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Is unlimited annual leave good for business?

18 August 2023 5 min read

unlimited annual leave

The idea of unlimited annual leave has been around for a while, and posts on LinkedIn from companies announcing that they’ve just introduced it always receive a great of attention and praise. But what does it really look like? 

Unlimited leave means just that. Employees can take as much or as little annual leave per year as they like, regardless of role, with no questions asked from their line managers.  

In the UK, the statutory paid holiday entitlement is 5.6 weeks’ off per year. That’s 28 days per year for full-time employees, including 8 public bank holidays. Many organisations opt to offer more than the minimum holiday entitlement, as a means of attracting new talent and rewarding their employees with an added perk of the job. Offering unlimited leave takes this approach to the next level. 

What are the benefits of unlimited annual leave?

Giving employees the freedom of responsibility to choose how much annual leave they would like to use can be seen as hugely empowering and positive. It places more emphasis on them managing their own time and workload effectively, which shows the level of trust and confidence an organisation has in their teams. This in turn can make employees feel more closely connected to the success and future of a company, if they feel it is up to them to work hard when required and enjoy a well-earned break when they need it. 

The benefits for a better work-life balance include enabling employees to have enough time for both work and personal commitments. Rather than having to use a limited number of holidays throughout the year carefully planned around social and family commitments, unlimited leave relieves some of the stress associated with juggling both work and personal life.  

In terms of engagement, it can boost your employees’ enjoyment of their role by offering more flexibility, and make them proud to work for a company that prioritises their wellbeing and work-life balance. This also goes a long way in making your company much more attractive when recruiting, and increases employee retention. 

From an administration point of view, unlimited annual leave means there is no ‘end of year rush’ when employees are racing to use up as much of the remainder of their holiday allowance as possible before they lose it. It also means there is no need to carryover holiday allowance into the following year – an often complex task when done manually. 

What about the challenges?

One of the biggest challenges when it comes to unlimited leave is inevitably how you are going to manage it.  

Managing absence and leave in an organisation is already challenging, especially without tools in place that help you automate your processes, resource plan and provide visibility of who is off and when. Throwing unlimited holidays into that mix will require careful consideration including how much notice employees will need to give when requesting leave, and what the criteria might be for having to refuse holiday requests.  

Interestingly, providing employees with unlimited leave can actually cause them to take less time off. Rather than being empowering, having unlimited leave can be overwhelming for some as they feel they have too much choice.  

Similarly, a lack of clarity over the number of holidays allowed might cause some employees to feel as though they have to make the ‘right call’ and not be seen to be taking too much advantage of the policy.  

It may also mean that employees are simply less motivated to take holidays. When they have a limited number of annual leave days, they are inclined to use them up and make the most of them, but an unlimited leave policy can remove that motivation to do so.  

Such a policy may mean that some employees take full advantage of it, while others are reluctant, resulting in those that are taking fewer days off to have to manage the workload of others in their absence – which could lead to a culture of resentment and presenteeism. 

Considerations for implementation

Implementing an unlimited leave policy is not something that will work for every organisation, or every industry. If your teams are made of employees who are largely self—sufficient and manage their own workloads, then they may be in a better position to also manage their holiday allowance. As opposed to teams where their workload is more reactive and generated by external sources, i.e. customer-facing roles, sales, development or order processing. 

Another challenge will lie in the details of an unlimited leave policy. Consider how much notice you would like employees to give when requesting leave, and determine exactly what the processes should be when making a request.  

Unlimited leave does not mean ‘unlimited anytime you want’, so employees need to be aware that there are procedures in place to ensure the business can handle anyone choosing to go on leave for longer periods of time.  

Reinforcing the message that unlimited leave only works for everyone if employees are confident that they have managed their own workload ahead of being off, is also important to highlight in your policy.

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Katrina Bennett People Director at edays
Katrina
August 18, 2023

Katrina is edays' own People Director with significant UK and international experience in delivering people strategy and value-adding HR solutions across a range of organisations and sectors (including Arriva, Boots, Rolls Royce, the utility and charity sectors). Katrina has over 20 years of experience in Human Resources and is CIPD qualified.