The pros and cons of unlimited holiday allowance

Upon first hearing about it, the idea of unlimited annual leave might seem fantastical; surely such a thing is too good to be true? However, not only is the idea a reality, it’s gaining popularity. For instance, large organisations like Netflix, Dropbox, Virgin, and even the massive General Electric are now offering limitless holidays to their employees.

However, an unlimited holiday policy has both its benefits and drawbacks, for both the employer and employee. Let’s take a look at some of them:  

Pros

An Excellent Perk

Unlimited annual leave is sure to turn the head of the best talent and gives you a better chance of attracting them to an organisation, even if they’re being offered a higher salary elsewhere. Plus, as an employee who’s benefitting from the policy isn’t guaranteed to find the deal elsewhere, they’ll think twice about leaving – leading to higher employee retention.

Great for employee morale

An unlimited holiday policy is likely to be good for overall staff morale, as they’ll feel more valued. In stark contrast to businesses with a ‘slaughtering the golden goose’ mentality, that values production over personal wellbeing, workers will feel that a company offering unlimited leave has their best interests at heart. Consequently, they’re far more likely to show greater loyalty to the company.

Less admin

With employees able to take off as much time as they please, there’s less need to keep on top of staff calendars, especially as it pertains to the tracking of leave. You no longer have to calculate annual leave that’s to be carried, for instance.

Cons

Creating and enforcing the policy

Once you decide to offer unlimited holiday allowance, the policy has to be implemented so it’s mutually beneficial for the business and the employees. Too far one way and you get staff abusing the policy; too far the other and they’ll end up resenting it – feeling cheated. A good policy takes into account the amount of notice required, how much time can be taken at once, and how many people are allowed to be absent at once.

Off too often?

In our post on calculating legally entitled holiday allowance, we briefly touched upon staff not taking enough holiday because they’re unaware of how much they’re allowed. Here, conversely, employees can fail to take enough time off, as they put pressure on themselves to not be away too often.

Some things become hard to track

Sadly, less admin doesn’t mean zero admin, and some of the remaining details became harder to keep track of – most notably, payment in lieu. For example, how do you determine how much an employee is owed if they depart from the company part way through the year? Similarly, how do you track the days accrued by staff on long-term leave, be it through illness or for maternity? Such scenarios should be planned for when crafting an unlimited holiday policy