Unlimited Vacation Policy: Let employees decide when they need a break

About 3 percent of the companies in United States maintain some form of an unlimited vacation policy. This is cited by an interesting survey conducted by the Society of Human Resource Management.

The reasons for adopting an unlimited vacation policy is to offer flexibility and work life balance, while empowering employees with the responsibility of balancing their time off and thus relieving the company of administering a vacation or Paid Time-Off  (PTO) policy.

The unlimited vacation policy trend is soon seeping roots into HR management decisions and there are various considerations that companies take into account before plunging in. These include:

• Best fit for Appropriate Workforce and Workplace Culture

Companies that already provide employees with flexible hours and autonomy can provide unlimited vacation policies. However, if your organisation has large non-exempt employees, then a blanket unlimited vacation policy will not be the best workplace culture fit.

Non-exempt employees typically hold a more structured schedule and do not enjoy flexible working; hence employers in such cases are required to track their man hours regularly. Perhaps an unlimited vacation policy can be applied to just a small group of employees within an organization (such as those from the higher level management or senior executives).

At the end of it all, employees who are responsible for delivering bottom line performance do understand that the amount of man hours put in and efficiency at work matters. These are candidates who can eligible for an unlimited vacation policy.

See: Fixing the Workplace Culture for Our Own Good

• Consideration of Paid Leaves as per Law

Different states in United States are governed by federal laws that help determine if an employee gets paid during vacation or not. In certain cases, employers pay out unused or accrued vacation time considering it as earned compensation, which employees should not be deprived of.

In most cases, the employee handbook dictates if an employee gets paid for unused vacation or PTO upon departure. Hence organisations need to have a clear written policy regards paid leave and inconsistent practices need to be brought to employer attention.

In certain states, where there is a mandate of payout of accrued vacation time, unlimited vacation time may be considered as an attempt to circumvent mandatory payouts. While there is little guidance on the unlimited vacation policies and payout laws, courts conceivably deem certain amount of vacation time as earned in most cases.

• Administration and Implementation Challenges

While unlimited vacation policy might seem simple to administer, the actual challenge comes to fore during the implementation processes. For example, an employee must obtain supervisor’s approval before scheduling a vacation and ensure that this application is fair and consistent with the organisation norms. In case of perceived unfairness, the organisation can be held liable for discriminatory claims.

• Decide On How to Treat Earned Vacation Leaves

If your organisation decides to have an unlimited vacation policy, which can be implemented for flexi workers, then the most crucial answers lies in how to treat, manage and administer paid leaves for employees on vacation.

You can either decide to pay out the unused leaves, or allow an employee some time to use up their remaining vacation days. Organisations can also maintain a track record of unused leaves earned by an employee to calculation remuneration during termination of services.

Managers need to be trained to govern employees for fair approval of vacation leaves such as to avoid favouritism or unfairness at work. Unlimited vacation policy can prove to be a motivating factor for employees to get back on floor much re-energised after a period; however it’s only on employer’s judicious decision making capabilities, if such policies can be implemented as an organisational fit.

This program is worth consideration and appropriate for a workforce, only if potential drawbacks, account benefits and associated legal risks are given second thoughts before implementation of an unlimited vacation policy.

Also read: HR Best Practices Block Innovation at Workplaces

Image credits: flickr.com