The challenge of unlimited holiday allowance

In a world where jobseekers increasingly value perks over salary, it's easy to see why an unlimited holiday allowance is so appealing.

Once relatively unheard of, this perk is fast gaining the attention of savvy CEOs. In fact, lots of companies have jumped on the bandwagon, from Netflix and LinkedIn across the pond, to the Virgin Group over here in the UK. But is an unlimited holiday allowance a golden ticket to endless fun in the sun at an employer's expense, or is there more to it than meets the eye?

From an employee's point of view, unlimited holiday allowance is the ultimate perk. Allowing staff the freedom and flexibility to take time off as they please certainly gives a job role the edge over its rivals. If staff can work and play when they want, this can make them happier and more productive. This helps achieve that all-important work-life balance. But how well do these benefits actually translate into reality?

What are the challenges of unlimited holiday allowance?

1. It's hard to implement

Putting an unlimited holiday allowance policy in place is actually harder than it seems. In some job roles, it just won't work. But if you only offer it to some staff, those not on the scheme can feel bitter and undervalued. Plus, if you've previously used extra holiday time as a staff reward, this won't work anymore.

From a practical point of view, if staff are away on extended jollies, what happens if work suddenly gets busy? If you need to call workers back to duty, will they be happy? And is this even reasonable?

In reality, the policy has quite limited scope. Small businesses may struggle to keep afloat and grow if they can't cover staff absenteeism. Of the 1% of employers who offer the perk, most are large, well-established brands.

2. It leads to staff taking fewer holidays

Rather than taking more time off work, several studies have found that staff often end up taking less time away. Why? Since an unlimited holiday allowance is open and flexible, staff can feel uncomfortable about deciding how much time they should actually take off - so they don't bother. On the other hand, with fixed paid leave, you know exactly how many days you're entitled to. And you're more likely to take them.

3. It's open to abuse

An open ticket to holiday when you want can create tension and mistrust in the workplace. Some employees may abuse the system, leaving more restrained colleagues to pick up the slack at work. Unequal holiday taking may eventually force conscientious workers to quit their jobs. Plus, it can cause staffing and work output headaches for managers. If this policy is going to work well, bosses might have to monitor the number of days taken.

4. Guilty feelings

On the flip side, with unlimited holidays, staff may feel guilty for taking the time off which they're entitled to. This could result in colleague rivalry over who has taken the fewest days off.

5. It's not actually unlimited is it - 365 days off?

In reality, there's a limit to the unlimited element of this policy. Most people won't have the time or money to take endless holidays. After all, can you really expect to return to a job if you've spent more time holidaying than working? And what about those returning from maternity leave or long-term sick leave? Can they just jet off as soon as they return to work? Those firms that already use this scheme are mainly tech brands operating in demanding environments, so taking frequent, lengthy holidays isn't likely.

6. Uneven work-life balance

The idea of unlimited holiday allowance is to improve employee work-life balance. Used appropriately, it's easy to see how having time off when you want or need it can achieve this harmony. But what happens if you take an extended holiday? You could end up paying the price when you return to the office, having to work day and night to catch up. If you get into a habit of holidaying this way, your work-life balance will become out of kilter and could lead to burnout.

7. Entitlements

An unlimited holiday allowance isn't always a win-win situation for staff. With fixed holiday entitlement, you get paid for days not taken, or they're accrued for the following year. This won't happen with an unlimited holiday allowance - and it's the employer who benefits financially.

Currently, UK staff are legally entitled to a minimum of 28 days annual leave. If firms switch to an unlimited holiday allowance scheme, the legalities aren't clear in those situations where staff don't take their minimum entitlement.

While there are certainly challenges to an unlimited holiday allowance scheme, businesses shouldn't necessarily rule it out. If you decide to go down this route, set some boundaries and remove any guesswork. Make it fair. Test the water first and consider adding some limits or restrictions to your policy.