Unlimited holidays – employment utopia or career suicide?

No cap on holiday entitlement is increasingly a perk being offered by employers, including Netflix and Virgin. Is giving employees the freedom to decide how much holiday they need every employee’s dream, or could the taking of annual leave damage careers?

This article was first published in Reward Strategy Magazine.

Giving employees the freedom to determine how much holiday they need would surely be welcomed by all employees. At first blush this seemingly generous policy might require close monitoring by businesses to ensure that it is not open to abuse by some employees. However, it should also bring benefits to the employer – a more relaxed, less stressed workforce could lead to greater productivity, lower sickness absences and higher staff retention. This type of holiday policy may also help an employer to stand out from the crowd and assist them to recruit the best talent.

However, all that glitters may not be gold. Giving employees an unlimited amount of holiday and the autonomy to determine how much holiday they need may lead to some employees feeling that they should be taking fewer holidays than they otherwise would. Such a policy might make them feel that how much holiday they take correlates to how seriously they take their careers (a view that might be shared by their managers too) and might cause the employees to be worried about how their taking of holiday impacts on their colleagues. This potential failure to take holiday has been mirrored in the increased unwillingness of employees to take sick leave. Data from the Office for National Statistics has revealed that the number of sickness days taken by workers has almost halved over the past 20 years to reach a record low of 4.1 days in 2017, which could suggest that workers are worried about job security and are therefore coming into work when they are ill. This potential unwillingness to take holiday is further reflected in the recent study by the TUC, which found that unrealistic workloads already contribute to 1 in 12 workers not being able to take their statutory minimum holiday entitlement under the Working Time Regulations (WTR), namely 5.6 weeks or 28 days (including bank and public holidays for full-time workers).

Whilst the theory of unlimited holiday polices is that they give employees the freedom to govern their own holiday requirements, this could cause some practical issues. If an employee felt deterred from taking holiday under an unlimited holiday policy, how would this be dealt with? Employers may still need to monitor employees’ holiday records to ensure that they are taking at least their statutory minimum holiday entitlement. The carry-over of leave is another complex issue, as evidenced by the numerous cases brought in both the European Court of Justice and the domestic courts. Employees returning from family-related leave (such as maternity leave) and long-term sickness absence will have potentially significant additionally accrued holiday entitlement, and therefore should be monitored particularly carefully by employers to ensure that they do, in effect, carry over to the next holiday year at least their statutory minimum holiday entitlement – even if it is not necessarily convenient for the business for them to take this additional time off.

Would the introduction of unlimited holidays lead to a happier and healthier workforce, or lead to the burnout of staff unwilling to take holiday due to an actual or perceived fear of reprisal? Only time will tell.

Key points

• Consider whether an unlimited holiday policy might be attractive for your business, including potentially enabling you to stand out from the crowd and attract the best talent.
• If you would like to consider implementing an unlimited holiday policy, consider how it would work in practice. For example, what would happen if several employees on the same team sought to take lengthy holiday periods at the same time? Or what if an employee sought to take annual leave before a key project they were working on was completed? Surely business needs would prevail but clearly this would fetter the supposed autonomy being given to employees in respect of holiday entitlement.
• If you do decide to introduce an unlimited holiday policy, it would be prudent to continue to monitor employees’ annual leave to ensure that employees take at least their minimum holiday entitlement and, in the case of employees on family leave and long-term sick leave, are permitted to carry it over to another leave year.