Benefits and Compensation

Unlimited Vacation Time—California Here We Come!

Should you consider this Silicon Valley trend that’s spreading across the United States? Attorney Susan Fentin, a partner with Skoler, Abbott & Presser, P.C., in Springfield, Massachusetts, offered her take on unlimited vacation at BLR’s Advanced Employment Issues Symposium, held recently in Las Vegas.

One of the most interesting things surveys find about unlimited vacation policies is that employees may actually take less time if time is unlimited, says Fentin. She calls it a “race to the bottom.”

Earn while you learn

Some of the questions that arise when creating policies, Fentin says are:

  • Will you be required to pay out unused time if an employee quits or is fired?
  • Should there be some cap?

Also, she adds, remember that it is easier to add benefits later than to take them away from employees, so start lower than the highest you can afford and adjust from there, if possible.

Fentin offered the following pros and cons for unlimited vacation policies:

Pros for Unlimited Vacation

  • Great perquisite that helps ensure good work/life balance.
  • Offers multiple uses: Vacations, personal time, sick time, whatever; there is no worry about “banking” time in case of illness or opportunity.
  • Seems fair: Everyone gets the same policy, eliminating unfairness and resentment.
  • Follows global trending; leads to more Europe-like averages (4–6 weeks per year).
  • Motivates: The punish vs. reward aspect is eliminated.
  • Turns power over to employee.

Cons of Unlimited Vacation

  • Employees might not take enough (or any!) time off.
  • Eliminates “saving up” for big trip or long vacation; no need to justify.
  • Overworked people with greatest responsibilities may take least amount of time.
  • “Unlimited” may also mean “untracked,” so how much is normal or appropriate?
  • Can lead to resentment/comparisons.
  • May make employees feel guilty about taking more than their peers.
  • If manager approval is required (“unlimited time off as long as it’s cleared with your manager”), may not be unlimited at all.
  • Different managers with different systems may lead to inequity.
  • Structural inequities are possible, e.g., manager approving time off at a higher rate for men than for women.
  • No payout at termination could result in lower wages.
Steve BruceStephen D. Bruce, Ph.D., PHR is an award-winning writer and editor, who has been following and clarifying developments in the HR field for 20 years.