Unlimited leave = unlimited productivity?

02 October 2014

‘We should focus on what people get done, not on how many hours or days worked. Just as we don’t have a nine-to-five policy, we don’t need a vacation policy.’


Those are the words of Netflix in its Reference Guide on our Freedom and Responsibility Culture.  This idea has now spread to Virgin, where Richard Branson has introduced a policy whereby all salaried staff may take holiday whenever they want for as long as they want.  They do not need to ask for prior approval and neither they nor their managers are required to keep track of their days away from the office.  As Branson has commented however, employees should only take time off when they feel 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 or their careers.

Since we live and work in an age where technology ensures we are accessible at all times, we now work longer and harder than ever.  Work is no longer restricted to the office and employees are often far exceeding the working hours stipulated in their employment contracts.  In this context, the traditionally strict policy on annual leave seems outdated and incongruous with modern day demand for flexible working.

This idea isn't new.  In the US unlimited leave has become increasingly prominent recently.  Evernote, a software start-up based in California, is one of many companies who have offered unlimited paid vacation for several years.  Especially around Silicon Valley, employers have picked up on this policy as a means of attracting and retaining talented people.

It is a powerful recruitment perk, especially for Generation Y (broadly defined as those born in the 1980s and 1990s).  This younger generation bring fresh skills to the workplace: they are more tech-savvy; they are often more racially diverse, socially interconnected and collaborative; and the dynamic social climate they have grown up in means they demand greater responsibilities, faster promotions and more flexible work schedules.  Employers have to accommodate these demands to ensure they have the best workforce in the future (much to the understandable annoyance of older co-workers who feel they have spent years paying their dues to rise through the ranks).

But unlimited leave is more than a recruitment perk.  It aims to lower employee stress and reduce turnover of staff, which are often consequences of working in a high pressured environment – and far more disruptive to a business than the occasional week's holiday.  This notion is central to a management philosophy known as Results-Only Work Environment, in which workers are evaluated on the basis of their output instead of how many hours they clock at the office.

It is no surprise that long hours and zero holiday results in people becoming ill, working to lower productivity levels and experiencing family tension as a result of work becoming the main priority.  It is also not a surprise that this self-destructive way of working became prevalent during the recession, where the unstable job market made employees feel as though they had to work long hours, put in face time and appear 100% committed.  Cary Cooper, Professor of Organisational Psychology and Health at Lancaster University, commented in 2012 that "workers today are suffering from presenteeism".  The problem, ironically, is that the more you work the less you get done.

Of course, unlimited leave may well not be appropriate or even positive in some corporate environments.  In commission-based jobs, unlimited leave simply limits earning potential, and the methods of calculating holiday pay will create a whole host of other problems for employers and employees alike.  More broadly, once you remove a structured system of holiday it can actually make it harder for employees to admit they need a break and request annual leave.  This is a very real concern: several US companies have reported that upon introducing unlimited leave the instances of employees taking holiday actually lessened.

To try and counter this, Evernote decided to write $1,000 cheques for anyone who took a week-long trip as long as they provided evidence of an airline ticket and reported back to their colleagues about their holiday.  The company truly believed that their staff performed better having travelled away, making them ultimately more useful to the company. 

Another US company, FullContact, went one step further and began offering their staff $7,500 per year to take their family away for a real break.  Their chief executive emphasised the importance of properly resting, disconnecting from technology and not working whilst on holiday.  As with Evernote, he commented that the staff came back more refreshed.  This is hardly surprising, and is already firmly established in EU law: the purpose behind the provisions for paid holiday, as set out in the Working Time Directive, is to protect and uphold high standards of health and safety in the workplace.  A workforce that is overworked and overtired is potentially a very dangerous one.

Unlimited leave also encourages employees to ditch the "hero mentality" that no one else can do their job but them.  There is no point hoarding knowledge and massaging the importance of your own role.  Instead, if all employees focus on documenting things, sharing knowledge and having a back-up plan, their team should perform more efficiently and this will ultimately benefit the whole organisation.

With the apparent benefits come possible detriments.  Unlimited and potentially sporadic leave places more pressure on employees to ensure work is looked after in their absence.  Teamwork will need to be seamless, and trust between team members will be tested if work is to be handed over more regularly.  Employees will need to ensure clients are aware of any absences and are not disadvantaged or irritated by any lack of continuity.

Fundamentally, the 'honour system' of unlimited leave gives employees more responsibility for their time and demonstrates the trust their employers place in them.  If staff fail to handle that responsibility, this trust may be lost, but if they manage that responsibility well, unlimited leave could be a successful policy.  It allows employees to take leave when they need it and plan it strategically around their workload.  It allows those who are planning a wedding, are renovating a new house or who have saved for a long time to go on their dream holiday to harmonise their career and their personal life, accepting that there will be years where one will take precedence over the other. 

Whilst this concept has undoubtedly taken off in Silicon Valley, it remains to be seen whether more UK companies will follow in Richard Branson's footsteps: to encourage their employees to be motivated by the work they need to get done rather than the hours they have to spend at the office.

Katie Barnett

Image attribution: https://creativecommons.org/licenses/by/2.0/