Why an Unlimited Vacation Policy is NOT What You Think

Wow, you’ve won the vacation lotto and can take all the vacation days you wish! Where are you going to go now? Or should I ask “How many days are you going to take off now?”

Unlimited Vacation? How many days do you really have?

Should all of us be jealous of those who have an “unlimited” vacation policy at work? My gut reaction is to be jealous about those companies we’ve heard about in the news (such as LinkedIn, Netflix, and Virgin) who’ve jumped on the unlimited bandwagon.

Did you know that some have switched back? Let’s talk pros and cons to get a reality check of this seemingly uber-generous vacation policy. It may not be for you.

Scott Thinks Unlimited Vacation is Ridiculous

Let’s get my opinion out-of-the-way first. In my opinion, unlimited vacation is the dumbest answer to work-life balance. I believe these employers are chipping away at your hard-earned right to paid time off. Unlimited vacation is NOT unlimited. Here’s how I feel:

  • Unlimited makes you feel guilty for taking too much.
  • Unlimited undervalues your contribution to the company’s bottom line.
  • Unlimited is a smokescreen to avoid addressing the real work-life balance crisis in America.

Hmmm… the so-called unlimited vacation benefit needs closer inspection. Maybe you already work for a company that offers unlimited vacation days. What’s your opinion so far? Do you think it’s a godsend or simply HR/marketing spin intended to make us work more?

What is an Unlimited Vacation Policy

Take all the vacation time in the world – hooray! Pinch me, I think I’m dreaming 🙂 OK let’s take it down a notch.

The word “unlimited” is not the best term, but it has become the standard way to describe this style of vacation policy. With this HR benefit you no longer earn a fixed number of hours or days of paid time off (PTO) each year. Instead you as the employee are given the power to decide how much paid time off to take each year.

In theory, unlimited means that you can take as many vacation days as you choose. Hey, employers picked that over-promise, under-deliver term not me. You are put in control of how much time you spend in the office and how often you call a vacation day. The reason doesn’t matter and you may not even need to track your non-working days.

It goes without saying that you still have to get your job done so you can’t take an extreme number of vacation days. Employers are saying to their employees that they are trusted to take off the right number of vacation days. But how many is too many? Is there a risk of getting fired for taking way more than the average or expected number?

When to Take Your Unlimited Vacation?

The hope is that when you feel worn out from work and need a rejuvenating break, you won’t need to do vacation math. There is officially no counting of earned, accrued, and unused vacation days. Need some time off? Go on, take a vacation!

The truth is that since all of us are used to having a set number of vacation days or PTO, your employer trusts that you’ll take a similar amount of paid time off after implementing an unlimited policy. They certainly don’t want you to take tons more days off than you have in the past.

Ask yourself… with an unlimited vacation policy will you take more vacation days than you did in previous years just because you can? Would you work harder, smarter, and be more productive or will you feel guilty and take fewer days than is typical in your industry? The verdict is not out yet so I’ll be keeping an eye on the real-world statistics as they are published.

So are you thinking, where do I sign up? Hold on a minute since you haven’t thought about how unlimited policy sucks. That’s what this blog post is all about after all.

Why Unlimited Vacation Policies Suck

The sign said “All You Can Eat” and Homer considered it a challenge in this classic Simpsons clip. The laughably tragic result is that there are limits to the generosity of an all-you-can-eat policy. Fortunately, in cartoon world, the court ruled in his favor and Homer eventually earned his due.

In all seriousness, a seafood buffet is nothing like a vacation buffet, but I hope you get the point and laughed a bit too.

Employers should come clean and state that unlimited is not unlimited nor is it intended to be. You have to get your work done, meet or exceed expectations on performance reviews, support your co-workers and team who are depending on you, and pitch in during crunch time. Employers expect work to come before vacation, so hold off on thinking you’ve discovered a work-life balance utopia.

Is Unlimited Vacation Half-Baked?

In my opinion unlimited is a marketing trick. It is designed to make employees believe that with this “new and improved” policy, they’ll never be without the time off they deserve to relax, recharge, and enjoy life. If European workers can have 4, 5, or even 6 weeks of paid vacation guaranteed to all full-time employees by law, why can’t us Americans? Is the unlimited vacation hype the USA’s way of trying to one-up Europe?

As I’ve stated before, I think that unlimited vacation policies are a terrible idea. It’s like having a pay policy called “We’ll pay you as much as you want” where you need to write down how much you think you have earned in salary. How long would it take for you to get fired for writing out a paycheck to yourself for a ridiculous sum of money?

Unlimited Vacation Paycheck

I want to know exactly how much paid time off I will receive this year and know with certainty how many more vacation days I will earn with each additional year of service. Paid vacation is a tangible benefit with significant monetary value. You worked to earn that time off in the same way that you worked to earn your pay and other benefits such as health insurance and matching 401K contributions.

Do you really want to be worried about abusing this policy? 42% of American workers already feel guilty about relaxing on vacation. With an unlimited policy, will you feel guilty about taking what your boss or co-workers feel is “too much” time off? At least with a fixed vacation policy, you can refer to your HR benefits handbook or paycheck stub to know exactly how many paid vacation days you are legally owed (and deserve).

Plus I don’t want the opportunity to earn additional vacation days by sticking with the same company. In the same way I can earn an annual raise in salary, I look forward to moving up the vacation accrual chart. Increasing vacation benefits have always been an important retention tool. I don’t think it is fair for a recent hire to get the same generous vacation policy as an employee who has put in years of service on the job.

Can Unlimited Vacation Ever Work?

Listen in on what this Fast Company segment thinks about this vacation benefit trend. I’ll admit that unlimited vacation can work for certain types of people and certain organizational cultures. The people at Fast Company may be more likely to succeed at work and at life with unlimited vacation, but it is far from a typical workplace. The reality is that we all don’t work for Fast Company. A blanket policy that tells us to take all the vacation we need (given the responsibilities of our jobs) is far from ideal for most.

So in the real world, how are we supposed to decide how many vacation days are appropriate to take. If you took 3 weeks in a row is that OK? What about 4 or 5 weeks across the year? Do you have to take fewer days than your more senior colleagues? What about if you just started the job this year and want to take a 2+ week trip?

HR organization SHRM, the Society for Human Resource Management, put together this insightful guideline for determining whether unlimited vacation is right for your company. There has to be trust between employees and managers and a work-culture fit before it should even be considered.

There are more questions than answers at this stage. I for one want to know that my position and seniority has earned me x number of days per year. I have enough to worry about and never want to feel stressed about how often I go on vacation.

A Brief Reminder of Why Paid Vacation Days Exist

Most of us work because we have to earn a living to pay for ourselves and our families. Money goes towards living expenses such as housing, food, education, children, entertainment, healthcare, travel, and saving for the future. Your job comes with a salary that pays cash in exchange for your time.

Every job also comes with a benefits package that includes a combination of paid time off, sick days, health insurance, disability, and retirement plans (of course, with huge variation in the US). These benefits are the result of decades of hard-fought workplace improvements, legal and otherwise. There was a time when a 5 day workweek was controversial and child labor was no big deal.

Employee benefits such as paid vacation are standard policy. They are essential tools that employers use to be competitive when recruiting full-time staff, keeping employees happy and productive, and retaining staff. How likely is it that you would accept a job that doesn’t let you take a sick day or offers no way to save for retirement? The same applies to vacation time.

An unlimited vacation policy is like having no policy at all.

Use-It-Or-Lose-It No Longer?

Remember that with traditional paid time off benefits, you accrue vacation days during each pay period. Those vacation days (often broken down into hours) are what your company owes you. It’s considered a financial liability. While some companies prevent you from rolling over vacation days from one year to the next, you usually get paid for unused vacation hours if you quit or lose your job.

Now what happens if you leave a job that offers unlimited vacation days? Unless you have it in writing otherwise, they won’t owe you back vacation pay since you’ve never accrued any.

Is it possible that many companies are switching to an unlimited vacation policy in order to get this liability off their books? The Washington Post thinks it’s a no-brainer for employers. Hmmm…

Why Unlimited Is NOT Unlimited

Instead of unlimited vacation, a more accurate description is unlimited working hours. That is because you may be prone to work more when you have no fixed number of vacation days to schedule and take. Americans are already awful about taking their paid time off. Millions of days are left on the table each year because people feel overworked and irreplaceable at the office.

Unlimited Vacation is Not Unlimited Sign

What do you think would happen when people are told to take as many vacation days as they need? I think they’ll take even fewer days off on average since the pressures of work haven’t changed. I feel strongly that employers need to address work-life-vacation balance, but this is not the magic bullet.

People like having goals at work and knowing they can strive to achieve these goals to be successful. With 2 or 3 weeks of vacation for instance, there are clear guidelines as to how to take earned time off. With an undefined vacation policy which is what unlimited really is, vacation goals and incentives are thrown out the window.

With this type of policy, employers are telling their staff that whenever they feel the need for a vacation to just take it. Taking vacations is not like going to the bathroom. There is no innate bodily urge to take a week’s vacation or a two-week trip abroad. Left unchecked, many deserving employees may keep on working due to the drive to both further their careers and not lose their jobs.

If you are in charge of implementing an unlimited vacation policy at your organization, at least follow this advice and do not use the term “unlimited PTO” for example. From this other Fast Company article with lessons from an unlimited company, their advice is to avoid the headline-grabbing names and

use less sensational names, like “flexible,” “self-managed,” “personalized,” or even “responsible PTO” (which) might all be better terms for your policy.

I wholeheartedly agree.

Unlimited Vacation Policy Survey

Answer one quick question in our survey on what you think about an unlimited versus a 6 weeks of paid vacation policy. After enough responses are gathered, I’ll publish the results. Subscribe to our Take More Vacation Time Off email newsletter to be the first to know.

Who Offers Unlimited Vacation Days

Several companies have been in the news lately with promises of “unlimited vacation” for their entire staff. Are you one of them? Netflix is one of the first examples and Richard Branson announcing it to his Virgin America staff got tons of press.

Companies both large and small have tried this model, but as you can see a majority are Silicon Valley area tech companies.

This list of companies that you probably heard of is far from comprehensive since not every company advertises their vacation policy to the public. A recent addition is LinkedIn who are mentioned in the following NBC Nightly News segment on this subject.

Their head of HR calls it “discretionary” time-off with no maximum or minimum either. Employees are told to work out the details with their manager. To me that sounds vague and subject to the whims of your boss, but I’m glad they dropped the word “unlimited” to be more honest.

It’s worth noting that according to BuzzFeed, many Silicon Valley tech startups offer unlimited vacation in addition to a host of other smart and zany perks. Also this article in Daily Muse lists 10 “awesome” companies with unlimited vacation time. They may be awesome places to work, but does unlimited vacation time really make a difference in recruiting or to the financial success of a company?

Companies That Have Reverted Back to Fixed Vacation

The list is small, but you should not be surprised that unlimited vacation is not the be-all-end-all solution to our work-life-vacation balance problems. A few companies have gone back to a traditional fixed time-off model. I’m here to report that for these companies, going unlimited was a failed experiment.

The U.S. travel industry sponsored website Project: Time Off talks about when and why unlimited vacation policies fail. I’m surprised this list is not larger, but we may still be in the early stages. While a company may make the local news when the go unlimited, will it get reported when they revert their policy?

How to Have Your Vacation and Take It Too

Considerate yourself lucky if you have a good number of vacation days per year to take as you wish. It is your just reward for working. You know exactly how many days you can choose not to work and still get paid. That’s a fortunate thing.

VacationCounts is all about maximizing your time off whether by using vacation days, holidays, weekends, flexible working arrangements, and time off during the work week. There are so many ways to make the most of your time off for family, travel, and enrichment. Unlimited vacation may sound better than it really is.

I want Americans to be given generous vacation benefits, but I believe unlimited is a step in the wrong direction. Knowing that I will earn 5 or 6 weeks of vacation each year (wouldn’t that be awesome?) would make me a lot happier, balanced, and successful.

Here are several articles that I know you will find helpful to hack your vacation time and optimize your work-life balance. You don’t need “unlimited” to be able to take more vacation time off.

> Vacation Days and Paid Time Off Work Policies – Top 10 Questions to Ask HR

> 7 Ways to Overcome the “I’m Too Busy to Plan A Vacation” Syndrome

> How To Take More Time Off To Travel, Let Me Count the Ways…

Speak Out About Unlimited Vacation Days

Now it’s your turn. What is your opinion about unlimited vacation policies? If you work for a company that has gone unlimited, please tell us about it with a comment after this article. I want to share more pros and cons here on VacationCounts.

Let everyone know whether you work for a company that has a traditional set number of paid vacation days or have switched to an unlimited policy. Which do you have, which do you prefer, and why? Add your comment to the discussion section below.

  • John says:

    “Discretionary” time off only works if all employees are capable of discretion. In my experience the slackers will abuse such a policy and take off way more than they are entitled to, and the hard workers will have to pick up their slack and wind up not getting as much time off as they deserve. In a perfect world the slackers would be fired from their jobs, but workplace politics and brown-nosing ensure that those lazy bums will always be with us.

  • Rozi Khan says:

    Whatever the case may be one should not take vacation unlimited times than what has been prescribed in the holiday plan. One should utilize his holiday very carefully so that this doesn’t go waste. Also I am not against the vacation. One should take vacation to relax one’s mind and body but not too much as it will hamper the work.

  • Roger says:

    We implemented an unlimited vacation policy two years ago. HATE IT! Now I’ll soon have completed five years of service and under the fixed vacation policy system will have earned another week. It would feel like earning a nice pay raise but that’s not the case anymore. As the author stated in the article, “I look forward to moving up the vacation accrual chart. Increasing vacation benefits have always been an important retention tool.” I feel the same way. Now that’s taken away and we have some people that have taken 5 weeks vacation and others like myself that have only taken 1 week and it’s getting close to end of year. At least I would have been compensated for lack of vacation in the past. Terrible, terrible policy I feel this is more about removing that liability on the balance sheet to make the company appear more fiscally sound than, “Oh look we care about our employees so much we give them as much time off as they need.”

    • Thanks for sharing your experience. I totally get your extreme unhappiness after switching to an unlimited vacation policy. A lot of people have surely been in the same situation and felt the same way. I still believe that legally guaranteed and mandated paid vacation is the only way to compensate employees and maximize work-life balance. -Scott

  • I like having a fixed number of vacation days to plan around each year. I also like being able to use the vacation policy as a shield in the face of overzealous managers who might think I should be taking less time off. ‘Hey, I’ve earned this time off. It’s mine and I’m going to take it!’

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