Is an Unlimited Vacation Time Policy Right for Your Workplace?

16 March 2019

It sounds like every employee's dream: unlimited vacation days. Just work hard and take off the time you need. No more saving up precious paid time off for summer vacation or winter holidays. No more fretting over skipping work to handle unexpected family emergencies or no-school days.

But does a policy of limitless vacation days work in your workplace? Here are a few things to consider.

What Is an Unlimited Vacation Policy?

Unlike a traditional vacation policy where paid time-off is given or accrued, with a bottomless vacation policy, there is no cap on vacation days. Salaried employees can take as much (or as little) time off during the year as they want — as long as they get their work done.

It's one of many job perks that has gained traction in start-ups and tech companies but has started to spread to more traditional companies too.

What Are the Benefits?

The idea behind this policy is the belief that employees who take more vacation will be happier and more productive.

In fact, research has found that taking a vacation is good for your physical and mental health. People who took more vacation have a lower risk of dying and depression, as well as less stress compared to those who vacationed less often. According to CNBC, workers who take vacation are more likely to be promoted or get a raise.

The job perk also aims to build trust between employer and employees. For example, Netflix, by letting employees decide how much vacation time to take, says it wants to focus on what people actually get done on the job instead of logging a specific number of hours. When employees have more autonomy to manage their time and workload, they may feel that the company's leadership cares for them as individuals and wants to help them better manage work-life balance.

When employees work in an environment where they feel valued, they may be more likely to stick with a company for the long-term. A work culture that supports employees can also be a strong selling point when recruiting top talent.

What Are the Downsides?

While it may seem like having no limits on vacation days is a win-win, there are some challenges to consider.

For many employers, the biggest concern may be that your staff will abuse the policy and barely show up in the office, making managing a department or team's workload difficult when schedules are unpredictable.

For employees who are used to more traditional vacation policies, they may not know how much vacation time they can or should take and if it's all right to take more time off than their manager or someone who is more senior at the company. Others may feel uncomfortable taking time off they didn't "earn," especially if the management culture doesn't communicate that it values these job perks.

For example, after placing no limits on vacation days, Kickstarter returned to a more traditional policy because they found that employees wanted more clear guidelines around paid time off.

Is Unlimited Vacation Right For Me?

Unlimited vacation can be a valuable asset to help employees succeed at work and outside of the office, but it may not right for every company.

For employers, an unlimited paid time-off policy can eliminate the administrative burden of tracking and managing vacation time. But, for employees, especially those who have a long tenure at a company, there's a risk that they will not be paid for their accrued vacation days, according to The Washington Post.

Since trust is a major factor in the success of a flexible vacation policy, consider your company's values. If there isn't a level of trust between employees and management, it may not be the right fit for your company. The size of your organization matters too. Will unpredictable vacation schedules affect your organization's workflow?

If you do decide to implement a flexible vacation policy, take time to think through how the policy will be implemented and communicated. If there aren't clear guidelines — and senior staff who support and use the policy — employees may be reluctant to make use of their time off.

In addition, a bottomless vacation policy may clash with employment and wage laws. According to the Society for Human Resource Management, some states require employers to keep tabs on employee' work hours and accrual of paid time-off. Talk to your legal counsel to ensure that your policy is in compliance with state and local policies.

The best vacation policy is the one that fits the individual culture of your organization — and one that your employees will actually take advantage of.