Could Unlimited Vacation Time Improve Your Productivity?

You might have read recently about companies like Netflix and Evernote switching to unlimited vacation time policies. Under these policies, instead of getting a set number of paid days off each year, employees are allowed to take as much time off as they’d like, as long as their work is still getting done and things are covered while they’re away.

The argument in favor of this move is, of course, that giving employees this kind of freedom will help attract and retain great people – after all, who wouldn’t love the idea of unlimited vacation time? The thinking is also that people are more productive when they have ample time away and don’t feel like their company is nickeling-and-diming them on time off. After all, the thinking goes, in today’s world, employees are often “on” when they’re off the clock – they’re answering emails on the weekends, thinking about work on their commute, and coming up with brilliant ideas while they lay on the beach. So the divide between time at work and time away has gotten fuzzier anyway.

In reality, though, there are some real drawbacks to unlimited vacation policies. Not insurmountable ones – but drawbacks that aren’t always obviously at first look.

For one thing, unlimited vacation requires managers to truly manage their teams. If an employee is abusing the benefit, you need to know that their manager will address it effectively. These programs can implode if managers aren’t assertive enough to speak up when an employee isn’t meeting their goals and is taking too much time off.

What’s more, unlimited vacation requires good employees. You’ll be switching to a policy that treats people like adults and trusts that they can manage their own workload and time away and still perform at a high level. Obviously, you want this kind of team anyway, but if you don’t have one yet, you’re going to need to make some changes before the policy works well.

And perhaps surprisingly, unlimited vacation can result in people taking less vacation time. One common unforeseen consequence of this switch can be that people end up feeling that they should take less time off than before. Because people aren’t told “you get X days per year,” they often have no idea what’s really okay to take — and as a result end up taking less time off because they don’t want to be seen as slackers. A particularly machiavellian manager might think that this is a good thing for productivity, but it’s bad for morale – and ultimately for productivity too, because productivity goes up when you have employees who are rested and refreshed, not burned out.

But these drawbacks aside, unlimited time off has some huge advantages too: treating employees like responsible adults, freeing people up to have real flexibility in their schedules rather than just paying lip service to the concept, and (perhaps on the more mundane side) simplifying the administration and tracking of benefits. Unlimited vacation policies aren’t for every employer, but they can work successfully in the right environment.

What do you think? Could your workplace handle an unlimited time off system?

Check out this handy little vacation schedule app in QuickBase.













Alison Green

Alison Green writes the popular Ask a Manager blog where she dispenses advice on career, job search, and management issues. She's also the co-author of Managing to Change the World: The Nonprofit Manager's Guide to Getting Results and former chief of staff of a successful nonprofit organization, where she oversaw day-to-day staff management, hiring, firing, and employee development.

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  • Charles Var

    Great article. We here at TrackVia offer unlimited vacation, following the same logic you outlined above. We hire highly educated grown ups who are more than capable of managing their time. I agree with the potential pitfalls, particularly the last one about people taking “less” time, not more. It’s just as important – maybe even more important – that managers watch for employees who are NOT taking time away from the office to recharge. In my own limited experience, the less time people take, the less productive they become over time. They simply burn out. To help avoid this, I ask each my employees to set personal goals alongside their business goals. And like their work goals, I hold them accountable to get it done. If they said they were going to take two weeks off to island hop, then we’ll review that at their mid and end-of-year performance reviews to see if they’re making progress toward that goal, and how I as a manage can help them achieve that goal. It’s that important. Good article.

    [Reply]

    Dan Reply:

    Wow! You sound like a great boss!

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  • Jonathon Stewart

    How does this work for states that require vacation time to be paid out when you exit?

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    Alison Green - Ask a Manager Reply:

    Ah, that’s another downside (for employees). If you’re not accruing vacation time, there’s nothing to be paid out when you leave. It’s an argument in favor of making sure you’re taking it while you’re there, of course (and most companies would argue that they want employees to take a break, not stockpile their leave time), but the lack of payout is an impact employees might not welcome.

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    Bruce Reply:

    My company is switching from banked vacn to discretionary at end of year and i live in a state that requires vacation time to be paid at exit. Should they have to pay me for my banked vacation time that is essentially being taken away?

    [Reply]

    Alison Green - Ask a Manager Reply:

    Depends on the laws of your state — you’d need to talk to a lawyer who could really look at the situation!

  • alexgodden

    There is another major benefit to the company that you didn’t mention – accrued vacation days that have not been taken often get paid to an employee when they leave. With unlimited vacation this does not happen.

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  • Sheri

    I completely identify with your last point – at my last job, we had no earned ‘sick’ days, but a policy that if you were ill, you should just stay home. In theory, it makes a ton of sense – we’re all adults, keep your germs to yourself and not infect anyone else, etc. In practice, however, it meant that almost no one *actually* took sick days, and there was a bit of eyebrow-raising when anyone did. It was like a badge of honor, or proof of how seriously you took your job, to come in sniffling or totally ill. Dumb, and a complete backfiring of the original intent. I think this kind of policy can work, but it’s incumbent on upper management to practice it first and show their employees they really intend the motivation behind it.

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  • Cary Thomson

    We don’t have unlimited vacation, but depending on how long you stick around you can earn up to 30 days per year not including public holidays, so it throws up a lot of the same issues (like ensuring coverage). However, we’re also such a large employer and our different research labs vary in workplace culture so taking all that vacation can be viewed very differently. As a HR Manager it can be really challenging to ensure people are taking time off. Also, managers vary on their willingness to tackle abuse of vacation or our really generous sick time. Just some of the challenges with working in academia.

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  • Nonprofit Org Boy

    I come from the nonprofit world, and I think another consideration here is the organization’s staffing. If the bench is not deep, if it is typical for one person to be doing 1.5 or 2 persons’ worth of work, or if staff are highly specialized in their responsibilities, it seems difficult even under the normal plan for staff to take their permitted time off. If “coverage” is one of the criteria to meet for unlimited vacation, staffing infrastructure has to be part of the mix, too.

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  • Jef Miles

    You make some good points, it would take a lot of trust between the manager and employees..

    Are there any results from this example? I would say it should increase productivity but I’ve been suprised before :)

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  • Catt

    I have a client who switched to this policy, but viewed the vacation time in terms of never taking a break because you always have to respond to e-mails even if you are on vacation. if that is the actual intent of the unlimited vacation time (to in reality mean ‘No Vacation Time’) I wholeheartedly disagree with implementing it.

    At my org; I specifically advise the managers in our org to not take their phones with them when they are on vacation… to turn off their work e-mails on their mobile devices because they need the break… and honestly, there is nothing that can’t wait a week or two that someone else in the office couldn’t handle while they are out on vacation.

    The second point about not having the additional liability on the books.. is also a great point to make … but it is also in the organizations favor, not the employees.

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