In an age when work-life balance is synonymous with healthy company culture, flexible vacation policies have become a standard for the enlightened workplace. Many employers are now offering unstructured, unlimited time off.
But the bliss of limitless vacations may be just as fantastical as it sounds. In reality, these programs can actually discourage employees from taking time off, says Stacy Glass, senior consultant with HR Options. “Unlimited vacation policies, for the most part, are just bad,” she says. “If you’re looking to avoid burnout, they’re aren’t very effective.”
With no clear guidelines on when to go on holiday and for how long, employees tend to take their cues from what their co-workers are doing. “There can be a stigma around taking too much time off,” says Glass. While the assumed risk with these policies is that staff will never show up to work, the opposite tends to be true, she says. Employees feel pressure to prove their dedication to their work and they’re not slacking off on a beach somewhere.
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Meanwhile, the nature of companies that tend to offer such policies — many of which are fast-growing startups — simply isn’t conducive to taking lots of vacation. “In companies who implement unlimited vacation, the employees are generally overworked,” says Glass. “It looks like this awesome perk, but really, none of [the employees are] to take the length of vacation they want.”
And if employees aren’t taking their vacation, the company ends up paying for it. In Canada, legislation sets vacation pay at about four to six per cent of annual salary, depending on seniority and the province or territory. Even with traditional policies, Canadians rarely take full advantage of the vacation they’ve earned. According to a TD study, only 43 per cent of Canadian workers took all of their vacation days in 2013. (That’s despite Canada’s ranking as third last among industrialized countries for the number of paid vacation days allotted to workers).
“If employees are taking less than their two or three weeks, then you’re on the hook for that vacation time,” says Glass. “That can get messy.”
Ontario construction company EllisDon ran into this problem when an employee billed the company for four unused holiday weeks upon his departure. “He was lying,” wrote president and chief executive officer Geoff Smith on the company’s blog. “He had taken plenty of time off, and everyone knew it. But because he hadn’t called head office and recorded [the vacations], the computer showed he hadn’t taken them.”
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To avoid administrative nightmares like the EllisDon example, Glass suggests carefully tracking vacation time as part of unlimited policies. “It needs to be clear to employees how they request vacation,” she says. “And you need to be monitoring to make sure people are taking at least the minimum allotted time, then reminding employees if they haven’t been taking enough.”
Even with careful tracking, unlimited vacation policies can be hard to roll out in a way that’s equitable. “There’s no way you can have a policy where you take vacation whenever you want, however long you want,” says Glass. “You’ll always have one guy who get two months off when another guy was denied the same two months off.” To make flexible holiday policies work, Glass says management teams should define at what point employees can take vacation, including how much they can take after how much time worked.
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Miovision, a Kitchener, Ont., startup whose software platform adjusts traffic-light timing in real time, relies on employees to use its unlimited vacation policy responsibly. “If you trust your staff, you get a much better outcome — a better cultural dynamic, better retention, better engagement — than when you protect yourself from the few people taking too much vacation,” says chief executive officer Kurtis McBride. “If I don’t trust you, you shouldn’t work for Miovision. If I do trust you [and] if you think you need six or eight weeks vacation, who am I to tell you you don’t?”
But Mivision did face the opposite problem. Before it implemented a more structured policy this year, some employees weren’t taking enough time off. “The subtext of our policy is a minimum vacation policy,” says McBride. Staff must now take at least three weeks off. And what’s the penalty for not following company policy? “HR has threatened to shut off your key fob access to the building if you haven’t taken enough vacation by the end of the year,” says McBride. So far, he’s the only employee to face that consequence.
This article originally appeared on Benefits Canada‘s companion site, PROFITguide.com.