Unlimited Paid Vacations – too much, just right or never enough?

Unlimited paid vacation seems like the antidote to the problem, with the promise being able to take all the time necessary to relax and recharge. But some see it as a policy that, while it looks great on paper, can actually lead to less vacation days if leaders don’t model the behaviour.

A 2018 survey from Namely found workers in the United States who had unlimited vacation took less time off — 13 days annually versus 15 days for those with traditional plans. While the number of companies offering it is growing, only six per cent of organizations have jumped on board, according to a 2022 survey by the U.S.-based Society for Human Resource Management (SHRM).

Flighthub CEO reports no turbulence

Flighthub, a Montreal-based travel agency, offers the perk to its staff and CEO Henri Chelhot said they introduced it as a way of “enhancing our efforts to support employee well-being.”

He hasn’t seen employees abusing the leave or, conversely, not taking advantage of it.

“We haven’t encountered significant issues with this,” he said. “Most of our employees are responsible and manage their time off appropriately.”

There are some ground rules in place, including that time off needs to be requested two weeks in advance and has to be approved by a manager before it’s taken.

“It shouldn’t negatively impact work and, ideally, vacations shouldn’t exceed three weeks at a time,” said Chelhot.

The only challenge FlightHub faced in rolling it out was the need for a more sophisticated system to track vacations across teams.

“However, addressing this challenge has led us to enhance our internal processes, ensuring better oversight and planning for employee time off,” he said.

Offering the perk to staff has another benefit, said Chelhot. “They feel more trusted and valued.” It has also helped with recruitment and retention efforts, as candidates are often curious and excited about the policy during interviews, he said.

“While some are skeptical, thinking there might be a catch, we assure them that there isn’t,” he said.

Unlimited doesn’t mean ‘unlimited’

Olivia Cicchini, an employment law and HR expert with Peninsula Canada in Toronto, said unlimited paid time off (PTO) can be great for everyone — if they are rolled out and applied correctly.

“Many employees nowadays prefer flexible work to a pay raise, so an unlimited PTO policy can be a useful non-monetary retention strategy depending on what’s important to your workforce.”

There is an unwritten rule around this perk, mainly that most unlimited vacation plans aren’t truly “unlimited.”

“Keep in mind there is almost always an implied cap on ‘unlimited’ PTO, which means employees will likely have their vacation request declined if it conflicts with operations,” she said.

That can be a slippery slope for employers, as too many denials can impact morale and hurt the company’s culture.

But offering unlimited vacation can also remove the stress employees feel to take time off, which can happen with a set number of days.

“Since there is no set vacation allowance, employees may not feel that ‘I only have three vacation days left, I better take them’ pressure,” said Cicchini.

Implementing a policy

The best time to roll out unlimited vacation is when the worker is hired, said Cicchini. That’s because putting it in the employment contract ensures they’re aware of it before they start, and policies around it can be clearly outlined in the employee handbook.

To add it for existing employees, it’s helpful to be transparent and ask staff for their opinions on the model, she said.

“Asking staff for their feedback will make them feel valued, heard, and able to make contributions to the workplace in the future,” she said. “Additionally, if the employer considers their opinions, the decision to implement the policy — or not — will reinforce trust on both sides and allow for a smoother transition.”

Working while on vacation outside Canada

Your social media feed may be full of people who are half-working and half-vacationing in exotic locales. But having employees working remotely from another country can raise operational, productivity, and even legal concerns, said Cicchini.

“Depending on the country the employee is working in, different time zones can cause a disruption to operations and team communication if the employee is not managing the change,” she said. “Additionally, productivity can suffer if the employee is working from another country directly before or after a vacation.”

That’s because it can be very tempting to put work on the “back burner” and enjoy the surroundings — and the associated freedom — for as long as they can, she said.

Tax implications could also arise, depending on how long the person is working out of the country. Plus there could be legal and privacy concerns surrounding data protection, network security, and intellectual property theft.

“It may be better for employers to encourage staff to take some well-deserved ‘me’ time and leave their laptops at home when they choose to vacation abroad,” said Cicchini.

When asked if the perk is a gimmick or a great HR practice, she said it all comes down to the company.

“It will work for some and not for others, depending on policy execution, operations, employee count and the wants and needs of staff,” she said. “It can help boost recruitment and may help with retention if the policy is applied correctly and fairly.” 

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