Several companies offer unlimited vacation, but the policy has its detractors as well. Ideally, the focus should be on balancing productivity with wellness, reducing complex HR protocol as much as possible. In this article, we discuss:
- The benefits of providing an unlimited vacation policy
- Pitfalls and risks of giving employees unlimited vacation
- Tips to make the policy work for your company
In the last few years, there has been a lot of discussion around unlimited paid time off (PTO). Companies like LinkedIn, Netflix, and HubSpot all offer unlimited PTO or unlimited vacation as a core employee benefit. And it seems like a great idea – employees can take time off at any time of the year. Advancements in collaboration technology and remote work toolsOpens a new window lets employees stay connected and continue to be productive.
It seems to be a win-win for everyone.
But is it really?
An unlimited vacation also has its detractors. In Buffer’s 2019 surveyOpens a new window of nearly 2,500 remote workers, 32% said that they get unlimited vacation time. Yet, most employees took only 2–3 weeks off every year. 5% didn’t take any time off at all.
How do employees perceive and use an unlimited vacation? Should employee-centric companies go down this route? Let’s delve deeper.Â
Learn More: The New List of Non-Negotiable Job Seekers Are DemandingOpens a new window
Employees Genuinely Value Unlimited Vacation Time
Employees view unlimited vacation policies positively. The 2019 Vacation Confidence Index by Allianz Global AssistanceOpens a new window , which surveyed at 1,005 workers, found that employees would even take a pay cut in exchange for unlimited vacation days! Here are some of the key statistics from the study:
- 1 out of 3 respondents would give up some of their salaries to get unlimited vacation time.
- Among these respondents, 7% were willing to forego over 50% of their salary for unlimited vacation time.
- On average, employees believe that giving up 26% of their compensation for an unlimited vacation policy is a fair deal.
Trends like this demonstrate why unlimited vacation time has become such a popular benefit. It can be particularly effective for small-to-mid-sized companies looking to bolster their benefits package. Check out this job ad on Twitter explicitly mentioning remote work as a key benefit:
We are hiring for a Front-End Engineer! Are you game? #HTML5Opens a new window #jQueryOpens a new window #CSSOpens a new window #remotejobsOpens a new window #unlimitedvacationOpens a new window pic.twitter.com/CHI193jOJdOpens a new window
— RockSolid (@OneRockSolid) October 16, 2017Opens a new window
This tweet from One Rock SolidOpens a new window demonstrates how companies can use unlimited vacation as part of their recruitment marketing strategiesOpens a new window .
Here’s another one from SparkcentralOpens a new window leveraging this idea
We’re #hiringOpens a new window a product marketing manager! Come help us make #custservOpens a new window better, faster and easier #unlimitedvacationOpens a new window
— Sparkcentral (@Sparkcentral) June 24, 2016Opens a new window
But how does unlimited vacation play out in real-world scenarios?
Do employees never come to the office, but constantly stay connected, putting in more than their share of efforts?
Or, does this policy lead to many weeks of paid holidays every year?
Turning the Spotlight on Well-being and Recovery, Not Just Vacation Days
Instead of looking at the administrative side of unlimited vacation, let’s focus on what it intends to achieve. Ideally, employees should come to the office for as many days feasible, and take time off to rejuvenate, recover, and reenergize themselves, so that monotony or fatigue does not set in.
Digital tools like workplace messaging platformsOpens a new window , project management tools, and video calling can help employees to be available in case of an emergency. It is this careful balance between productivity and self-healing that forms the cornerstone of unlimited vacation policies.
And studies suggest that employers are making moves in the right direction. 54% of 1,200+ businesses surveyed by PwC Opens a new window are taking proactive actions to help their workers disconnect. 30% allow sabbaticals/career breaks, while 67% have policies in place to promote mental and physical well-being. This is important, as a few days of leave can improve employees’ reaction time by 80%, the study notes.
The unlimited vacation definitely has a role to play here. It allows employees the flexibility to take time off, without the fear of this leave affecting their compensation.
Some companies take a different route – like Evernote, which offers employees a $1,000 vacation stipendOpens a new window every year specifically for travel!
Why Unlimited Vacation (Alone) May not Work for Your Company
At the beginning of this article we mentioned Buffer’s finding that even when employees get unlimited vacation days, they use it sparingly, to say the least. And this is confirmed by the company’s own experience with this policy.
Looking at its internal analytics in 2016 (right after introducing unlimited vacation), Buffer found Opens a new window that most of its employees were taking 15 days or less off per year. This was below the recommended number, which is why the company decided to make 15 the minimal threshold, sending its employees reminders and alerts if this basic driver of wellness wasn’t met. In spite of this, 8 team members took less than 10 days off in the next year!
This suggests the risk of offering unlimited vacations – as employees aren’t aware of the expectations, they prefer to stay well below what they feel is the acceptable number. The founder of Trust and WillOpens a new window agrees:
In my (flexible) opinion, “Unlimited PTO†only works if you also work somewhere with unlimited trust, unlimited healthy boundaries, and unlimited freedom to fail. In reality those things come in limited quantities.
— Rory (@RoryTyer) February 26, 2020Opens a new window
And in an always-on culture, it can be tempting to check your email, quickly clear a bit of task backlog, and catch up on the company news even when on vacation. After all, employees are confident that they can take another vacation whenever they wish – but the experience during that particular moment is diluted.Â
That’s why it is so important to bolster your unlimited vacation policy with a culture of wellness and transparency.
How to Get Unlimited Vacation Right in 2020
As you can see, unlimited vacation has its pros and cons.
For HR, it can mean less time spent on time and attendance, and fewer complexities around approval mechanisms. However, there is always a risk that employees won’t avail themselves of the benefit sufficiently – even if it does serve to attract quality talent. This is why it is so important to take concrete measures with a keen eye on wellness:
- Coach managers on acceptable PTO patterns. Equip them to balance work with vacationing, even if an employee isn’t in office for over 50% of the year.
- Adopt digital collaboration tools to connect with employees during their vacation days. Establish strict online hours, beyond which these employees cannot be contacted.
- Hold seminars and sessions on the importance of vacations, how it refreshes one’s mind, and expands one’s worldview. Employees must recognize the benefits of taking time off if they are to utilize your unlimited vacation policy.
- Define specific terms like the minimum vacation period and the number of days for which compensation can be accrued and collected at the time of offboarding.
- Equip managers, employees, and HR teams with the right employee self-service tools to apply, approve, and track the amount of time taken off and to plan the work accordingly.
An unlimited vacation isn’t a way to deny employees compensation for accrued holidays if/when they resign. By following these four tips, you can strike the perfect balance between employee well-being and productivity in 2020.
Would you consider implementing an unlimited vacation policy in your organization? Why or why not? Tell us more about it on FacebookOpens a new window , LinkedInOpens a new window , or TwitterOpens a new window . We’d love to hear your thoughts!