Encouraging or requiring vacation time can help your employees stay sharp and motivated when they return to the office. Some companies take this one step further and implement an unlimited vacation policy. Letting employees take off as much time as they want seems like an invitation to abuse the policy and certainly doesn’t suit every organization, but it can have surprising benefits for both employees and employer.

How Does Unlimited Time Off Work?

The specifics of the unlimited vacation time policy vary depending on the company, but the main idea is that your employees choose when to take time off and for how long. The catch is that the employee should be up to date with work and let their coworkers know the status of their work. The leave also shouldn’t have a negative impact on the company. You may still have an approval process with the possibility of the request being denied if it might cause harm to the company. The assumption is that employees take it as a sign of trust and do a better job of managing their time.

Advantages of Unlimited Time Off

By showing you trust and value your employees, you may gain increased motivation and greater engagement from your workforce. You might find that your employees work harder at the office, knowing they’re able to take time off if they get their work done efficiently. It gives your employees more ownership over how and when they work, a greater sense of loyalty, and you’re better able to retain your employees. A perk like unlimited vacation time can also make it easier to attract top employees who view flexible working as a terrific bonus.

This policy can also save on administrative costs. Since your HR department doesn’t have to track and manage leave, this policy frees up time for those staff members. You also don’t have to budget for paying employees for unused vacation days. Likewise, your employees don’t have to scramble to use up any remaining leave days before the end of the year.

Some people choose to use their time off to create long weekends and enjoy a better work-life balance. This can be especially beneficial for employees who commute long distances or have to stay away from home and family during the week.

Disadvantages of Unlimited Time Off

Despite the potential perks for your employees and your company as a whole, this policy still leaves some disadvantages to consider. The specific role of an employee or your industry as a whole may make the policy more challenging to use. Certain job roles don’t lend themselves to a flexible remote-working approach. This includes front-facing staff, jobs that require a person to be present in the workplace, and hourly paid workers. It’s not as easy as just granting some employees unlimited vacation if their positions work with the policy. If you have a mix of job roles, allowing some unlimited vacation whilst others adhere to the traditional fixed system can cause tension and hurt employee morale.

Employees can be suspicious of your motives, especially if they’re used to cashing out accumulated unused vacation days. They see it as losing money because those vacation days no longer have the cash value that comes with being paid for unused time off. You may also run into an issue of some employees using leave too little and others using it too much if you don’t establish a standard for an acceptable number of vacation days. Some employees may worry they’re being judged for taking too much time off, so they don’t take as much as normal. Others who don’t have those same worries may see it as a chance to take advantage of the system and do less work.

Considerations for Implementing the Policy

If you’re considering an unlimited time off policy, it’s a good idea to make the policy specific and clear. A mandatory minimum number of vacation days per year can help employees feel more comfortable about taking time away from work. You also ensure your employees get the time off they need to feel rejuvenated. The policy should also explain why you offer the unlimited time off, so employees understand that it’s about you caring for them and providing the flexibility to manage a healthy work-life balance.

If you’re considering rolling out an unlimited vacation policy, think carefully about your employees, their work patterns, and how they might react. For example, millennials are more likely to embrace flexible working practices than older workers. You might consult with your teams and implement training sessions and guidelines for requesting time off before the full roll-out. Try to find a suitable name for your program. Terms such as “”flexible”” or “”self-managed”” sound less indulgent and more accurate than “”unlimited”” vacation.

With careful planning, an unlimited vacation policy can lead to a more loyal, motivated, and productive workforce that works with you to boost your company’s success. Managing your workforce is easier with simple, employee-friendly policies and tools that simplify your job. The QuickBooks Self-Employed app helps freelancers, contractors, and sole proprietors track and manage business on the go. Download the app.