Should You Offer Employees Unlimited Vacation Time?

The Payroll CompanyHuman Resources, Payroll

Unlimited vacation time is like an all-you-can-eat buffet: Although you love the idea of downing pounds of shrimp, in reality there’s only so many fantails you can eat, and it’s never as much as you imagine.

Unlimited vacation is like that — you imagine weeks off from work – weeks of lying on white sand beaches. But, in fact, studies show that U.S. workers don’t take the vacation time they’ve earned. Employees worrying they’ll fall behind at the office or miss out on a great project or promotion. Only 51 percent of the vacation days accrued are actually used, according to a Glassdoor survey. When employees finally do take some time off: 61 percent work while they should be unwinding and recharging.

This vacation avoidance is bad for employees and businesses, which typically pay out unused vacation days when workers leave. Businesses could adapt a “use it or lose it” policy, where workers forfeit vacation days they don’t take – but then come off looking like Scrooge. Companies can also offer unlimited vacation, which makes them look like Santa Claus, and relieves them of the burden of paying for vacation days employees don’t take.

The stated philosophy behind all-you-can-take vacation time is this: Treat employees like adults, and they’ll take the time they need and can afford. In reality, the caveat “so long as you get your work done” is a cudgel hanging over employees who know their work is never completely done. Also, unlimited vacation for an always-connected workforce often turns time off into a change of venue, rather than a change of pace.

Although only about 1 percent of U.S. companies offer unlimited vacation, more and more are adopting it as a perk to attract workers, especially millennials who say benefits are more important to them than salary. The jury is still out on whether all-you-can-take vacation means employees will take more, less or the same amount of time off.

It may or may not be right for your company, but it should give you food for thought on your vacation policy and how your employees are approaching vacation. Whatever you decide, you don’t want employees feeling resentment because the workload makes it difficult for them to take the vacation time they have accrued each year.