Unlimited Vacation Policies: How to Make Them Work For You

This blog is by our friends at Amui Inc. Their easy-to-use online platform, AnswerBar provides on-demand access to HR knowledge, with custom answers addressing everyday situations.

Unlimited vacation policies are rising in popularity as an effective way to manage time off. Some might see them as a mythical unicorn defying traditional business logic. But the idea isn’t as crazy as you may think.

In unlimited vacation environments, people are accountable for their work, not their time. An unlimited vacation policy is created on the basis of accountability, which is culturally inspiring and empowering. 

As with any policy, unlimited vacation has to work for your business—and it’s not for everyone. If you’re afraid of the word “unlimited”, don't be. With proper execution, plus leadership that invokes trust and autonomy, there are more upsides than risk. Let’s dive into the reasons why.

Why is an Unlimited Vacation Policy Successful?

1. There are rules

Unlimited vacation policies are like regular time off policies. They have documented guidelines on how to request time off, how to approve time off, and how to communicate with anyone impacted by the absence. 

2. They need to be managed

Unlimited vacation time still needs to be tracked when people take time off. Why? In BC you must be able to prove your employees have taken their legislated two (or three) weeks annual vacation. Plus, you probably want to schedule how many people are away at any given time. 

Sounds familiar, right? In fact, it sounds like a traditional time off policy, but here's that mythical unicorn piece. 

Because unlimited vacation policies don’t specify how much time an individual can take off, the biggest fear employers have is that employees will abuse the policy. 

So what happens if an employee takes too much time off? The answer is actually really simple. 

If an employee abuses the policy, you’ll observe either a decline in their performance, or an interruption in other employees’ ability to perform. Or both. All of which impacts the business as a whole. If this happens, you don’t have a vacation policy problem - you have a performance problem. 

You Have a Performance Problem, Not a Vacation One

If quality or quantity of work is affected, then performance management discussions need to happen. An unlimited vacation policy implies trust and autonomy - personal qualities you want in top performing individuals.

The jury is still out on whether a traditional or unlimited vacation policy translates to employees taking more time off. But that's not really the point. Unlimited vacation changes an employees perspective on what a vacation is and how it’s distributed. It eliminates vacation as an ‘entitlement’ and becomes something governed by personal and business needs.

Some additional benefits to unlimited vacation include reducing your company's vacation liability and administrative overhead. (The latter is a reason your accounting team is going to love you.) 

In general, vacations reduce stress and fatigue. They also provide time for employees to connect with family and friends, contributing positively to mental health.

Next Steps

The reality is, most employees aren’t looking for ways to jeopardize themselves or the company. They won’t take time off at critical moments. They know when they need to show up and when they can step away. For those who don’t, they’re probably not the right fit for you. 

Unlimited vacation can be a way of investing in your employees and their wellness. The added advantages to your company far outweigh the risk of an employee abusing the policy, and it encourages trust and autonomy as part of your corporate culture. 

To learn more about the benefits of vacations, read: Go Away! Why Employees Should Take Vacations.

Additional Wellness Tip

To help your employees take their vacations and be more productive, consider creating a Vacation Fund.  An employer-sponsored vacation fund is straightforward to set up and can be a great compliment to existing retirement or savings programs. Vacation funds are payroll deducted, short term savings plans which can be offered through your existing retirement or savings provider.  The most successful plans include a matching contribution.