Pros & Cons of Unlimited Vacation Days

November 14, 2019

The way in which we work today is changing. There’s now a blurred line between work and home life. Technology has made it hard for employees to unplug from work, enabling many employees to check their emails and complete their work from anywhere at any time. As a result of the change in work culture today, companies such as Netflix, Kronos, General Electric, and Hubspot are just a few of the companies offering their workforce unlimited vacation days. If you’re considering offering the same, you may want to read this article first.

The health and business advantages

1. Boost employee morale and loyalty

Providing unlimited vacation is a way to show your employees that you care about them and their happiness, both in and out of the office. It should go without saying that happy employees help foster a positive work culture. But because unlimited vacation is still a relatively uncommon benefit among Canadian companies, this can help to build loyalty among employees as well.

Those who take vacation time may also experience a variety of other benefits, such as an increased sense of belonging at their company, and an increased desire to contribute to their organization’s success in comparison to those who don’t take that vacation, according to one survey by O.C. Tanner.

2. Mental health and work productivity

Countless studies show that Canadians are more stressed than ever before. According to Statistics Canada, 23% of people over the age of 15 report that most days are “quite a bit” or “extremely” stressful; this number rises to 30% among those ages 35 to 54. Another study conducted by Monster Canada showed that one in four Canadians quit their job due to stress. Sounds like people could use a break! An unlimited vacation policy allows employees to take time off when they need it, eliminating the risk of burnout and presenteeism.

Taking vacations is actually scientifically proven to improve work productivity. For example, researcher Mark Rosekind of Alertness Solutions found that the effect of a vacation can increase performance by as much as 80%. Reaction times of returning vacationers increased by 40% in his study. Plus, research proves that regular vacationing reduces stress, depression, and risk of getting a heart attack.

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3. Talent acquisition

Canadians today are prioritizing work-life balance more than they did historically. According to Clutch, 18% of employees cite paid vacation as the greatest driver of job satisfaction. An unlimited vacation policy helps companies stand out from the crowd of employers in order to help attract and retain top talent. It sends the message that a company is forward-facing, cares about its employees, and prioritizes work/life balance – things that job seekers look for at a company in addition to salary.

Possible downsides to unlimited vacation

1. Potential abuse

While one would hope that employees will use an unlimited vacation policy in good faith, it does open up the potential of abuse i.e. overuse of the policy. If your employees start taking too much time off work, you may find yourself in a pickle. An absent employee affects workflows, project turnaround times, and team cohesion.

While these things can be bridged in the short-term for a few weeks throughout the year, they can become unmanageable should you find your employees – or a select number of employees – gone for so much time that the rest of their colleagues are forced to pick up the slack.

For this reason, it’s a good idea to introduce your policy to employees with this context, and remind them of any existing rules that still apply – for example, rules around providing advance notice and seeking manager sign-off. You may even wish to introduce unlimited vacation on a trial basis, and review your policy after a defined period of time.

2. Alternatively, underuse

Statistically speaking, underuse of unlimited vacation is the more common scenario. According to Insider, 29% of employees with unlimited vacation regularly work while taking vacation time, and in general, employees actually often end up taking significantly less vacation time in companies without defined vacation time than they otherwise would.

If you are offering unlimited vacation to encourage your employees to prioritize work/life balance and unwind, your employees not taking the time to actually do so defeats the purpose.

3. Loss of reward

An increase in vacation time is a common benefit to offer an employee in a traditional company with defined paid vacation times. It’s a great way to offer a perk for high performance without incurring direct costs to the company. With unlimited vacation time, naturally, offering additional vacation time will no longer be an option.

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Important things to consider

Here are some steps you should consider taking before jumping on the unlimited vacation wagon:

1. Evaluate your workplace culture

If an unlimited vacation policy were implemented, would employees feel reluctant to take time off out of fear of looking bad in front of management and colleagues? Would management feel less inclined to promote someone who took, say, four weeks off in a year than someone who took only one?

Consider your existing work culture in regards to the attitudes around booking time off: are employees encouraged to use up their vacation time, or is it subtly disapproved? Are employees making the most of their paid time off, or are they letting it go unused? If it’s the latter, an unlimited vacation policy likely isn’t the most effective route for your company.

2. Evaluate alternative desirable benefits

If you’re not sure whether an unlimited vacation policy is right for your company, you may want to consider flexible work options for your employees as a starting point or even an alternative.

Companies who have an open vacation policy also often offer flexible work options, such as the ability for employees to work from home or to set their own work schedule, given that they will continue to be able to complete their job duties.

3. Make sure you’re hiring the right people

If you’re hesitant about implementing an unlimited vacation policy because you think your workforce is going to abuse said policy, then you may need to re-evaluate your hiring process. If you cannot trust your employees, then you’re not hiring the right people.

4. Continue to track employees’ vacation days

Just because you implement an unlimited vacation policy doesn’t mean that you should stop tracking vacation time spent by your employees. Tracking time off will help you see how effective your new policy is, and how your employees are using it. You may see that average vacation time has increased, or stayed the same, or even decreased. Unlimited vacation is based on mutual trust between employer and employee, but if an employee is frequently on vacation and their performance is suffering, for example, this is obviously important to know.

5. Implement a minimum vacation time

The whole point of offering unlimited vacation days is so that employees get enough time to rest and unwind. Due to employees feeling hesitant to take time off in the absence of vacation time norms, many companies that already offer unlimited vacation policies have also implemented minimum vacation times. Hubspot, for instance, requires its employees to take a minimum of two weeks off per year under its unlimited vacation policy.

With more and more employers realizing the importance of keeping their workforce happy, unlimited vacation days are already starting to gain traction. But, for now, it’s important to evaluate whether your workplace is ready for the open vacation policy. If not, then you should take small steps to slowly get your workforce there, so that when and if you do implement unlimited vacation, it will be a smooth transition that will only serve to benefit your company and its employees.