Should I offer unlimited holiday?

An unlimited holiday policy is where employees are given no set amount of paid holiday entitlement per year. This means that, in theory, they can take as much or as little holiday as they wish, subject to meeting the statutory minimum entitlement enforced by law.

Although several companies have implemented this policy successfully, including Netflix, unlimited holiday is not a policy that many employers are willing to adopt.

How does unlimited holiday work?

In the UK, the statutory minimum holiday entitlement for full-time employees is 28 days, inclusive of the usual statutory public holidays in England and Wales. This entitlement includes agency workers, workers with irregular hours, and workers on zero-hour contracts. However, employers can choose to provide their employees with any amount of holiday over and above the statutory minimum at their discretion.

If an employer decides to implement an unlimited holiday policy, this enables employees to take as much holiday from work as they wish, usually on the basis that they have met certain work targets. Subject to meeting the employers’ rules regarding the entitlement to unlimited holiday, it is then up to the employee to decide how much holiday they wish to take and when they wish to take it. This is a policy which requires an employer to have a high level of trust and confidence in their employees not to abuse the policy. By offering this incentive, it is hoped that that employees will be encouraged to take full ownership of not only their duties and responsibilities, but that they will also enjoy a better work-life balance.

What are the benefits of unlimited holiday?

As an employer, the thought of implementing an unlimited holiday policy may leave you concerned that you might not always be able to maintain the minimum staff levels needed for the effective running of your business, or that the policy is open to abuse by less conscientious employees. However, there are several benefits that an unlimited holiday policy may provide, including the following:

• Increased employee satisfaction;
• Assists employees in achieving a sense of ownership and responsibility for the work they do, thus potentially increasing productivity;
• Creates a healthier work-life balance for employees;
• Increased focus on measuring output instead of hours physically spent at the office;
• Helps companies stand out in the job market and attract higher-quality talent;
• Boosts employee morale and improve workplace culture; and
• Creates a greater level of trust in the employer/employee relationship

What are the disadvantages of unlimited holiday?

An unlimited holiday policy will not be suitable for every company and can have its fair share of disadvantages, including the following:

• Discourages managers and high performers from taking time off work for fear of falling behind;
• Problems with productivity, and subsequently staffing issues;
• Increased workplace anxiety if employees are uncertain about the perceived acceptable amount of holiday and don’t feel able to take holiday;
• Problems for employers who require a set number of employees to be on-site;
• Errors in tracking attendance data and performance;
• A sense of unfairness if  some employees take a much higher level of holiday leave compared to others; and
• Difficulty in managing the policy, and ensuring that employees are still taking their statutory minimum holiday entitlement required by law.

Recommendations for employers

If you feel that an unlimited holiday policy is something you would like to implement in your organisation, you must ensure that the policy is clear. It is important to consider any procedures and practical issues such as:

• Establishing the company’s right to reject leave requests;
• Setting out any applicable procedures for employees requesting leave;
• Specifying how any “carry-over” to the following leave year will be dealt with;
• Setting out any limits on how much holiday can be taken at any one time, if applicable;
• Specifying how any poor performance related to an excessive amount of holiday taken will be dealt with; and
• Establishing how competing requests between employees will be handled.

It is also important that employers remain mindful of their legal obligations in relation to holiday entitlement. Employers must still encourage their employees to take their minimum statutory entitlement, ensure that contracts and other employment documents are legally compliant and that and employees are paid correctly for holiday. It is also important that employers take into consideration any potential discrimination risks and ensure that efficient training is in place so that managers and staff alike know how the policy should be implemented

If an unlimited holiday policy is something that you feel would be beneficial to your organisation, our document audit team can draft a compliant holiday policy for you. Contact our team by emailing employment@warnergoodman.co.uk or calling 023 8071 7400.