Best Practices for Offering an Unlimited Vacation Policy

Angela Kambouris

The digital world has made it increasingly difficult for employees to unplug from their work. People continue to check their emails and complete their work from various environments at any time. Unsurprisingly, research shows that unlimited vacation policy is trending up. Companies such as Netflix, HubSpot, and General Electric embrace the change in work culture, offering their employees unlimited vacation days. Kronos reported that there had been a positive change for all employees in taking off more time.

A workplace culture that promotes employees taking a break to recharge instead of rewarding burnout is far more fulfilling. There are definite positives and risks when it comes to both sides of the argument. At the end of the day, if you treat your people like responsible adults, they will rise to the occasion. When you don’t, they will also rise to the occasion. Responsible adults can only lead to better employee experience, better job satisfaction and enhanced productivity both in and out of the office. 

Traditionally, time off has been separated into a paid vacation, sick, and personal days. Some companies offer paid-time-off to serve as a single bucket of time off, allowing the employee to use their discretion. To take it a step further, some companies adopt an unlimited paid-time policy based on employees taking as many vacation, sick and mental health days as they need on the requirement, they are meeting their performance goals. Employees can continue to take unplanned time off for sick days or emergencies. Some companies, the process still encompasses manager approvals; in others, no consent or tracking is required. 

There will always be benefits and drawbacks to consider before implementing an unlimited vacation policy. Here are a few to consider:

Advantages of an Unlimited Vacation Policy for Employers

  • Research supports that taking vacations reduces stress, depression and improves work productivity. 
  • 18% of employees acknowledge that paid vacation is a significant driver of job satisfaction. Unlimited vacation supports companies to stand out in the marketplace, sends a message that they are forward-facing and that they care about their people.
  • Encouraging employees to figure out their own vacation time shows that the company trusts and respects them. As a result, it strengthens their commitment to the company.
  • Netflix does not track time off. They focus on what people get done, not how many hours or days are worked. 
  • Supports health and wellbeing of work environment by reducing people coming to work when ill rather than trying to protect their time off for later use
  • Depending on state laws, companies may not have to pay out for vacation time when employees exit the company
  • Time no longer must be sent on administration by tracking time off and how much must be paid out when an employee’s leaves
  • By taking vacation time, employees may feel a sense of belonging and an increased desire to contribute to their company’s success.
  • An unlimited vacation policy supports employees to take time off when they need it, eliminating the risk of burnout and presenteeism.

Disadvantages of Unlimited Vacation Benefits for Employers

  • Studies support that for the most part, employees with unlimited vacations take approximately the same amount of time off as employees who have a designated pool of hours. Namely reported that workers at companies that offer unlimited time off take an average of 13 days on vacation. Whereas companies that provide traditional paid time off spent 15 days out of the office on average.
  • If employees exploit the unlimited vacation policy, it may be challenging to terminate the employee for absences as they are encouraged to take time off. When office managers establish performance goals, this may be one way to mitigate the risk.
  • To prevent the exploitation of an unlimited vacation policy, a tracking process will still need to be implemented to ensure compliance with medical leave and disability requirements.
  • 29% of employees continue to work while on unlimited vacation. It is more common that employees will under-use their vacation time without defined vacation time which defeats the purpose of people unwinding. 
  • At times, employees who have unlimited vacation must be encouraged to take more time off or are afraid to take ‘too much’ time. Human beings fall into the guilt-trap off not taking needed time off to take care of personal or family matters, relax on vacation or recover at home when sick. 
  • When employees begin to take too much time off work, ripples are created. An absent employee can affect workflows, project turnaround times and team cohesion. Companies may want to introduce your policy with clarity about non-negotiables, providing advance notice and implement with a three-month review period after three months. 

Best Practices for an Unlimited Time-Off Policy

Unlimited vacation policy is not a prerequisite for every company. Here are a few best practices to consider before proceeding with unlimited time off policy.

1. Workplace Culture

Goal-oriented company culture will best support an unlimited vacation policy. Assess your current company culture to determine whether your employees would be reluctant to take time off out of fear of repercussions or would they embrace the new policy with open arms celebrating health and wellness?

Explore existing attitudes around employees organizing time off. Do managers encourage their people to use their paid time off or do they accumulate their paid time? Companies can organize focus groups, sending out a survey, explore internal data and identify employee responsiveness. It is a worthwhile investment to obtain a pulse check of the current work culture. 

2. Will Employees Exploit Unlimited Vacation?

When companies are fearful of introducing an unlimited vacation policy, it is time to re-evaluate your hiring process. If you are hesitant because you think your workforce will exploit the system, then warning bells will be ringing. If you cannot trust your people, then you are not hiring the right people, and it’s time to look at your culture. 

3. Tracking Effectiveness of Policy

Tracking paid time off is critical once the policy has been implemented. It allows the company to assess the effectiveness of the process and how your employees are implementing the policy. A company must be able to determine whether the average vacation time has increased, stayed the same or decreased.

Within the team, office managers can establish a review process to track performance. For instance, implementing a process where the office manager must approve leave in advance can reduce risk and minimize the impact on the rest of the team. Another way is for companies to implement a minimum vacation time to ensure that employees are getting enough time to rest and unwind. Hubspot applies a minimum of 2 weeks off per year as part of its unlimited vacation policy.

4. Support Employees to Take Meaningful Time Off

If companies are transparent and uphold their values around employee happiness, wellbeing and appreciation as a driver for high-quality work, then employees in turn value the mission and success of the company. A culture of mutual respect boosts productivity and morale. Where employees are trusted with the responsibility to build their time-off schedule, this nurtures a culture of trust, goodwill, and mutual respect.

5. Working Long Hours to Prove Value is Not Sustainable

When a company values the quality of work, employees will do their best work as they recognize the company genuinely cares for them. Office managers must celebrate employee accomplishments which contribute to a culture where employees can take their time off with enthusiasm and appreciation. With this mindset, companies breed a healthy work-life balance. 

6. Employee Trap

One of the greatest struggles for employees with an unlimited vacation policy is the trap of taking less time than they deserve because they do not know how to define what the line looks like between acceptable and excessive. Office managers must open communication channels about standards and expectations to promote transparency around unlimited vacation. 

7. It Starts from the Top

If the company wants the policy to permeate the fabric of the organization, managers must lead by example. When office managers take vacation time, employees will often feel more comfortable taking time off as well. Adopting a workplace culture that demonstrates a genuine interest by encouraging employees to share vacation photos and share highlights at team meetings promotes a healthy workplace and that everybody matters. 

Implementing an Unlimited Vacation Policy

Adopting an unlimited vacation plan would be a massive cultural shift for many companies. There are benefits and challenges unique to any company setting up a policy. Companies must carefully design their policy based on their business objectives and evaluate whether their workplace is ready for the open vacation policy. Companies can take small steps to engage their workforce before taking the plunge for unlimited vacation.

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