Let Them Take Vacations: Pros and Cons of Unlimited Vacation Policies

Who doesn’t love a vacation? Time away from work is important for everyone. Vacation time not only boosts the economy, but it boosts the mental health and productivity of employees.

As an HR manager, it can be tough to set a paid time off policy that makes everyone happy and doesn’t place undue stress on your company. That’s why offering unlimited vacations to your employees—something that companies like Virgin and Netflix have done over the last few years—might seem to be totally impractical. If everyone’s allowed to take as much time as they want off, who’s going to be left to run the company? But that isn’t necessarily the case when it comes to unlimited vacation time.

Let’s take a look at some of the pros, cons, and misconceptions of giving your employees the freedom of unlimited paid time off (PTO).

PRO: It can make everyone happier to be there

This is the obvious benefit—what employee wouldn’t like to take time off whenever they’d like? An unlimited vacation policy means employees don’t have to fight for the weekend they want off at the beginning of the year. They can get some time away from work as needed, whether it’s a long weekend to unwind or a Wednesday afternoon to take their kids to a ballgame.

Unlimited vacation policies can be expanded to include all paid time off. That means sick and personal days don’t have to be carefully budgeted just in case of a particularly nasty flu season. Better still, this means new mothers and fathers or those caring for a sick family member can take as much time as they need to focus on those important things.

So it certainly boosts morale and your workplace culture, but it’s also a bonus recruitment tool. Not only is it a policy that appeals to all types of workers, but it’s a rare perk—less than one percent of companies have unlimited vacation—and all they’re all the more eye-catching.

CON: It can be tougher to organize and manage schedules

One necessary consequence of an employee taking a vacation is that usually the flow of work can’t stop. For companies with a high proportion of non-exempt employees, the need to make sure hours are covered without awarding too much overtime pay can become a hassle. And because employee vacations may not be chosen far ahead of time, there will be instances of a manager having to approve one employee’s request but not another’s. That can create some confusion and hurt feelings if not handled with respectful communication (which we’ll deal with in a little bit).

PRO: It prevents the end-of-year vacation sprees

With traditional paid time off policies, there can be a rush to use up days before they expire at the end of the year, which can create a scheduling and coverage nightmare. Or, if vacation days roll over at your company, you may have the problem of people hardly using them at all in a given year.

An unlimited PTO policy removes a lot of the pressure to make one’s vacation days count. Your employees may already be better at managing unlimited time off than you think. For example, Virgin noticed that their employees took days off more thoughtfully and intermittently, using PTO only when they and their team were caught up on projects. The flexibility of unlimited vacation can result in PTO days being used more efficiently overall.

CON: It takes a lot of communication

Unlimited paid time off can create some uncertainty for the very employees who you’d think would jump for joy because of the new policy. People don’t want to rock the boat and some will think there has to be a catch. Or, they’ll think that they’re still an unwritten rule about how much time is reasonable—that’s why some companies with unlimited paid time off are seeing their employees actually take fewer vacation or personal days.

Preventing misunderstandings requires constant top-down communication about how employees can best use unlimited vacation time and even more communication between team members to make sure time off isn’t creating unfair scheduling patterns. If employees under the old policy were allowed to cash in accrued time off when they leave the company, an additional policy may be needed to keep them happy (which is something that led to Tribune Publishing rescinding their “discretionary time off” policy only a week after implementing it).

Unlimited vacation is just one of many modern HR policies that may or may not work for your company. At Paycor, we know how confusing it can be when deciding whether to jump on board with new trends. That’s why our Resource Center is always full of timely information to help you make the right decisions and build a better, happier workplace. Want to learn how you can make simple changes and take your people processes to the next level? Contact us today.

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