Unlimited holiday policy: what’s the catch?

While a bottomless holiday allowance might sound like paradise, there are pitfalls to the perk 
by Bethan Rees

Unlimited holiday allowances first started appearing in workplace policies in the mid-1990s, according to André Spicer in an article for The Guardian, with IBM a frontrunner in the trend. Since then, firms such as job site Glassdoor, LinkedIn, Netflix and Virgin Management have followed suit. 

“Firms that have introduced unlimited holiday claim the policy works wonders, helping their employees to create a better work-life balance,” writes Spicer. “Having control over holidays is also said to make employees happier, which should make commercial sense, because happier workers are generally more productive.”

In an article by Felicity Hannah for the BBC, she reports that employment company Reed saw a 20% increase in jobs offering unlimited holiday between 2017 and 2018. She quotes Frankie Parkinson from graduate careers site, GradTouch, which offers unlimited holiday, who says that she took just over 30 days’ leave in 2018: “As long as everyone is performing and the business is doing well, it's absolutely fine to go on holiday as and when you wish. We see increased productivity, we see people progressing more quickly than they would typically because everyone has so much trust and so much responsibility. People buy into the goals we set because they have that flexibility and because we place that trust in them.”

Writer Rebecca Monks quotes Alex Myers, CEO of Manifest, in an article for the i news website. He describes the traditional holiday allowance system as “broken” and says it doesn’t “really offer any benefits”. Manifest has implemented the system in its office: “We found people would take a lot of time off in November and December simply because they had holidays left, which not only disrupts the workflow of the office, but is bad for the workers themselves,” Myers is quoted as saying.

Alastair Brown, chief technological officer at BrightHR, a human resources software company, outlines some of the benefits of unlimited holiday in a blog for Peninsula Group, a professional services provider. It could help a business “stand out from other employers when [it’s] recruiting new talent”, as some jobseekers are searching for a career that can fit flexibly around their lives. And it shows employees that their employer trusts them. “Good staff respond well to having the power to plan their own work and holidays responsibly. When you let staff take extra time off, you reinforce a positive workplace culture.” Plus, a well-rested and productive team are more likely to be engaged in their work. 
The pitfallsThere are some drawbacks to the strategy, however. 

Ben Gateley, COO and co-founder of CharlieHR, writes on the company’s blog about what went wrong with unlimited holiday policy, three years after implementing it. “We've decided that offering teams an unlimited holiday allowance just doesn't work – but probably not for the reasons you think. A lot of people just weren’t taking enough holiday.” While many employees were using the policy as anticipated, some people were taking fewer than the statutory UK 28 days (for a five-day week, full-time). “We had quite a few people lingering around 21–22 days off per year. Personally, I don't think that’s enough to keep you fresh and at the top of your game.”

Gateley argues that there is a psychological element of ownership to having a quota of days to take. “When something belongs to you, then you immediately value it far more highly.” But the lack of a given number of days means you don’t value your holiday time in the same way, he explains.

Spicer says that “the companies that offer it tend to be demanding and all-consuming workplaces, so taking time off can make employees feel guilty” and make them worry that it portrays them as “not fully committed”. 

Brown also describes the “worst case scenario”, where “you have an employee who abuses your unlimited annual leave policy, taking weeks off at a time with a trail of unfinished work behind them”.  

Gary Bury, founder of Timetastic, a staff leave planner for modern companies, writes on its company blog explaining how unlimited holiday can feel like a firm is removing a benefit, rather than adding one. “An unlimited holiday allowance isn’t always a win-win situation for staff. With fixed holiday entitlement, you get paid for days not taken, or they’re accrued for the following year,” he writes. “This won't happen with an unlimited holiday allowance – and it's the employer who benefits financially.”Halfway house? Perhaps there doesn’t need to be a decision between limited and unlimited holiday – flexible working could be a good option for workers, suggests Brown. “Staff who struggle to use their existing holiday allowance might prefer to come in late or leave early once a week over unlimited annual leave,” he reports. Find out more about why flexible working is good for business.

Seen a blog, news story or discussion online that you think might interest CISI members? Email bethan.rees@wardour.co.uk.
Published: 21 Jun 2019
  • Career Development
  • The Review
  • unlimited holiday
  • policy
  • flexible working

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