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Unlimited Vacation Policies, Do They Work?

By:Lauren Mineau

People seem to think that paid time off is a deal breaker, but they aren’t taking enough of it. What are companies doing to make sure employees get some time away from the daily grind?

Unlimited Time

Perhaps it’s the restrictive and convoluted nature of the time-off policy at some companies that prevents people from taking all their time. If sick time is limited, maybe employees have trouble deciding if they are “sick enough” to come in and are concerned about  wasting a day—in case they get even more sick.

Some companies, including we here at IEEE GlobalSpec, Inc., have begun to introduce “unlimited” time-off polices for a multitude of reasons. Leaving the policy open-ended can reduce the confusion of tracking accrual, time taken, sick days, and more. It can also be a good tool for attracting new hires. Say someone with a lot of experience was offered a job here, but they had a good amount of vacation time accrued wherever they currently work. It’s quite possible they’d consider rejecting  a move to a new company if it meant starting at square one. Many large companies like Netflix, Grubhub and LinkedIn have also embraced this kind of policy. 

“The hardest part, with any time-off program, is ensuring employees take off enough time to be present in their personal lives and avoid burnout at work. Not only is time off critical for employee’s personal lives but it also increases their engagement and productivity at work,” said Courtney Bogaard, Vice President of Human Resources at IEEE GlobalSpec, Inc. “Managers might worry about employees taking advantage of an unlimited policy but if you treat your employees like professionals, you will find they act like it.”

Tried and True

Web service Mammoth tried the policy in 2015 and found it created less tension and pressure in the workplace, and no employees abused the system. During a survey after a year with the policy in place, the benefit was ranked third among employees—after the 401(k) offerings and insurance benefits.

Management found that employees took roughly the same amount of time off as with the accrual system previously in place. On average, employees took about three weeks total in vacation days, plus 10 company-wide paid holidays.

A big factor in the success of this policy is the trust it creates among employees. Life happens, and in a given year you could have five weddings to attend or an opportunity to travel. Other years may be slower. All employees are unique and have different things going on in their personal lives. Mammoth found that trusting employees to get their work done and done well partnered with the flexibility of a rich personal life was a success.

Cashing In

For some companies, the unlimited thing might not be the right fit. But, they sometimes offer a way to cash in on the time you don’t use. Depending on your field, this could also be a good benefit. Say for a full year you’re working hard on a big project that could define your career. You don’t take much time off that year, but at the end of the project and/or year, you get that money back as a lump sum. An amount that might fund a nice two-week vacation when things slow down, no?

It could also cut back on a common financial loophole that troubles many companies. If a top employee accrues months’ worth of vacation time over the years and leaves without taking it or cashing it in bit by bit, the company is often left with a big sum to pay out. Certainly, that’s time that is owed to the employee, but it could make things tricky financially for a company if it happens often.

Did you catch part one in this series? Read it here.

We Offered Unlimited vacation Time For A Year, Here's What Happened

Unlimited Vacation Days, A Blessing or a Curse?