To employees, unlimited vacation time is a dream come true. But the question isn’t how to sell the perk to your employees; it’s whether or not offering it is a smart business decision.
Giving unlimited vacation time to workers comes with obvious concerns. How do you ensure no one abuses this benefit? How much will it cost the company? Will it inconvenience the team?
Unlimited vacation time has its benefits, but it’s not without drawbacks. Before you roll out this benefit, think through them carefully.
Why You Should Offer Unlimited Vacation Time
Just ask your team: There are plenty of reasons to make vacation time an unlimited affair. With the policy in place, you’ll:
Attract and Retain Top Talent
If you want to hire the best talent, you need to give them benefits they won’t find elsewhere. Top candidates will have several options available, and they’ll look beyond salary numbers to make their decision.
Offering unlimited vacation time is a perk that stands out. Only a handful of companies, like HubSpot and Sony, currently offer it. Make sure you can compete.
Increase Employee Happiness
Everyone wants work-life balance. Both new hires and tenured workers will be happy to see this perk added to your benefits package.
Taking breaks frequently helps to cut down on the stress and burnout of a 40-hour work week. While you can’t afford for employees to take time off every week, they’ll appreciate simply knowing they can step away when they need to.
Promote Ownership and Accountability
Employees who take control of their time are more effective than those who don’t. They’re more willing to think outside the box and need less hand-holding for everyday tasks. An unlimited time off policy can instill that sense of ownership in your team.
The good news is, this policy can also promote accountability. No matter how many days team members take off, they still need to fulfill their responsibilities. Learning to balance their obligations and free time will help everyone grow.
Did you think you could cut costs by offering unlimited vacation time? The truth is, you can. As long as employees aren’t abusing the system, this policy has lower overhead costs than a traditional vacation plan.
With traditional vacation plans, employees accrue sick and vacation time based on hours worked. Companies were expected to pay this time out, even if employees left before taking their allotted hours off. With unlimited paid time off, employers only incur costs when workers actually take time off.
Why You Shouldn’t Offer Unlimited Vacation Time
Not all organizations offer unlimited vacation time, and for good reason. Weigh these concerns against the positives:
Abuse of Privilege
While management always has the final say on whether workers can take time off, employees may still try to abuse the privilege. A worker who takes months off at a time with no thought as to his or her duties is not an asset to the company.
With unlimited paid time off, you have to be careful about how long of a leash you give. Allowing one employee to take a ton of time off for no other reason than because they want to can cause other workers to do the same.
Underuse of Vacation Time
As strange as it sounds, some employees with unlimited vacation time actually take less time off than they otherwise would have. In fact, researchers suggest underuse of the policy is a bigger problem than overuse.
Why? Because the policy can promote a competitive culture, in which employees take fewer days off to keep pace with their coworkers. They may fear taking too many days off will disqualify them from promotions or pay raises.
One solution is to set a minimum. Perhaps employees must take at least one week off per year, but they’re welcome to take more if they wish.
If you go that route, establish a norm. Do most workers at your company take between four and six weeks off per year? Then say so when explaining your unlimited vacation time policy.
Misuse of Vacation Time
With an unlimited-paid-time-off plan, setting expectations is key. If this allowance involves trade-offs, make sure employees understand them.
For example, must employees on the plan take calls and emails from work while out of the office? If employees are expected to be available for work every time they want a day off, they may not be so keen on the policy after all.
Every business owner will weigh these factors differently, and that’s OK. Do what makes sense for your team; if it doesn’t work, try something else. Experimentation, including with employee benefits, is how great companies are built.