Could introducing an unlimited holiday policy work?

Since the pandemic, many employers are adapting the way in which they operate and how they look to retain and attract staff. One area of policy that has been explored by several organisations and which seems to be seriously considered by small to medium sized businesses has been to offer unlimited holiday.

Legally under the Working Time Regulations all workers are entitled to 5.6 weeks of paid annual leave each year, so how would offering unlimited holiday work in practice and what would be the benefits and challenges associated with it?

What would an unlimited holiday policy look like?

Introducing an unlimited holiday policy would mean allowing employees to take as much time away from the workplace as they wish, so long as it means they can still perform their job and the business is not disrupted.

This new way of allowing time off hasn’t just been used to manage holiday, but as a policy, it can be used for other forms of leave, such as time off to attend a school event, to study, provide care for a relative or volunteering.

How can it be managed in practice?

To ensure that the policy does not get abused it will require management time and effort in administering.

It also relies on an existing workplace culture that is open, transparent, and trusting. To manage a policy where the right culture is not in place risks its effectiveness and can potentially damage employee engagement which in turn could lead to workplace conflict.

If the company has the right culture to implement, then in doing so there must be effective manager-employee communications and relationships. Without these it can impact on how it is implemented and applied.

Why introduce an unlimited holiday policy?

Over the last couple of years, UK employers have struggled to recruit, whether this has been due to candidate shortage, time to hire being too slow or the inability to compete with other organisations.

Consequently, it is now becoming more apparent that employers must become innovative in the way they recruit, attract, and retain their employees. Introducing an unlimited holiday policy is one potential solution that for some businesses, may help overcome these recruitment challenges. A policy like this can also:

  • Can help support recruitment
  • Aid employee retention
  • Requires less administration since reasons for time off would not be necessary
  • Has the potential to increase productivity due to higher employee engagement

Are there any drawbacks?

Several companies have trialled this type of policy, and whilst the above benefits can be gained, there are also practical challenges that can be associated with it. For instance:

  • How to ensure fairness when managing? With a policy like this being very broad, there will still need to be judgements made around whether the time off would be detrimental to the business. So how would managers ensure they are treating everyone fairly?
  • If there are no limits, could it lead to disgruntled employees? Even though for health and safety reasons employees should ensure breaks from work throughout the year, in practice, this does not always happen. Employers can end up near the end of the holiday year with some employees with an excessive balance of annual leave. So however, appealing this policy could be, would it make any difference to these workers?
  • Does there need to be some form of administration to monitor whether there are individuals who are abusing the policy.

It will be for each business to determine whether a policy such as this is appropriate and address some of their current employment challenges – such as recruitment, employee retention. If it is going to be considered, then it would always be best to operate a pilot of the scheme before implementing fully.

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