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The pros and cons of unlimited holidays

Differentiating your business from competitors can be tough. This is particularly true when you are trying to recruit talented new staff. How do you encourage potential employees to choose you over a rival?

An unlimited holiday policy is an increasingly popular way for forward-thinking companies to attract new talent. Indeed, according to a recent survey, 18 to 24-year-olds say that unlimited annual leave is the most attractive perk a company could offer.

So, what are the pros and cons of an unlimited holiday policy, and would it work for your business?

The pros of an unlimited holiday policy

  1. It builds a culture of trust

Offering unlimited annual leave to your employees helps to create a culture of trust in your business. When you implement this policy, you are essentially saying that you trust your workforce, you have faith in your employees and that you are happy with them taking ownership of their own health and wellbeing.

In return, they understand the value that you have put in them, with the knock-on effect of making your team more loyal.

  1. It promotes health and wellbeing

Creating a good work culture can have a direct benefit to your employees’ health and wellbeing. If you speak to employers who have introduced this type of policy, all will maintain that a healthy work-life balance has been one of their main reasons for implementing flexible leave.

Rosie Haslem, Director at the architecture firm Spacelab who implemented such a policy says: “Work is just one part of life – but in the design industry, this can be a big part, with people often having to work long hours.

“So we have uncapped annual leave which enables our team to take the time out that they need, to relax and recharge.”

  1. It makes the team more productive

The knock-on effect of improving your team’s work-life balance is an increase in productivity. You don’t have to be an HR expert to understand that an engaged workforce with and a balanced work life will be more motivated to produce and achieve.

Rosie Haslem from Spacelab, adds: “The flexibility has led to a more empowered workforce, who are happier and more productive when they are at work.”

  1. It helps to attract staff

As the expectations of a younger workforce change, more staff value time off, flexible working and life experiences over salary and consumables.

As well as improving wellbeing and productivity, offering unlimited leave is a great differentiator when looking for new talent. Young workers are increasingly confident of finding other employment, so unlimited leave could be a benefit which sets you above the others.

  1. Fewer sick days

Of course, introducing unlimited holidays could leave you having to cover this additional annual leave commitment. If you have hourly paid workers, then it could result in extra costs.

However, evidence suggests that the number of sick days reduces after implementing such a change. Combined with the extra health benefits, this is certainly a positive reason to consider flexible leave.

The cons of an unlimited holiday policy

  1. People take less holiday

Rather than turning up to discover that your office is empty because everyone is on annual leave, companies who have implemented this policy often find that the opposite is true: employees actually take less annual leave.

Where an individual has a specific holiday allowance, they feel a sense of ownership over these days and are likely to use them all. If you operate a holiday ‘year’ then people feel obliged to use the days as they will lose them otherwise.

Where there are no guidelines or limitations, some staff will find it difficult to request holidays as they equate ‘unlimited’ to ‘none’. Taking away the urgency of a deadline means people may be less likely to take time off.

London-based CharlieHR abandoned their unlimited holiday policy after three years. Ben Gately from the business says: “People are pretty bad at taking holiday, we’re all scared to do it because we have to do our handovers and pass stuff over and meet deadlines and so we actually saw a reduction in the amount of holiday people were taking.”

One way to combat this problem is to introduce a ‘minimum holiday’ limit and encourage your staff to use the days.

  1. People abuse the system

Most, if not all, of your staff would act responsibly under an unlimited holiday policy and take a reasonable amount of time off. This is especially true if you have an ‘output driven’ approach where, as long as all the work is completed successfully, you are less bothered about the hours a person works.

However, there may always be people who take advantage of this policy. Monitoring output through KPIs will, therefore, be crucial to ensure that staff are not simply abandoning their desks for holiday when there is work to be done.

  1. It can be unfair

Following on from the issue above, if there is a large discrepancy between the number of days colleagues are taking it can breed resentment.

Holidays are not just about individuals taking time off. It also affects everyone else in their team and everyone across the business as a whole. So, if one person only wants to take 20 days off each year, while their colleague wants 35 days, it can lead to someone having to cover the work and take up the slack.

  1. There’s no such thing as ‘unlimited’

Even if you implement such a policy, you are likely to need a process to manage annual leave. Requests will need to be signed off by a line manager, you will have to ensure there are sufficient people in the business to manage the workload, and so on.

This still means that you could easily find reasons to decline holiday requests, and, without a fixed amount of leave, employees could end up taking fewer and fewer days, impacting on their motivation and productivity.

Ben Gately from CharlieHR adds: “There’s a huge amount of anxiety about not knowing the limit. A bunch of our team came to us and said: ‘Actually, we’d love to know where the line is. Is it okay to take 35 days? Is it okay to take 25 days? Where should I draw the line?’ Because the reality is that it’s not actually unlimited.”

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