Understanding Unlimited Vacations

Understanding Unlimited VacationsThe Latest in Career Trends

As demand for talent heats up, startups and big companies continue to make headlines for new and interesting perks. From free college tuition for employee’s kids at Boxed, to a year of paid paternity leave at Virgin, perks continue to get more creative and compelling.

One such perk that has gotten increasingly popular is the concept of unlimited vacation. There are thousands of jobs on Tapwage that offer this perk, and the list is nearly completely comprised of startups, although larger companies like General electric are getting in on the action.

So what does unlimited vacation mean?

It’s interpretation essentially sits in contrast to the fixed vacation policy of larger companies. In a company with unlimited vacation — you have greater flexibility to take paid vacation, especially for major life events like honeymoons.

It doesn’t automatically mean more vacation time in absolute days but rather, it creates an environment where employees are encouraged to take vacation, and be responsible for actively planning a vacation with business and client needs in mind, as opposed to having to deal with bureaucracy and fixed quotas in order to take vacation.

So does this mean you can take months off?

Yes and no. Essentially an unlimited vacation policy means that you can take paid vacation without being bound by strict and limiting (and often arbitrary) quotas. However, you still need to exercise judgment. People still typically take vacation commensurate with their seniority at the firm. In the US, Junior employees tend to take 1 to 2 weeks, and more senior employees take 3 to 4 weeks. This policy also encourages employees who have been with the company for a while to take longer sabbaticals from time to time.

You still need to exercise judgment and planning. Make sure that your vacation doesn’t jeopardize responsibilities to clients or to the business, and provide your boss and team with adequate advance notice. Even at companies with unlimited vacation policies, employees can still run the risk of being perceived by peers and managers as taking too much vacation.

The downside? It can sometimes mean a pay cut

In many states, you are entitled to get paid at the end of the year for any vacation not taken. An unlimited vacation policy removes the vacation liability for the company and reduces that benefit to the employee.

This policy also threatens to pose cultural issues at companies that haven’t developed an open culture compatible with such employee empowerment. It can lead to ambiguity around how much vacation is acceptable. Lopsidedness in the way vacation is taken, with some employees taking significantly more vacation than others, can breed resentment and passive aggressiveness.

Some startups found that the lack of tracking and reminders about unused vacation time resulted in employees taking less time off than used to under a fixed vacation days policy. That then resulted in burnout and increased stress and anxiety levels.

Our verdict?

The idea of unlimited vacation is a good one, especially at companies committed to building a culture of trust and empowerment. Overall, we think it’s a step in the right direction where companies, especially startups are building a culture with less human resources bureaucracy.

It can, however, create a tricky environment to navigate for a new employee. When doing diligence on whether to accept an offer from such a company, it’s good to get a sense of the typical length and frequency of vacations taken by existing employees, and make sure that it’s compatible with your needs.


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Trendy Thomas is a team of Tapwage journalists who stay abreast of the latest news and gossip from the world of business and recruiting, so you always have the latest scoop.

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