Should you offer your employees an open vacation policy?
Benefits 4 minute read

Should you offer your employees an open vacation policy?

Megan Orr | August 26, 2021

Although not commonplace yet, some organizations are starting to offer an open vacation policy for their employees, where they’re able to take off as many days within a year as they need or want to.

Offering your employees an open vacation policy can benefit both them and your organization. Indeed writes that “productivity doesn’t just come from hard work but from a balance of work and time off from work”. 

Many leaders worry that employees will take advantage of an open vacation policy, taking months off, but the benefits outweigh the risks. Research shows that unlimited paid time off can contribute to “low attrition and high engagement” with some companies even boasting increased productivity and record company growth, among many other benefits. 

An open vacation policy can reduce administrative burden and save money. 

Your HR administrator will no longer have to track time off policies if you have a “use it as needed” vacation policy. This will save them time and energy—all you need is a system to track requests. 

And  if vacation is unlimited, your organization won’t need to pay out any unused vacation time at year-end or when an employee leaves. 

An open vacation policy is good for recruitment and retention.

Unlimited time off is an attractive quality for potential employees. According to one study, Canadians work up to “three extra days to make up for taking one-week vacation [and] nearly half would switch jobs for more vacation time”.

Allowing employees to take time off as they need and want to, without capping the limit, is a great way to show your employees you care about their wellbeing at and outside of work. 

The concern that employees may take advantage of an open vacation policy is not unwarranted, but it may be misguided.

While there might always be a few people in any organization who push the boundaries of acceptable use of your unlimited days off, most people won’t. In fact, a study actually found that 28% of Canadians take less than half of their allotted vacation time.

However, if your employees do seem to be taking a significant amount of time off under your unlimited policy, it may be an issue of job burnout or dissatisfaction. Evaluate how you can better manage the day-to-day for your employees so that they are less inclined to need extended time off. 

Here are some ways that you can ensure employees fully understand your unlimited vacation policy:

  • Create a clear policy and have employees sign off on it. Include a framework for acceptable request timeframes, if there are any blackout dates, or if you have any limitations about how many days within a specific time period a person can take off, and what exceptions there may be. Be as specific as possible to avoid any misunderstandings. 
  • Encourage open communication. Encourage employees to talk to their managers about any upcoming plans, to help work out what makes the most sense for their role and department. 
  • Encourage and remind employees to take time off. Whether it’s a random Friday off or a week to rest and recharge, employees might need a little push to take time off and not feel like their unlimited time off policy is in reality a no time off ever policy.
  • Lead by example. Leaders should take time off too and avoid answering emails or Slack chats during vacation.

An open vacation policy is a recruitment and retention strategy that’s gaining popularity in many industries, as early adopters continue to work hard to implement compelling benefits for employees. Ultimately, both organizations and employees can benefit from offering unlimited time off. 

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