The 1 PTO Policy So Bad It Should Be Illegal

One of my friends shared the absolute worst paid time off plan I have ever seen. The plan is “unlimited” PTO, but there’s a catch. To get your PTO approved, you have to explain what you are doing, how much time you need, and the whole department votes on whether or not you can take it or not.

The logic is—and I did ask—that because the co-workers have to pick up your slack while you’re gone, it’s only fair that they have a say.

I have seen a lot of PTO policies, and many of them are dumb, but this one exceeds the stupidity of all the other ones. I am not generally a fan of increased regulation, but this one has such a high risk of illegal discrimination that you should pretend it’s illegal. I’m going to break down why this is so awful.

Unlimited PTO means zero PTO

If there were truly unlimited paid time off, you would never have to work. We call that retirement. It’s not a job.

So, when a company offers “unlimited PTO,” that simply means that the limit is a secret, and not the same for everyone. And it also means, as in this case, that you’re not entitled to take any time off. In states that require a payout of vacation upon termination (such as California), an unlimited vacation policy means you get zero dollars when you quit or are fired.

So, with no guarantee of paid time off and no ability to point to a spreadsheet and say, “Hey, I have 13 days of PTO left and it’s almost November, so I’d like to book some time,” you really have zero guaranteed PTO.

Management discretion is a recipe for disaster

While I love the idea of hiring people I can trust 100 percent, after 25 years in HR, I can confidently say it would be extremely rare for a company to have 100 percent of its managers you could trust to fairly and equitably allot PTO time. In fact, once you get two managers, I think this falls apart.

Leadership, and especially finance, love unlimited PTO precisely because it’s easy to say no, and there are no vacation liabilities on the books. 

So, without guaranteed time off, decision makers have the discretion to say yes or no. And who do they say yes to? Their friends? The slackers who won’t be missed? People who they feel “deserve” time off? Each manager will be different. Can they be fair?

A vote is even worse

Remember, one definition of a democracy is two lions and an antelope voting on what to have for dinner. 

Group dynamics can be funny, and having peers vote on who gets to take a vacation can end in disaster. What if you have a bully in the group who pressures people to vote a certain way? What if no one likes one team member, for any reason? Sometimes people don’t like high achievers; sometimes people don’t like low achievers. Sometimes people don’t like those who vote differently, dress differently, or speak differently. Sometimes race and gender will come into play. It’s OK for Bob to take two weeks off to go to Hawaii because everyone likes Bob, but the only time the group will let Katie take time off is for doctor’s appointments.

It’s a nightmare.

As a general rule, the reasons people want to use vacation time should be irrelevant. It’s part of your compensation, and whether you want to use it to paint your front porch, march in a protest, or trek through the Andes, you should be able to.

While there are some times when the reason matters—someone who does tax returns will probably need a really good reason to take April 14th off—most of the time, the reason should not play a role in the decision calculus.

A better solution

The other problem with this method of determining “unlimited” days off is that the employees could collude and decide everyone will take the entire month of December off. What are you going to do about it? Your rules say you can take vacation when your team says you can.

The best PTO plan is generous, with a set number of days, a reasonable rollover policy, and a culture in which managers ensure their employees use the vast majority of their time each year. 

But if you insist on an “unlimited” plan, one metric you should use to judge managers is the minimum number of vacation days each employee takes. For instance, a manager’s bonus will be reduced if their employees don’t take at least 10 vacation days.

Managers should have clear guidelines for when to approve vacation requests and when to deny them. They should match requests against these guidelines, and HR should do regular analysis to ensure that vacation is being used equally across all groups. People who haven’t taken the minimum amount should be strongly encouraged to take a vacation.

It’s not as good as a generous plan with a set number of days, but it’s far better than having your employees vote on whether someone should take vacation or not.