It’s a perk we all want — and rarely use

Since Sir Richard Branson announced in 2014 that Virgin Group would permit its staff to take unlimited days off, workplace commentators have vigorously debated whether the employment perk actually works.

It does if the company cultivates a culture of trust, say the supporters. But unscrupulous employees may take advantage, fret the detractors. Either that, or workaholic staffers afraid of looking like slackers won’t take enough time off, especially in the vacation-challenged US.

Skeptics also worry that such policies won’t fly with employees accustomed to being monetarily compensated for unused holiday days upon leaving a company, or with senior workers who’ve accrued generous time-off after years of employment at one company.

Consider Tribune Publishing in the US. Last year, the owner of the Chicago Tribune and Los Angeles Times newspapers announced an unlimited time-off policy, only to rescind the announcement eight days later after receiving overwhelmingly negative employee feedback.

Virgin isn’t the only corporation to make an unlimited booked holiday programme work. In recent years, the trend has gained popularity in Silicon Valley and among small, niche companies around the globe. Employers that have embraced the policy include GE, Netflix, Twitter, Glassdoor, Groupon and Evernote. Still, these companies are in the minority. In 2015, the Society for Human Resource Management reported that less than 1% of US companies offer such a policy.

Hire good people and treat them like responsible adults, the paid-time-off pioneers say, and workers won’t abuse the system. Employers may even save a bit of administrative overhead in the process, especially if the benefit helps attract and keep top talent.

It all sounds great in theory, but how do these companies pull it off?

Set ground rules

Unlimited holiday policies aren’t the free-for-all they may sound like. In fact, the word “unlimited” is a bit of a misnomer.

Take PayasUgym.com, a UK network of gyms, pools and fitness centres offering pay-as-you-go and unlimited passes. According to Chief Executive Officer Jamie Ward, the London company’s unlimited leave policy has two primary rules: don’t blow your deadlines, and don’t leave your colleagues in the lurch.

“Obviously for some roles, like customer service, we need to ensure that we have appropriate cover,” Ward said, referring to the company’s pool of freelancers. “But we’re very flexible on how we manage that.”

This doesn’t mean employees can sneak off to a tropical island at a moment’s notice or the entire 22-person staff can vanish at once. They still have to clear holiday and personal time with their manager, giving at least a day’s notice for one day off and at least two weeks’ notice for two weeks off, Ward said. But nine times out of ten, permission is granted, he added.

The five-year-old company rolled out its unlimited holiday plan last year as a hiring incentive and to ensure people take the time off they need. In 2014, employees took an average of 21.5 days each, Ward said. In fact, all the companies interviewed for this story do have a tracking system in place to count the number of vacation days off per employee, no matter how informal.

Fierce Inc, a global leadership development and training company in Seattle, didn’t want to put too many parameters around the unlimited paid time off programme it unveiled in 2012. But, as Stacey Engle, the vice president of marketing who helped create the company’s policy, conceded, “There are times when I have to tell my team, ‘No one is taking vacation at this time.’”

In addition, new hires to the 28-employee company must wait 90 days before taking some time off. “In the first three months, we really need the person to be here,” Engle said.

Weed out violators

Proponents of unlimited vacation say abuse of the policy is rare, usually committed by a bad apple who is already underperforming.

“If people ask for time off when they know there’s a hard deadline, you have to question their dedication,” Ward said. He’s had only one vacation violator since implementing the policy, a dissatisfied junior employee who requested an excessive amount of leave, despite not keeping up with his workload.

“There was already a performance issue there,” Ward said, who wound up laying off the employee after six months.

Jim Belosic, CEO of ShortStack, a 20-employee software company in Reno, Nevada, echoes this experience. Rather than ask his permission, workers who want time off “work it out with their peers,” explained Belosic, who’s maintained this policy since founding the company five years ago.

One customer service worker racked up about 30% more vacation time than her teammates, which would have been fine had she been pulling her weight. Only her teammates had begun to complain about how she repeatedly shirked her duties, Belosic said.

“If you weren’t on her all the time, she was watching the Giants game, or some sort of TV show or Netflix,” said Belosic, who eventually served the slacker her walking papers. “She just didn’t want to work. That really taught us that culture and personality is the number one thing that we hire for.”

“No, really, you can take off”

Abusers aren’t the only concern. Some employees are too afraid of looking less diligent if they take time off. What’s more, without the designated two, three or four weeks, they may not be sure how much leave is appropriate.

For Ben Geoghegan, head of content at CurrencyFair.com, a 100-employee financial technology company based in Ireland and Australia, the greatest challenge has been getting employees to believe they won’t be penalised for days off and that their team will survive without them.

“We have people from banking sectors and large corporations where they’re used to seeking permission to go to the bathroom,” Geoghegan said. “We need to coach them to feel more comfortable.”

Fierce’s Engle also has witnessed some confusion among employees about the line between too much and just enough leave.

“I think some people still have that notion that if they work more hours and don’t take vacation, they’re more dedicated,” she said. “There are a few people we’ve told, ‘You need to take more than two days off in a year. We’re worried about you. Please take care of yourself.’”

At CurrencyFair.com, management is more subtle. Rather than pull workaholics aside to suggest they hit the beach, executives lead by example, taking vacation as needed and reminding direct reports that the unlimited leave policy exists, Geoghegan said.

Regardless of communication style, “you have to have very strong management to make this work,” said Ward of PayasUgym.com. “If you have one manager that isn’t completely brought in or doesn’t respect the policy, then their whole team won’t respect it.”

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