Why Unlimited Vacation Policies Work

Many HR professionals have a negative knee-jerk response to the idea of giving staff unlimited vacation time. Surely, they will abuse it. This is in part based on a misunderstanding of what an unlimited vacation policy actually is. It is also based on a misunderstanding of how people tend to use vacation time.

What is an Unlimited Vacation Policy?

First of all, unlimited vacation policies are not technically unlimited. What the policy actually means is that there are no set limits to vacation time, no use it or lose it and often no distinction between vacation time and sick time. Instead, the idea is that employees should be able to take time off when they need it, as they need it, without “running out” or having to take time off because otherwise they will lose it.

It doesn’t allow an employee to take months off and then come back. In fact, some companies that have implemented unlimited vacation have found they had to set vacation minimums or people wouldn’t take time off at all and would then burn out.

What are the Benefits of Unlimited Vacation?

There are a number of benefits of unlimited vacation time:

  • It attracts top talent. As a perk, it is particularly valued by Millennials and younger employees who have a strong desire for flexibility.
  • It encourages diversity. For example, unlimited vacation time allows people to take off non-Christian religious holidays with no questions asked, makes lives easier for parents, and can be helpful to employees with chronic illnesses. The last may be very valuable when in the office, but need to randomly take days off so they can regain their energy.
  • It improves commitment and engagement. Employees who know they can take time off when they and their family need it are more likely to be committed when they are in the office.
  • When done correctly, it develops an environment of greater trust between management and employees.
  • It can help ensure work-life balance in a day when everyone is on call, all the time.
  • It makes it a lot less stressful to get to medical and dental appointments, which helps keep your employees healthier and reduce absenteeism.
  • You have to spend less time tracking vacation time, although it’s still a good idea to track it so you can spot employees who are not taking enough time on.

How Have Companies Done it Right?

Not every company has done unlimited vacation right. In some cases, employees have felt it was not a perk, but might even be just a way for the company to save money by not having to pay out accrued leave. But here are some examples:

  • Netflix. Netflix is the granddaddy of unlimited leave. For them it was a natural extension of flexible work days and many people not working a standard 9 to 5. Moving away from tracking vacation days was only another way of expressing a company culture that valued what you got done, not the hours you put in. It took them years to get it right, but the key elements were leaders setting the example of taking time off themselves and setting context so people didn’t either take no time off or disappear when most needed.
  • Kronos. When Kronos shifted to an unlimited leave policy, it was out of a desire to encourage employees to put their families first and improve work-life balance. They found a few issues. Some managers thought it would increase their workload. Other employees had been stocking up on the value of vacation time. Not wanting to appear as if they were just trying to dodge paying out, they were investing that money into improved parental leave, student loan assistance, and others. They also strongly encouraged taking time off and it helped that the CEO was the kind of guy who would leave early when his kids had a game and be honest about it.

Unlimited vacation policies have pitfalls, but when they are done right they can work well and help improve productivity, wellness, and work-life balance for your entire company. For companies that have implemented them, tracking the result is vital to show that it works. 

At Intraway we strive to create a boundless open space that fosters innovation, and a comfortable environment that encourages teamwork. We focus on enhancing our company culture by empowering a talented team in a challenging and satisfying environment, characterized by continuous learning and commitment.

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