Unlimited Vacation Policy

Unlimited vacation policy can attract top talent, but make sure you have set rules to keep it in check.

In the past few years many companies such as GitHub, Evernote, Netflix and Twitter have begun to offer unlimited vacation time to their employees as a perk and a respite. Traditional policies of accruing based on an employee's hours worked or limiting time off to a few weeks annually have given way to allowing employees to manage their own schedules with no set limitations. Still, even if it is considered a growing trend, only around 1% of employers are offering unlimited vacation time so it's still a rare occurrence. While some companies have found unlimited time off to be a positive recruiting and retention tool others have found issues such as push back from employees. A few companies have even reverted back to accrued time off after adopting an unlimited policy.

Unlimited Vacation Policy: Advantages

For companies looking to be competitive in acquiring new talent and build a strong relationship with their employees, an unlimited vacation policy is seen as helping to build an ownership mentality within their workers. Employers are looking to disrupt the mindset of the traditional boss / worker relationship and create an environment that makes the employee think like an owner. In their minds, it gives an employer a more vested interest in the company and will help them make decisions that are best for both.

Empowering employees to decide on their own how much vacation time to use shows them how much the company trusts and respects them. The theory is that this trust will be reciprocated with loyalty and hard work. Treating employees as individuals by giving the choice to them personalizes their work experience and allows them to fit work into their lives instead of the other way around.

Things happen in life. People get sick, friends get married, the unexpected occurs. Events in our lives give way to different needs at different times. Unlimited vacation time gives employees the ability to manage their life even when life has other plans.

Unlimited Vacation Policy: Disadvantages

Traditionally vacation time is accrued under a plan where time grows over a certain period. This accrued time has value as it can be cashed out when leaving a job, usually giving a buffer when transitioning to new work. With an unlimited vacation scheme there is not an accrual and nothing to cash out. Because it is given and not earned it does not offer the same payout as traditional vacation time.

Tribune Publishing, owner of the Chicago Tribune, rescinded their unlimited vacation policy after input from their staff. One issue that came up was the monetary loss of long-term employees accrued vacation pay. Some states even have laws that require payouts for unused vacation time.

Another challenge, faced by employees whose companies have implemented unlimited vacation, is the vagueness of what is acceptable time off. It leaves workers questioning whether their employer will view their use of this policy as abusive or lazy. Working in a high paying job in a competitive field may leave employees fearful of taking any time off. Some studies have shown that employees that work for a company offering unlimited vacation don't take any more days off than those that work for companies with traditional vacation policies. In fact, many employees take less time off.

Guidelines: Understand the Expectations

One of the main complaints by employees and managers alike is a lack of understanding expectations of the workplace when it comes to unlimited vacations. Under these policies it is often left open to interpretation. If your policy allows for an employee to take 6 months off, without limitation, what right do you as an employer have to judge that behavior should it occur? Companies enacting these policies often say that it is the employee's responsibility to determine what is appropriate. However, expectations on both sides can be difficult to reconcile without a clear cut understanding of what is acceptable. Your contract or employee manual should not leave too much to interpretation.

Guidelines: Know What’s Acceptable—and What’s Not

An employer probably has a general idea of the time they feel is acceptable to take off and it's a good idea to discuss that range with your employer. The range will likely be variable depending on your situation and from boss to boss. Employees with more tenure will likely be able to take more time, in the eyes of an employer, than a new hire. Also, the reason for needing the time will likely come into play. There is a difference between taking time off to tend to a sick relative than to take a third trip to the beach this summer. Communication will be key and discussing with your employer what is and is not acceptable will help eliminate friction caused by a lack of understanding.

Tips in Creating an Unlimited Vacation Policy

There are a lot of reasons to implement extended vacation options. Managing expectations of a worker is always in the employer's best interest. Consider the phrase, "unlimited vacation time." While it may sound enticing and elicit a positive response during an interview, does it really relay your intention? The phrase conjures images of paychecks being delivered directly to a vacation address and lounging on a beach all summer long. While no one truly expects this to be an accurate depiction of an employee's work experience it's good to manage their expectation ahead of time. "Flexible" or "variable" vacation time is a much clearer notion of intent than "unlimited', and also a more accurate one.

Also, consider implementing a hybrid of the traditional vacation with unlimited. For instance, offer two-weeks of traditional vacation pay with the option to take more. That gives employees the opportunity to vest their time off while still taking advantage of extended vacation time when needed or desired. If your company is transitioning from a traditional vacation model to one that is unlimited consider already accrued vacation time that your existing employees have. Change can be difficult, even positive change. Working with your employees to better understand their needs is key.

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