The Unexpected Truth About Unlimited Paid Holiday

Unlimited holiday. It’s the dream, right?

When we first heard about the concept, as part of Netflix’s bonus package, the team at HR and You were intrigued. ‘Wouldn’t people just go on whatever holidays they liked?’ we asked. ‘Isn’t it abused?’ Unwilling to let the concept go, we decided we’d do something a little different this week – we’d dig into another company’s HR practices, pick out how it works for them, why it works, and what you could learn for your own company.

So here’s a rundown of 3 companies, including Netflix, and what they learned from their unlimited holiday experience.

Netflix

Netflix’s approach to HR and hiring are simple, intuitive, and seem incredible on the surface; hire well, treat your employees like adults, and the issues most people run around trying to out-policy work themselves out. And when you need to let someone go, do so generously so you can find a star player for that position.

Seems simple, right? The truth is this strategy is the backbone of their paid leave policy. Because they’re selective in their hiring process and foster the right mindset amongst their employees, they can approach benefits like holidays assuming that their employees will treat the policy with the discretion and judgement it deserves.

In fact, good judgement and integrity are two of their values. They assume – if they hire someone who demonstrates good judgement in their work and acts ethically with the company’s best interests at heart – then they, as a matter of fact, simply won’t abuse the policy. In their culture document, they state it clearly; “Just because a few people abuse freedom doesn’t mean that our employees are not worthy of great trust.”

This swap didn’t come without hiccups – both for taking holiday at bad times, and not taking enough holiday. An accountant at the firm caused chaos one year when he took two weeks off during the annual accounting crunch period, causing the books to be closed late from the ensuing chaos. And on the other end of the spectrum, being surrounded by workaholics, another employee refused to take any vacation time at all…. For four years straight.

CEO Reed Hastings chalked both up to a failure of leadership and communication. To start with, he simply decided he would set the standard himself, and so he takes six weeks of paid annual leave a year, and then talks loudly about it to anyone who’d listen.

But it went further than simply bragging about the time off he was taking. Hastings pointed out that policies are simply a way to shape expectations for your employees – and in absentia, managers must talk to their employees about the expectations they have.

“When you remove a policy, employees don’t know how to operate with the absence. If you don’t tell them, ‘Take some time off,’ they won’t. Others will imagine they have complete freedom to behave in wildly inappropriate ways, like going on vacation at a time that causes pain to everyone else. In the absence of a written policy, every manager must spend time speaking to the team about what behaviours fall within the realm of the acceptable and appropriate.”

Communication, is, shockingly, another of the stated values on Netflix’s culture page. They emphasise that it must go both ways; that managers must talk to employees, and employees must talk to managers. If an employee has to take time off, it’s up to them to be transparent with their colleagues and keep them in the loop about where they are.

Likewise, if there are massive crunch periods like the accounting incident, it’s important for the manager to voice their expectations about that time. This, combined with their policy of treating people like adults, means Netflix has had very little issue with their unlimited paid time off policy.

CharlieHR

Another HR firm this time, CharlieHR chose to implement an unlimited holiday policy, stating they felt it was a gesture of trust for their employees. They eventually scrapped the idea for something else entirely, but what they learned is another fascinating glimpse into how the problems that can occur from unlimited holiday.

Much like Netflix, CharlieHR ran into multiple problems with their unlimited holiday policy, and they had many of the same problems that Netflix did. They had issues with people only taking 20 days or so off a year, which CharlieHR’s CEO admits is not enough to refresh yourself and end up at the top of your game. The issue, he continues, is that it has a counter-intuitive effect on people’s willingness to take time off.

Telling an employee they have 5.6 weeks of time off a year will encourage them to take all 5.6 weeks because they feel like it’s their time off to take. But unlimited holiday doesn’t feel concrete.

Another problem is they felt like it took away an important handrail that helped define acceptable and unacceptable behaviour. The result was that people shied away from taking time off out of fear of looking like they were “taking the mick”, and people were not being refreshed in the way they should have done if they were given a fixed number to shoot for.

And conversely, people who had to deny time off for business reasons felt like they were groundless to deny the time and personalise what should have been a very impersonal problem; ‘It wasn’t just “ah, sadly you can’t go away on that date”. Instead, it became “No. And I don’t trust your decision-making on this”’ wrote the CEO.

They also discussed how it felt unfair to others in the company when someone took a lot of time off – it would then be left to the people at the office to pick up the slack. Just like the accountant at Netflix, they felt it was unfair to people who were taking less time off to pick up the slack left behind by others on the team.

Deciding their team and workplace didn’t work with that sort of arrangement, CharlieHR eventually decided to scrap their unlimited holiday policy and replace it with a minimum cap arrangement. Essentially, everyone would have to take a minimum amount of time off, but more time was available if needed. So far, they seem happier with that arrangement.

Buffer

Buffer is perhaps one of the most generous about it’s time off, and it appears to be paying off for them. It has multiple types of paid days off, and their unlimited holiday days are just the start.

To start with, they have a minimum cap like CharlieHR of three weeks (Buffer is US based, where they get no paid time off as a matter of law, but they also make note to take time off as recommended by local laws to their global team.) Much like CharlieHR, they found people were taking too little time off with a standard unlimited holiday policy.

They also perform quarterly check-ins to make sure employees are actually taking the time off they deserve. This is not inclusive of but in addition to public holidays and religious holidays.

Those public holidays, by the way? Are booked off automatically without any input from the employee. So they don’t have to book, ask for, or justify their desire to be off on public holidays or bank holidays. More recently, they take ‘Buffer holidays’ – twice a year, they close the office completely, allowing employees to disconnect without having to catch up on their return.

This is in addition to a six-week break every five years. Yes, that’s right – after five years working at Buffer, they provide a six-week paid sabbatical. And for every year you put off having a sabbatical, they add more time to the clock when you do take it (up to 12 weeks).

Oh, did I mention I’m not done? Buffer is also incredibly flexible with its sick leave, provides generous general ‘family leave’ (allowing fathers up to 12 week paternity, whilst here in the UK, the law requires only 2 weeks), and an ‘Un-sickness Day’ to take care of preventative care – annual physicals, dental work, vision care, whatever preventative care is needed.

Conclusion? We were wrong.

The more we looked into the matter, the more we realised we were wrong about our assumptions. Unlimited holiday, generally, was not abused – it was in fact under-utilised.  Buffer and CharlieHR decided to tackle it with a policy shift, putting a minimum cap on the amount of holiday an employee had to take in a year. Buffer also built into its policy a great deal of detail about how exactly their employees should use their vacation time.

Netflix and Buffer also attempted to lead by example, making sure their employees saw superiors taking time for themselves. Buffer seems happiest overall with their time off policy, which indicates to us that a mix of cultural and policy shifts are required to make unlimited holiday work.

All three companies emphasised that their decisions were motivated by care for their employees and trust. They all implemented unlimited holiday policies because they cared about their employees and felt they could so because they trusted their employees to take control of the company for themselves.

They also all cited having a strong, sensible leadership system as being part of the solution – that implementing the policy wasn’t enough, and the executive team had to be proactive in promoting the policy across the company.

And all three companies point to the value of rest as the reason they kept their unlimited holiday policies in the long run, as we discussed in our last post about holidays. Well-rested employees were healthier, happier, and more productive, and that led to increased revenue and a much healthier company.

What do you think?

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Here to Help

Having read our conclusions, maybe you’ve decided you’d like to implement a paid unlimited holiday policy into your business? Good news; HR and You have those policies available for you to use and implement within your own business.

We are here to provide full advice, support, and guidance. We can advise in any HR or Employment Law matter: you can contact a member of our team on 0333 006 9489 or [email protected]

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