Unlimited Vacation: What You Should Know About This Time Off Trend

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Unlimited time off. On paper, it sounds like a dream come true, but is the latest trend in employee benefits, where workers are allowed to take as much (or as little) vacation time as they need, all it’s cracked up to be?

LinkedIn is the latest company to make the switch to discretionary time off. Starting November 1, employees will no longer earn a set number of vacation days each year. Instead, “employees will work with their manager to request time off when they need it,” according to a LinkedIn blog post announcing the change.

The business networking site joins companies like Netflix, Twitter, and The Virgin Group in doing away with formal paid vacation days in favor of a more flexible time off policies. Even stodgy old companies like GE have implemented unlimited time off for certain employees. The policies are often presented as a new employee perk and a sign that the company is moving toward a culture focused on results and performance rather than clocking the hours you spend behind a desk.

At LinkedIn, employees can take as much time off as they need, provided they clear it with their managers first. At Virgin, employees are allowed to take time away whenever they like, no questions asked.

“There is no need to ask for prior approval … It is left to the employee alone to decide if and when he or she feels like taking a few hours, a day, a week or a month off,” explained company founder Richard Branson in a blog post.

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That sounds great, at least in theory. But what if an employee is so burdened with work they feel they can’t take time away? Or what if a manager plays favorites, letting certain employees take more leave than others? For some, a limitless vacation policy might actually translate into little or no time off at all. That’s why human resource experts say these kind of policies work best for companies that can easily measure employee productivity, and where staff has a lot of autonomy and workers and management trust each other.

“It’s a system that requires trust on both sides. We trust our employees not to abuse it, and employees have to trust us that the flexibility is really going to be there,” Mary Beth Wynn, vice president of people at Jellyvision, which has an unlimited time off policy, told HR Magazine.

For many companies, whatever their vacation policy, the problem isn’t that employees take too much time off, but rather too little. Americans take just 16 vacation days every year, down from 20 in 2000, according to the U.S. Travel Association. Many of those people are sitting on a valuable bank of unused vacation days, often because they fear taking a break. Twenty percent worry that time off will make them seem replaceable, and 40% think they have too much work to do to be able to take time off, according to Project Time Off.

All those banked vacation days represent a $224 billion dollar liability to U.S. companies, the Wall Street Journal reported. That’s money they will eventually have to pay out when an employee retires or gets a new job. No longer having to worry about workers cashing out thousands of dollars in unused vacation benefits on their way out the door is a big incentive for a company to switch to an unlimited time off policy.

“The real reason [for a change to an unlimited vacation policy] is that there’s a significant impact from a financial perspective,” Steven Parker, head of business transformation at Achievers, a rewards program for employees, told HR Magazine.

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Losing the value of all that accrued time off also means some workers see a switch to unlimited PTO as a cut in benefits, not a great new perk. In late 2014, the Tribune Company, which publishes the Chicago Tribune and the Los Angeles Times announced that it would be doing away with traditional vacation time. Employees threatened a lawsuit and a week later the company switched back to the old plan.

Given the hurdles involves in implementing an unlimited time off policy, some companies, like tech firm Travis CI, are trying a different tactic: minimum required time off.  The German company tried no-holds-barred vacation policy and found it just didn’t work – people weren’t taking time breaks, which was leading to burn-out. So the company switched to a minimum vacation policy. Every employee is now required to take at least 25 days off per year, and those who need more time can take extra days. Some might see it as a bold move, but CEO Mathias Mayer says it’s the right thing to do.

“Your job as a company isn’t to coerce your people into taking as little time off as possible,” he wrote. “It’s to make sure they have a good balance between work and life.”

Follow Megan on Twitter @MeganE_CS

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