It’s about who is getting the most done. Productivity is a key measure of success, and before a business can effectively utilize an unlimited time-off policy, they need to have ways to measure productivity in place.

Workplace productivity will show you your ROI on your new vacation policy, and help you determine if you need to take extra steps to improve employee performance.


Eligibility is a key consideration in the development of an unrestricted leave policy. This is something that for the most part needs to be offered to all employees—otherwise, your business could face claims of discrimination.

SHRM recommends setting an eligibility policy where all full-time, exempt employees with 90 days of continuous service can participate.

Of course, the specifics of eligibility are going to depend on your organization. It’s also important that employers understand this leave time is different from what’s protected under the Family and Medical Leave Act (FMLA).


When a company is creating a new unlimited PTO policy, expectations need to be well-defined. There can be no room for ambiguity. Having a lack of clear expectations can often lead to one of two issues. The first is that no one is taking a vacation because they’re afraid that even though they can, they shouldn’t.

The second issue is abusing the system. Just like you don’t want employees never taking time off, you also don’t want them taking weeks off at a time.

Some of the specifics to consider when writing out expectations include the fact that employees still have to let their supervisor know within a certain amount of time that they’re requesting time off.

Also, just because a company has an unlimited time off policy, it doesn’t mean that an employee automatically gets the time off they request (which is where a leave tracker is handy). The expectations should include information about the potential for requests to be denied, and how requests are approved or denied.

For example, are requests approved on a first-come, first-serve basis, or are they based on seniority?

When outlining expectations, be very clear and specific in the system used for requesting time off in advance. There should also be plans for how work is handled when employees are out.

Expectations should outline the goals the company has for employees, and how their success on the job is measured, as well as the objectives they’re expected to meet.

Expectations should highlight what would indicate an employee isn’t meeting the guidelines, and how that’s dealt with in terms of discipline.

Something else that’s becoming a part of a lot of leave policies is a minimum PTO. You don’t want employees to feel like they’re pressured against taking time off, so set a minimum number of days they’re required to take off.

Work Completion Plans

Another element you might want to include in your unlimited PTO policy is requiring employees to make a work completion plan when they’re taking time off. This should indicate how the employee plans to meet objectives and deadlines, and what they think should be done to mitigate the productivity declines related to their absence.

A work completion plan might not be necessary for every business, but in businesses where project deadlines are tight, and individual employees carry a lot of responsibility, this might be necessary.

Finally, if you’re still on the fence about it, but think unlimited PTO could be good for your business and your employees, think about offering it on a trial period. Let your employees know in no uncertain terms that it is a test period and you want to see how things go.

This is another instance where your leave management system will come in handy. You can use the test period as a time to see larger trends that might be happening, and then you can adjust your policy accordingly.

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