As the summer winds down, you may look wistfully back at those two weeks of vacation and three long weekends and wished you could do it all over again. But at companies that have established unlimited vacation policies, you can.
While only about 1 percent of companies actually have unlimited vacation policies, they include such major companies as GE, Virgin Group, Netflix, and LinkedIn, as well as a number of tech startups. They also include three of Fortune’s Top 100 Companies to Work For.
Companies vary in how they set up unlimited vacation policies. In some corporations, employees must also get the approval of their manager, while in others, people simply use their own judgment.
Proponents of unlimited vacation policies point to several advantages:
Trust. When employees are allowed to decide for themselves whether they feel enough up to date with their work to take time off, it builds trust between the manager and the employee. “We want our employees to think like owners and consider what’s best for both themselves and the company,” writes Joshua Reeves, CEO of Gusto. “Letting them figure out their own vacation time shows that we trust and respect them, which in turn strengthens their commitment to the company.”
Saves time. Human resources staff don’t need to track employees’ vacation time, which can save up to 52 hours per year that can be spent doing other tasks, writes Minda Zetlin in Inc. The policies also reduce squabbling about whether a vacation day “counts” if the employee is doing some work while on vacation.
Reduces vacation time. It may sound contradictory, but employees who know they can take time off whenever they want may actually take less time off—or, at least, don’t take any more time off. For example, employees who know they only have three days off left by the end of the year will tend to take it because they’re operating from a position of scarcity.
On the other hand, even supporters of unlimited vacation policies admit they have a number of disadvantages:
Staff doesn’t take vacation. Conversely, people who work at companies with unlimited vacation policies may actually end up taking less vacation, or even no vacation at all. There may be social pressure not to take vacation, and organizations where employees have to get the manager’s approval may find that that approval is difficult to get. Really driven employees may not want to leave coworkers in the lurch, or may be concerned that by going on vacation they’re making themselves vulnerable to competitive coworkers.
“[Virgin CEO Richard] Branson wants employees to take as much time as they want, but said he assumes ‘they are only going to do it when they feel a hundred percent comfortable that they and their team are up to date on every project and that their absence will not in any way damage the business — or, for that matter, their careers!’” writes Jeanne Sahadi for CNN Money. “Arguably, that is a lot of pressure to put on an employee who was just kind of hoping to spend a week at the beach.”
For that reason, in 2015 Kickstarter rescinded its unlimited vacation policies in favor of giving employees a specific number of vacation days, after finding out that employees were actually taking fewer days off.
Legal issues. Companies that have unlimited vacation policies need to look out for legal issues, such as ensuring that overtime is paid properly, and that the company complies with various laws concerning workplace leave, writes Chad Brooks for Fox Business.
No vacation payout. Some organizations pay out unused vacation when an employee leaves the company. In organizations with unlimited vacation policies, employees don’t have this “bank” of time that could pay them additional weeks or even months of salary when they leave. While this ends up saving the company money—as much as an average of $1,898 per employee—some organizations, such as Tribune Publishing, have actually decided against implementing unlimited vacation policies due to employee outcry about losing this benefit.
One disadvantage that didn’t come up? People abusing the privilege of unlimited vacation policies, say proponents. While this is the fear, it hardly ever happens. “Employees rarely abuse unlimited vacation,” Zetlin writes. “When they do, it’s a signal that something’s wrong.”
If your company doesn’t offer unlimited vacation policies? Cheer up. It’s only 74 days until Thanksgiving.
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