6 pros and cons of an unlimited holiday policy

unlimited holiday policy

Unless you’ve been living under a rock for the past year or so, you’re probably aware of a new holiday policy that companies such as Netflix, LinkedIn and Virgin are introducing, where employees get unlimited holiday entitlement.

The idea is that the organisation trusts each employee to manage their own leave requests and to take as much or as little as they want, when they want it. No tracking, no allocated days, just take a holiday when you want to.

It may sound like a joke… but it isn’t.

Could this new idea really be introduced into every organisation? Would it work in every industry? Here are 6 pros and cons if you were to adopt an unlimited holiday policy (well, no policy really!)

Pros

1. Your employees will be happier

We all know that happy employees are more productive. This is one of the many reasons companies like Netflix and Virgin introduced an unlimited holiday policy. This flexible benefit boosts employee morale and improves workplace culture.

Today, there is more pressure than ever on companies to help employees better manage their work-life balance and personal well-being and unlimited leave is just one way to achieve these.

2. Retaining top talent is far easier

According to The Balance Careers, a reasonable leave benefit is one of the top perks that an employee wants. Research from Small Business Prices also backs this up with 26% of all employees wanting an additional holiday.

Offering unlimited holiday could be the difference between a top candidate choosing you over a competitor – especially if the salaries on offer are similar. It could also be the USP on your job advert, meaning more candidates view your role over others, putting yours firmly in the driving seat.

3. Productivity is higher

Research conducted by recruiter.co.uk shows employers who offer an unlimited holiday to employees could see a reduction of sick days by up to 50% and a 10% decrease in staff turnover. An unlimited holiday policy will also promote quality over quantity. Almost overnight you’ll eradicate the clock-watching attitude, and consider an employee’s overall contribution rather than just their presence in the workplace. After all, it’s the quality of work produced that defines success for a business.

Cons

1. You have to be very trusting

Don’t trust your employees? Don’t bother. The only way an unlimited holiday policy works is if you can really trust your people. It’s also true the other way around, as Edelman Trust data showed that almost one in three employees don’t trust the company management. This divide needs to be addressed before considering any new holiday policy.

2. Expectations aren’t clear – abuse or burnout

This may be due to unlimited holiday still being a fairly new idea and people are still in the ‘old’ mindset where they are unsure when and how much holiday to take. Knowing the numerical limits can help define what is acceptable behaviour.

While one person might want to take 15 days off in a year, another team member may feel they need 35. This is fine under the policy, but when one person is away, their work still needs to be covered and it’s the person who takes less holiday who picks it up. This can result in burnout for that person and may require the business to employ additional people, thus increasing costs.

But there will always be that one person who will abuse the policy, taking far more days than is needed resulting in lower productivity, but with no repercussions.

3. Negatively viewed for taking days off

Being viewed negatively for taking days off is probably the biggest contributor to employees not taking enough annual leave. Research by Croner House showed that 13% feel they can’t take a day off and four percent worry about what their place of work would think of them if they did. The research also showed that 33% of people said they didn’t take all their annual leave due to the amount of work they have to do. This would only increase with an unlimited holiday policy.

Finally, ‘unlimited’ doesn’t really mean unlimited, it really means, ‘we’re not counting’.

So, could an unlimited holiday policy work for you?

It’s time for the million-dollar question, should you introduce an unlimited holiday policy into your business? Ultimately, it depends on what you want to achieve and what your employees want. For example, a gaming company may employ numerous millennials who prefer additional benefits over pay rises, however, a tool manufacturer may have an older workforce who only care about their take-home pay.

Before you implement any new policy, always gain feedback from key stakeholders and have a trial run to minimise the chance of failure.

Looking to better manage your employees’ leave? Natural HR will allow employees to self-serve time-off requests and give managers a simple approval process. Discover more here.

Natural HR

About Natural HR

Natural HR is a cloud-based HR software company for growing businesses with 100+ employees. Since launching in 2010, we’ve been building a comprehensive suite of HR functionality that equips the small to medium-sized enterprise with everything needed to build an effective and efficient HR operation.

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