Should you have unlimited holiday as an employee benefit?

Imagine being told that you can take as much holiday as you like. 

Sounds like a dream, right?

Unlimited holiday policies have been praised as a revolutionary benefit for modern workplaces, promising flexibility and freedom. But, beneath the appealing surface lies a host of issues that can actually harm employee wellbeing and productivity.

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What is unlimited holiday AKA unlimited PTO?

Employment law in the UK ensures that employees can take a minimum of 5.6 weeks of fully paid annual leave a year (28 days) - and this can include bank holidays. According to Cord, most employees have an average allowance of 26 holiday days per year in addition to bank holidays.

So unlimited holiday (or unlimited PTO) means that employees can take as many fully paid holiday days as they want (within reason… but more on that later). In theory, as long as the work is done, then the employer is happy.

It’s a concept that has been embraced by some progressive companies in an effort to attract top talent and foster a trusting work environment. But is that the impact that unlimited holiday really has?

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The downsides of an unlimited holiday policy

Unlimited PTO Policies - Are they really unlimited?

It’s obvious that unlimited holiday sounds like a dream come true. But the truth is, it’s actually a lie. In reality, there IS a limit of days employees can take as holiday. The problem is, nobody knows what it is. 

When do you decline holiday? What is considered fair, and what is abusing the system? If it’s left to department heads, do they need to get involved in every PTO request from the team? 

Without clear boundaries, unlimited holiday becomes a messy and frustratingly hard employee benefit to manage. And at the end of the day, is it really worth it?

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Employees take less holiday

While opening up the floodgates to take time off whenever you want without having to check your allowance sounds great, it’s shown to often have the opposite effect. 

In fact, without a clear guideline, people just tend to take fewer breaks. According to a study by the HR consultancy firm Namely, employees with unlimited holiday policies took fewer days off per year, compared to those with traditional leave policies.

Now of course, this won’t be every employee - many might even take much more holiday days and make the most of an unlimited holiday scheme. But those that don’t are likely to see their wellbeing suffer as a result.

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Employees feel guilt and pressure to take less annual leave

The ambiguity of unlimited holiday can lead to employees feeling guilty about taking time off. They might worry about being judged or seen as less dedicated. 

This pressure can cause them to forgo their well-deserved breaks, leading to burnout and decreased productivity. In a work culture where presenteeism is still prevalent, the fear of appearing lazy or uncommitted can be overwhelming.

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Potential for employees to abuse unlimited holiday policies

Unlimited holiday can also create disparities within the team. Some employees might take advantage, causing resentment and uneven workloads. Imagine a scenario where one employee takes frequent, extended holidays while others rarely do. This imbalance can lead to frustration and a perception of unfairness among team members.

That’s not the type of culture you want in the workplace. In fact, HR automation platform, CharlieHR, wrote a blog post about why they removed their unlimited holiday scheme after just 3 years for this reason.

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Approving unlimited holiday days

With less restriction on the number of holiday days employees can take naturally comes more restriction on management approving holiday days.

It means more overlapping time off among teams, increased workloads for those still working and a more simple mindset from managers saying “no” because of current business needs - after all they can take holiday as much as they want later on right?

There’s a fine line between making the most of an unlimited holiday benefit and abusing it. It sounds pretty brutal but we’re all human and resentment naturally forms if some employees are perceived to be abusing the system.

With unlimited holiday, the rule is that there’s no rules — and with the lack of a clear policy it can lead to inconsistent and subjective decision-making, making it harder for employees to plan their time off. 

This unpredictability can further discourage employees from taking holidays, defeating the entire purpose of the policy.

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The pros of unlimited holiday

So does it mean that an unlimited holiday policy can never work?

Of course not - not always. So let’s look at some of the positive sides to an unlimited holiday scheme.

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Attraction for job seekers

It’s simple really. Unlimited holiday can be very appealing to job seekers. It signals trust and flexibility, which are highly valued when it comes to a company’s culture in today’s job market. Companies that offer this as a benefit might stand out to potential employees who prioritise work-life balance and autonomy in their job search.

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Potential for improved work-life balance

When used wisely, unlimited holiday can enhance work-life balance by allowing employees to take the time they need without bureaucratic hurdles. In theory, it offers the flexibility to manage personal commitments and take breaks as needed, fostering a healthier, more balanced lifestyle.

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Why unlimited holiday may not benefit employee wellbeing

Despite its alluring name, unlimited holiday fails to deliver on its promise. Employees often take less holiday and their wellbeing suffers as a result. The guilt and pressure associated with taking holiday days, combined with the potential for abuse and approval issues, usually make it a flawed benefit.

Ultimately, unlimited holiday is a well-intentioned but problematic policy. Clear, structured holiday policies ensure employees get the rest they need without the added stress. Fixed holiday allowances also provide clarity and fairness, helping to create a more supportive work environment.

It’s the reason why employees using Heka have their allowance expire after 3 months - to encourage them to actually take action and use their allowance to support their wellbeing. And without that encouragement, you might often find your benefits under utilised and having low impact.

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Conclusion

Instead of opting for the latest trend, consider policies that genuinely support your team's wellbeing. A holiday policy doesn’t need to be complex or “special”. Simply offering some extra holiday days to employees throughout the year would have the exact same appeal as an unlimited holiday policy but likely have much greater effect. 

Bolster this with additional wellbeing benefits for employees and you’ll be doing more to boost wellbeing, morale, and productivity than an unlimited holiday ever could.

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