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Unlimited Holidays: Do They Cause More Harm than Good?

4 min read

Does your company track employee holidays? Have you ever considered implementing a policy for unlimited holidays?

In this article, we will take a look at unlimited holidays for employees, and share the biggest pros and cons of joining the trend. Could this new idea really be introduced into every organisation? What is the best way to manage employee time off work? Can HR software help?

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How Does Unlimited Holiday Work?

As an employer, there are a few things you must always consider when managing employee time off and calculating holiday entitlement.

According to the UK holiday entitlement law, full-time employees in the UK are entitled to a minimum of 28 days of holiday each year (known as statutory leave entitlement or annual leave). This includes agency workers, workers with irregular hours and workers on zero-hour contracts. Employers can choose to include UK bank holidays in this total.

After these legal requirements are met, where you go from there is up to you. You might decide, for example, to implement an unlimited holiday policy. If a company offers its employees unlimited holidays, it means they are trusting them to manage their own holidays and take as much time off as they feel they need.

Provided employees meet all deadlines, they can choose when to take a day off and when to work. In other words, they are evaluated on their output, not their physical presence.

The trend began in the US in the 1990s, and it is now being adopted by many British companies. By offering the incentive, the hope is that employees take ownership of their work and enjoy a better work-life balance.

Companies that Give Unlimited Holidays to Their Staff

The Netflix unlimited holiday policy was among the first ones that began offering unlimited time off to its employees back in 2010. In fact, they were one of the very first pioneers to introduce this controversial policy. It took Netflix a while to get the policy right though. The most notable issue they had was an accounting fiasco when the finance manager decided to take the busiest week of the year off!

They were quickly followed by Github, which also were offering flexible hours and unlimited sick time. Github found that employees were happier and more engaged. They also noticed that profits quickly went up. The company has a rating of 4/5 on Glassdoor and scores very highly for compensation, benefits and work-life balance.

Evernote took it a step further and also decided to offer its employees a yearly stipend to pay for their holidays. They believe this helps to create an environment where all employees feel valued and empowered.

Another famous example is Roku. The TV streaming giant encourages employees to take as much time off work as they feel appropriate. Their only request in return? Hit all deadlines and make sure it doesn’t affect their colleagues or production levels.

Richard Branson follows this same sentiment at his company Virgin Management. He famously claimed, “Just as we don’t have a nine to five policy, we don’t need a vacation policy”.

The Benefits of Unlimited Holidays

  • An unlimited holiday policy can empower your workforce.
  • Having an unlimited holiday policy can increase employee satisfaction.
  • The policy for unlimited holidays is much more flexible, enabling employees to create a healthier work-life balance.
  • An open policy for managing employee holidays can also help companies stand out in the job market and attract higher-quality talent.
  • Unlimited holidays can help employees create a sense of ownership and responsibility for the work they do, thus increasing productivity.
  • Employers can focus on measuring output instead of hours physically spent at the office.
  • Flexible benefits such as unlimited employee holidays can boost employee morale and improve workplace culture.
  • Companies learn to trust their employees to act like stakeholders and be responsible for managing their own time and workloads.

The Disadvantages of Unlimited Holidays

  • Not having a set holiday allowance can lead to increased work anxiety. This is because employees are not aware of the acceptable holiday limit and they are afraid of being judged unfavourably.
  • Managers and high performers may not feel like they can take time off work.
  • An unlimited holiday policy might lead to unfairness. Some employees may be fine with taking 30 days off, others might worry about being away for too long and burdening their colleagues.
  • It can lead to problems with productivity. If little or no notice of a holiday is given, then it can lead to staffing issues.
  • Unlimited holidays wouldn’t work for companies where employees are required to be on-site, such as manufacturing, production or service industries.
  • If a company allows unlimited holidays, then they probably aren’t tracking attendance data and performance. This could lead to red flags going unnoticed for any potential problem areas within the company.
  • It can be difficult to implement and even harder to manage. It also makes it difficult to ensure all legal requirements are met in terms of statutory leave entitlement.

Managing Employees’ Unlimited Holidays

Ultimately, the scheme will only work if you have a company built on a culture of trust and shared responsibility. Your employees need to trust you, and you need to trust your employees. It also wouldn’t work for all business types. It might be an option for tech companies, but it wouldn’t work for any job involving shift work, dealing with the public or manufacturing and production.

Boundaries and rules can also be blurry. Does notice still need to be given? How will it impact other team members? Is there a limit to how many paid holidays they will get? Are holidays truly “unlimited”? What frequency would be deemed unacceptable? Will you still be managing, tracking and analysing employee holidays?

Whether or not you choose to offer unlimited holidays, you still need to manage the time that your employees spend away from the workplace. You must define a policy with clear guidelines. You need to record your data to measure performance. And you need to make sure all employees are getting the time off they are entitled to by law.

If you don’t already have a holiday tracker or use an effective Excel template, then you might want to check out these 7 tips for managing employee holidays.

And if Excel is not your thing, you might consider trying our time-off software to streamline your processes. The solution lets your workers manage their own holidays and absences, but as an employer, you still retain visibility and access to data.

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