How do unlimited vacation days work?

Question

I've seen numerous posts on Stack Overflow Jobs or on-line in general where a company lists "Unlimited vacation days" as one of the company's benefits.

I see several issues with this "benefit" and I'm not sure what I should expect when applying for one of these job posts.

• Are "unlimited" really unlimited? Or should I expect a fine print that says my maximum vacation days is 180 for example.
• Would the employees feel comfortable taking more than the norm (25-30 days per year)? I mean if the contract states that I'm entitled to 90 vacation days per year then I would at some point request to exhaust my vacation credit before the end of the year. The same can't be done in case no specific number was stated.
• Peer pressure. What if my colleagues decide to stick to the 25-30 days and I'm the only one going on holidays every 3 months? Would that lead to a toxic work environment where everyone is counting their peers vacation days.

The concept itself is very new to me, but I'm seeing more and more companies adding this perk to their packages and I wonder what my expectation should be and how to make it work effectively.

Answer 1

This will depend on the specific company culture. Some companies will absolutely use "unlimited vacation" as a vehicle to get people to take less vacation, while others will use it in the spirit of the policy and be generous so long as performance is good. Some may even allow it to be systematically abused.

I think you may already know/suspect that and really want to ask: How do I know how this company handles unlimited vacation?

When applying for jobs, largely ignore anything about "unlimited vacation" (or vacation policy in general). It isn't relevant yet.

Once you've received an offer from one such company, you can ask about the vacation policy. For something like "unlimited" ask about averages (On average how many vacation days did your employees take last year?)

In interviews, ask about things that are tangentially related to vacation and still incredibly relevant to whether the company is a fit (expected overtime, work/life balance, project deadlines, delivery goals, etc.). [do not ask about vacation time during the interview, it is a bad sign when an interviewee is already thinking about the time they're not working for you - though the interviewer may bring it up if it's a point of pride/selling point]

Research on websites like glassdoor where employees have given insight into corporate culture.

Answer 2

Chris has a very good answer, but I would like to add my experence as working somewhere that made the transition from a traditional vacation policy to an unlimited one. Many people working through this transition had many of the same doubts you did.

Are "unlimited" really unlimited? Or should I expect a fine print that says my maximum vacation days is 180 for example.

You probably won't find fine print with a number of days specified. Your contract will probably say something like "If you plan on being gone for more than 2-3 days you will need manager approval." This should be no different than traditional. Basically you have to get your manager to let you go. For people with bad management this means that "unlimited" becomes no vacation. If you have a reasonable manager, they should let you take a reasonable amount of vacation. If you ask for a month off every quarter, expect them to say no. Guidance at my last company was that people should be taking 4-5 weeks.

Would the employees feel comfortable taking more than the norm (25-30 days per year)? I mean if the contract states that I'm entitled to 90 vacation days per year then I would at some point request to exhaust my vacation credit before the end of the year. The same can't be done in case no specific number was stated.

Depends on the employee/manager agreement. Everyone has different vacation needs. My current manager has 4 weeks of vacation and she talks about never using it (traditional scheme). I currently have 2 and have realized that I really REALLY want at least 3 and would use all of it up. You'll find in unlimited land people don't feel internal pressure to "use" up their vacation at the end of the year like my dad has done for years taking Fridays off in Nov and Dec just for the sake of not "losing" his vacation.

If you need more vacation to do your job better, you'll get the time off you need. But if you take soo much time off that you are not getting your work done, expect it to get denied.

Peer pressure. What if my colleagues decide to stick to the 25-30 days and I'm the only one going on holidays every 3 months? Would that lead to a toxic work environment where everyone is counting their peers vacation days.

This depends on the workplace. As Chris mentioned, asking about average vacation is a good idea. Maybe as you talk to the team, ask what their last vacation was to give you an idea of how your future coworkers view their vacation time.

Can I burn up vacation?

You didn't ask this, but it is implied. Many times people in traditional companies may try to burn up their vacation. Like my dad taking off every Friday for 2 months. Many people may bank up vacation to use around the birth of a child, or use it around when they are resigning. My experience is that this doesn't work this way. There is no days to "burn" so there would be no reason for the company to compensate someone leaving/being laid off with unused vacation days. Don't think that there will be a magical number of days you are entitled to.

Answer 3

"Unlimited vacation" is almost always a horrible idea. It's not good for employees, but it's awesome for employers. The main problem is that despite the word "unlimited", it isn't unlimited. That's because there's still the concept of "what's a reasonable amount of vacation to take", which is a limit.

The only reason anyone would change a reasonable amount of vacation from an objective measure (x hours earned per pay period, for example) to a subjective one is if the employer is truly acting in a perfectly altruistic way, or so that those in control of the subjective definition can benefit. Only you can decide if your employer, and all future-hired leadership, are people you trust to only act altruistically.

You, as an employee, certainly have no power whatsoever to define or enforce what reasonable means. It comes down to the opinion of your employer—your boss, or his boss, or her boss. Or whether you take more than the other employees in your group (even if they're taking none and you're taking less than you used to). And if your boss likes you today, great, you can get more vacation. But if your boss doesn't like you tomorrow, or for any reason doesn't act perfectly altruistically (which is somewhat contrary to the mission of for-profit companies), well, now you've abused the system and are in trouble if you take that much vacation. Who's to argue one way or another? Think about it—your employer has no contractual obligation to let you have any vacation at all! Of course, you can take it, and then suffer the consequences.

So:

1. When you leave the company and haven't taken all the vacation you wanted, you don't get it now—try telling your company you're leaving in 2 months and wish your final 6 weeks to be all vacation time—but could you take it as a lump sum, so you get paid now and don't have to come in again after 2 weeks from now? See how that works for you.

2. If someone else plans badly or there's simply more work than a single person can do, so that through no fault of your own you don't have time to take vacation and meet certain unreasonable or unrealistic goals, this policy makes it your fault for taking vacation that you see as reasonable in its timing or length, but even just one person in power doesn't agree. In retrospect. When you couldn't have known at the time. Because how much vacation is reasonable is subjective and can be reassessed after the fact, at any time, for any reason, at the choice of the employer. Who probably isn't on a mission to enrich its employees at its own expense.

Frankly, and objectively speaking (with hard data available out there that will back this up), companies that switch to "unlimited vacation" always see the total amount of employee vacation taken go down. Anyone trying to sell you on the idea that it's better for employees is just selling you a bill of goods.

A better description than unlimited vacation is indeterminate vacation. You have no idea how much vacation you'll get, and whether it will hurt you to take any.

How would you like to go to work for "unlimited pay" where you choose your own pay rate week to week, but your employer decides if you are abusing the system—and if so, you're fired? Would you feel safe? Or would you ratchet back your pay just a bit to achieve that safety? So similarly, it would be an "indeterminate pay" system, which to me sounds like a horrible, horrible way to work. And if the company's fortunes turn, or they're bought by another company, who's to say that doing the same job to the same quality level next year as this year will warrant the same pay in the eyes of your employer?

Answer 4

In my company it works much like "Unlimited data" works for cell phone plans.

As long as you don't abuse it and use significantly more vacation than other people, there is no hard "limit".

Adequate notice needs to be given -- you can take a long weekend with a few days notice, but a 3 week vacation needs months of notice so the others in the company can prepare and make sure your work is covered.

Vacations here always require management approval, so you can't just decide on your own to go away for 6 months. But if you want to take off 4 weeks and have someone to cover your work, then it's generally approved. The only person I know who had his vacation request denied was someone that wanted to take 6 weeks to travel while completely off the grid and unreachable. Instead of 6 weeks of paid vacation, they gave him 3 weeks of paid vacation and 3 weeks of unpaid leave.

The biggest drawback to the employee (and benefit to the employer) is that with "unlimited" vacation, you don't accrue vacation days that then need to be paid out if you leave the company.

Answer 5

I think the best way to understand how it works is to think it through.

You're being hired for a job. You get trained up. Your contribution is critical. You are a professional performing a job that requires a lot of education. You value the respect of your peers. We're not talking fast food service here. I've done fast food service when young btw so that is not meant to demean folks doing it in any way, just talking about the type of work being done and professional engagement.

So people in your team are counting on your contribution. Can you imagine how it will look to your company and your colleagues it you decide to go on a three month vacation.

If you think this is not a compelling argument please consider that I work in one of these 'unlimited vacation' companies and know people in many others. As probably obvious I work in the high-tech programming sector. So this is what I work with and yes, people don't abuse it, don't take months off or even try to.

The main exception to this however relates to longevity. One of the big factors behind the policy is the, usually understated, idea that after a year or two or three you really will want to take advantage of the policy and take a 4-6 week long vacation. This is actually ok with many companies and you are then so valuable that replacing you will take 3-6 months for the hire and then 6-12 months for the training. Compare that year or two to taking a month of two off and many companies are ok with that. Part of the professionalism is that you'll make sure and plan for coverage in your absence and in the process you'll also be confirming that generally you are avoiding the bus factor. https://en.wikipedia.org/wiki/Bus_factor

Answer 6

I'm seeing more and more companies adding this perk to their packages and I wonder what my expectation should be and how to make it work effectively.

With the holiday policy being vague, it may be abused by management e.g. creating a culture of stigmitising holidays to a point that you take fewer holidays than if you worked elsewhere.

I would advise everybody to be aware of relevant legal protection regarding minimum amounts of paid time off.

In the UK for example:

Almost all workers are legally entitled to 5.6 weeks’ paid holiday per year (known as statutory leave entitlement or annual leave). An employer can include bank holidays as part of statutory annual leave.

Source: gov.uk

This doesn't constitute legal advice. It is simply an observation that some workers have legal rights in place regarding minimum paid holiday. These should act as a protection against unscrupulous employers abusing 'unlimited' holiday policies.

Answer 7

The funny thing about employee rights is that they are one of the areas where experience clearly shows that more regulation is good.

We know this for decades when it comes to working hours. In industrial times, they were strictly regulated - 9 to 5 means you are at your working place at exactly 9 in the morning, not roughly, about, circa. And the guy from next shift would relieve you at exactly 5 in the evening. You'd clock in and out and it would be checked.

With office and other jobs, this became more flexible, until flexible work times were introduced and it turned out that without a strict regime, the vast majority of people actually work more. Given a loose requirement such as "40 hours a week, on average", most office workers clock in somewhere between 45 and 50 hours, actually.

That's the real reason employers love flexible work hours and few regulations. In one place I worked for, the union forced the company to track employee working hours. The above was the exact result this revealed. People just never realized. Once they saw on paper how much they actually worked, many reduced it by a few hours.

I have a strong suspicion that "unlimited holidays" is the same scam. When your holiday days are tracked, you will take that exact amount. When they are not, most people will tend to err on the side of safety and take fewer days.

So what it actually means is: "We removed this regulation because we expect it will turn out in our favor. If you skew the average too much, we'll find a way to make you stop doing that."

Answer 8

Just to add to the mix - HR consultants always recommend companies change their vacation package to "unlimited".

The reason is that when you leave you didn't accumulate any vacation, so you aren't due any vacation. Be wary of this tactic, it is better to negotiate a solid amount of vacation time and have it in your contract.