How An Unlimited Vacation Policy Can Drive You Crazy And Lose You Money

To employees carefully portioning out their meager vacation days as the year begins, Sharon Rosenblatt sounds like she has it made. She describes her Maryland employer’s policy as “As long as you get your work done, it doesn’t matter where you do it.” That means total flexibility — including unlimited vacation days. Sounds like a dream, right? Maybe. But it could also mean losing some cash — and your sanity.

Rosenblatt’s employer, a consulting firm, is not alone in its flexible vacation policy. The website WeddingWire made headlines last week for offering its employees an unlimited vacation policy. The Washington Post asked, “Is this the best employer in Maryland?” Fortune reported last year that unlimited vacation policies are becoming a bona fide trend. Companies including Netflix, IBM, Morningstar, and the New York consulting company BlueWolf have implemented versions of the policy, sometimes called a “results-only work environment.” The strategy’s advocates say it makes employees happier and increases productivity.

Former Best Buy HR manager Cali Ressler and Jody Thompson, who developed the strategy at their former employer, started their own company, CultureRX, to help other companies make a results-only work environment work for them. “A ROWE workforce is more efficient, productive and loyal to the organization while also feeling satisfied, fulfilled, and in control of their personal and professional lives,” the pair write on their website.

The benefits of unlimited vacation to employees are obvious. As Christina Gomez, a lawyer in Denver, pointed out at a recent audio-conference on the subject for HR professionals, unlimited vacation boosts morale and creates “a culture of mutual respect, responsibility, and high performance.”

But unlimited vacation policies can also give an employer a reason to withhold pay and shrink a workforce. Yes, productivity sometimes rises — Ressler and Thompson say by up to 35% — but it’s more than that. As Gomez points out, in most cases the strategy releases employers from the obligation of paying out for unused vacation time when an employee leaves. If you don’t use your vacation, you really lose it. Employers also save money on administrative and accounting work. All that time counting up sick days and hours isn’t free — but with unlimited-leave policies, it disappears.

Many employees with unlimited vacation love it, of course. But others can feel as if the “unlimited vacation” really means “no vacation.” And if there’s no official, designated vacation time, are you supposed to be plugged in even when you’re in Hawaii? Will your coworkers give you the stink-eye when you take off, even if you’ve covered your duties?

Rosenblatt, the consultant in Maryland (she’s technically an independent contractor), jokes that the policy has caused her to suffer from “self-diagnosed workplace paranoia”:

I took over a week off in December for a vacation [on top of standard holiday time off]. While I cleared it by my coworkers, I still had these feelings of guilt. I think unlimited vacation is great if your work allows for it. Yet, I always feel pressure to work even harder when I get back, even if there isn’t more work.

It turns out that unlimited vacation comes with its limits.

Photo: Yuri Arcurs / Shutterstock.com

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    • luix80

      Unlimited vacation doesn’t work, I just quit a job with ‘unlimited vacation’. The problem is that it actually meant no vacation, just like you stated it at the end. I think that this is a strategy of the employer so that you feel guilty when taking vacations, and hence you don’t take them.

      I prefer if the employer said ‘you will have 20 days of vacation that you have to use during the year’, then I know I have them, and I have to use them. With the no vacation policy, it was really hard to take vacation, and if you took 3-4 days off you could sense that no one really liked it. One time, in order to get a full week of vacation, I had to work 2 Saturdays to make up for a couple of days. My vacation ended up being only 3 days, and needless to say, it was pretty obvious that I was not going to be given any more days off for a while. After 2 years like this I really got burnt out, and I just quit.

    • asdfasdf

      Yea, in theory, it sounds good however, the employee will be taken advantage of when all is said and done. You wont get any time to take a vacation or, they will be minimal. When has a corporation done anything for the employee that didnt benifit the employer? heh, good luck in finding something. They line their pockets with your blood sweat and tears, the only reason they would implement this is to screw you out of a set vacation time, and save money.

    • janon

      If a corporation implements a policy, it is worker hostile and inhumane by definition. Thats a no brainer. Corporations exist to make executives rich by amassing vast sums of money for “owners” (large institutional investors) You usually don’t need to look too far to find the scam… in this case its laughably obvious. “Unlimited vacation” = NO “official” vacation = no payouts and take off at your peril. Any policy started in Silicon Valley where workers are all exploited 20 year old rich kids dreaming of hitting stock option lotto at “bullshitt.com” is one to RUN from.