Unlimited Vacation: Good or Bad for American Workers?

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eHow Money Blog

Family by carRichard Branson recently announced that Virgin American employees will be offered unlimited vacation time without waiting to accrue the time or seek manager approval. Virgin joins the ranks of other American companies, including Best Buy, Evernote and Netflix, offering similar policies.

It sounds good on paper, especially to those who hate punching a clock and putting in face time whether they have actual work to complete or not. But without a concrete policy, some experts worry that employees may take less vacation than before. The United States doesn’t require employers to offer any paid time off, in contrast to most other developed countries around the world. On average, American workers receive 14 vacation days per year but use only 10 of them, according to the Expedia 2013 Vacation Deprivation Study.

That’s how much vacation time Americans take on average, but what happens at companies that offer unlimited time off? How much time off do employees actually take?

Perhaps these policies are too new or too much of a niche concept for a large-scale survey (the Society for Human Resource Management reports that only 1 percent of companies offer this benefit), but I did find anecdotal answers on Quora. Responses varied from about one week to as many as eight weeks (with some connectivity during that time). Some point out that the length of service and the level of position also seemed to play a role in the amount of vacation time employees take under an unlimited policy.

Here are a few potential downsides of unlimited vacation policies for employees:

No accrued leave when you quit a job. At many companies, if you’ve accrued paid time off that you haven’t yet taken at the time you leave a company, you’ll get that time added to your final paycheck. Some companies encourage employees to take at least some time away by limiting the number of vacation days they can carry over from year to year. I collected a nice windfall when I left my first full-time job because scheduling rules made it difficult to take time off. Without an official policy on accrued vacation, employers don’t owe departing employees this extra cash.

Fear of missing work. In an effort to prevent burnout, some companies have policies requiring full-time employees to take a certain number of days off or forfeit that paid time off. With the opposite anything-goes approach, workers may worry they’ll miss out on a promotion or get dinged in a performance evaluation if they spend too much time away. Without an official policy, they may overcompensate by not taking much time off because they fear violating unofficial rules. The few companies that do offer unlimited vacation time tend to be tech companies with an entrepreneurial bent, where employees already feel pressure to work long hours. Of course, letting workers at a manufacturing plant or a dentist’s office take vacation whenever they want wouldn’t make for smooth business, so unlimited vacation makes more sense for tech companies.

Expectation to be always “on.” When the mandate is “Get your work done” rather than “Be in the office this much time,” employees who do take vacations may feel pressure to answer email or do work from wherever they are in the world, which isn’t as restful as actually unplugging. Sure, they may get to spend a couple of days on the beach, but with constant email and phone calls, they may feel no more relaxed and rejuvenated than before they left.

Photo credit: Getty Creative

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