Is Offering Unlimited Vacation Time a Good Idea?

Offering benefits that improve an employee’s work/life balance may give you an edge if you’re struggling to find suitable employees. However, the idea of offering unlimited vacation time is foreign to most businesses. That doesn’t mean it isn’t worthwhile, though.

Here’s an explanation of how unlimited vacation time works and some of the pros and cons so you can decide whether it’s something that might work for your company.

It Attracts Top Talent

Who wouldn’t want to take time off whenever they need it? Maybe you just need a day to unwind or to catch up on chores around your home. Perhaps you want to leave early to beat the traffic on a holiday long weekend. Then there’s the kid’s dental appointment or soccer tournament. Obviously, being able to take time off without making excuses is a very attractive perk.

Many experienced employees are hesitant to come to a new company and give up their accumulated vacation time. They may have four, five, or six weeks of paid vacation and they don’t want to start over.

Kronos decided to try unlimited vacations, because they needed about 300 above average employees at any one time in the competitive tech industry. Offering their employees unlimited vacation time cost them slightly more, but the benefits outweighed the minimal expense.

They now find it much easier to recruit top talent as the company is now rated as one of the top places to work by its employees. Employment applications have increased almost six-fold.

Transparency, Trust, Collaboration

Clearly, to make unlimited vacations work well there must be a high level of trust between management and employees. Employers need to trust their employees will act responsibly and complete their work. They should also demonstrate they value a good work-life balance, by setting a good example.

Employees should not abuse the privilege and honor their employer’ guidelines. They need to keep managers in the loop to ensure the workplace runs smoothly. For instance, they must seek permission for long periods off to ensure it does not impede operations or conflict with other people’s requests.

New Focus for Management

Managers still track vacation time, but not to fulfill an annual quota. They focus on adequate coverage in the workplace. However, research compiled by Sage Business Researcher found employees that worked for companies with unlimited vacation time actually took less time off.

Consequently, managers also track time off to ensure people take time they need to rest. According to the Center for Economic and Policy Research, Americans only take 51% of their paid vacation days, and 61% work while vacationing.

Instead of waiting until year-end for a discussion regarding unused vacation time, managers monitor usage throughout the year. Ongoing conversations prevent burnout, encourage disconnecting while away, and prevent policy abuse.

Consider a Hybrid Policy

Existing employees may complain that they’re losing their accumulated vacation weeks and it’s unfair a new employee gets the same benefit. Consequently, some organizations limit the number of days off for new employees, but allow senior employees unlimited vacation time.

All employees must follow company guidelines, but they’re free to take their vacation when they need it. This honors the value of senior employees, but eliminates banked hours, rollovers, and financial liability.

Of course, unlimited vacation isn’t for all organizations. For instance, hospitals probably couldn’t manage it. However, when unlimited vacations are in the best interests of your employees, and they align with the best interests of your company, it can be a win-win situation.

Charlotte Payroll caters to businesses in the Greater Charlotte area. Let us help you simplify your company’s backend processes seamlessly and painlessly. Contact us if you need more information on how unlimited vacation time affects your payroll and human resource needs.

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