Does an unlimited holiday policy equal an unlimited headache?

Sir Richard Branson has proposed an unlimited holiday policy for Virgin head office staff in the UK and US. REX/Isopix
Sir Richard Branson has proposed an unlimited holiday policy for Virgin head office staff in the UK and US. Photo: REX/Isopix

Despite the fanfare about flexible working and trusting people to produce results on their own terms, how organisations dole out annual leave is still, arguably, a formal and traditional affair. Jo Faragher looks at the idea of an unlimited holiday policy.

Virgin boss Sir Richard Branson announced in a blog this week that all employees at Virgin’s parent company in the UK and US will be able to take as much holiday as they want, whenever they want.

“Flexible working has revolutionised how, where and when we all do our jobs,” he says. “So, if working nine to five no longer applies, then why should strict annual leave policies?”

Sir Richard got the idea from his daughter, who had read an article about streaming media service Netflix, which has been operating an unlimited holiday policy since 2010.

Unlimited holiday

At Netflix, salaried staff can take time off for as long as they want whenever they like, and their holidays are never tracked. Employees drove this shift in policy, questioning how, if they were supposed to be constantly connected to the business through email and smart phones, this reconciled with a strict annual leave policy.

But how does unlimited annual leave not turn into a holiday free-for-all, leaving deadlines missed and clients unhappy? In Netflix’s employee handbook, known as the “Reference guide on our freedom and responsibility culture”, it states that: “We should focus on what people get done, not on how many hours or days worked.”

Gareth Jones, chief alchemist at talent consultancy Chemistry Group, says that giving employees this level of freedom would only likely work in a business where the culture is already collaborative and output-focused, and where there are high levels of trust in staff.

Personal responsiblity

“It’s about personal responsibility. If you’re not counting, people will only take the days they need, and it’s up to them to think about the impact of their decision on their work and colleagues,” he says.

Branson does provide a caveat to his unlimited holiday policy or “non-policy”; that it must only be “when they feel a 100% comfortable that they and their team are up to date on every project, and that their absence will not in any way damage the business”. Employees are also encouraged to consider the impact on their career.

Many employers already offer the opportunity to buy and sell holiday as part of their reward package – where workers who feel they need more time off can sacrifice some of their salary to do so.

However, this is still subject to stringent rules, such as the period in which this can be done and how much can be bought and sold, plus the fact that a manager can always turn down a request.

If it is a work environment where they feel they cannot go on holiday, having no leave requirement could be a problem’ – Beth Hale

From a legal perspective, there is no statutory requirement to keep a record of holidays taken, but companies are obliged to permit staff to take a statutory minimum of 28 days, including public holidays, under the Working Time Regulations.

However, with no record, it could be difficult to ensure employers are abiding by their obligations under these regulations, says Donna Martin, an employment solicitor at Mackrell Turner Garrett: “Legal implications aside, from a practical point of view, if there is no requirement to provide notice of intended leave it will be almost impossible to ensure that adequate cover is in place unless some sort of policy is included in the ‘non policy’.”

Beth Hale, senior associate at law firm Stephenson Harwood, warns that there could be a risk that certain employees would take less than their entitlement if they feel under pressure to stay in work, which could lead to employers being in breach of their obligations: “If it’s a work environment where they feel they can’t go on holiday, having no leave requirement could be a problem. It also causes complications when calculating accrued holiday while on sick leave and maternity leave.”

But Adam Hale, CEO of HR and technology consultancy Fairsail, says that as employers embrace increasingly non-routine ways of working, and teams are increasingly more dispersed and some work remotely, formal constraints on holiday are becoming outdated: “If you are a fair employer, you will be using outcome-based performance management metrics to manage your workforce, and from their point of view, it is not when you work, but how efficiently and effectively you get stuff done.”

Those in favour of trusting staff to take holiday as and when they see fit argue that the returns in terms of engagement make any of the risks worthwhile.

Lucy Beaumont, solutions director at assessment company Talent Q, says that shifting the emphasis onto completing tasks rather than physical hours worked is great for engagement, but it may not be for everyone. “The only really effective way to tackle engagement is to understand what drives each individual employee to perform at work,” she says.

An unlimited holiday policy sounds like a dream workplace perk on the surface, but giving employees such freedom could have both positive and negative implications.

One Response to Does an unlimited holiday policy equal an unlimited headache?

  1. N P Postlethwaite 13 Dec 2014 at 6:56 pm #

    A limited holiday policy is almost certainly limited to some employers who have more flexibility in terms of filling in the gaps of skills shortages caused by holidaying individuals – unlimited holidays could never work in manufacturing or perhaps sales companies . Employees who do have unlimited holidays will certainly be happier as they are able to fully recharge their batteries, they will have a great work/life balance and feel trusted by their employer that allows them to take time off when they want. It is a fantastic recruitment tool. But, in reality it may be hard to ensure an unlimited holiday policy is fair to all employees, as everyone cannot be on holiday at the same time, and some employees may be left picking up the pieces when their colleagues are off if the unlimited holiday policy isn’t managed fairly by strong managers