What is unlimited holiday allowance?

The concept of ‘unlimited annual leave’ (or ‘unlimited PTO’ as it’s known in the US) has grown in popularity in recent years.

One of the first major uses was all the way back in 2003 by none other than Netflix, and, since then, it’s spread out to the point that some companies in the UK have started offering it, too. 

An unlimited holiday policy basically means you can take as many paid holidays as you want - you’ve just gotta make sure you're still getting enough work done between these days off!

If done well, there’s some pretty solid reasoning behind an unlimited paid holiday policy. It can increase staff productivity, morale, and motivation, and of course, it's not bad from the employees' perspective, either. 

So why isn't everybody offering it?

Which companies offer unlimited annual leave?

US employers still offer unlimited holidays more widely, usually at snazzier startups and tech companies. Think of the big players like Netflix, Kickstarter, and LinkedIn, they're all well-known for dishing out unlimited time off. Interestingly, the recruitment site Glassdoor offers unlimited holidays to its US staff, but not its UK staff.

Gradually, though, it’s definitely starting to spread here in the UK, too. We're seeing more and more companies, particularly those that are primarily online businesses, starting to offer this perk. We’re talking names like Dropbox, Songkick, and Eventbrite. 

And it’s not just online businesses: a few major multinational corporations like Honeywell are starting to dip their toes into unlimited holidays as well.

It seems to work really well in places where company goals are super clear and everyone knows what they need to do. If everyone on the team is good at their job and knows what's expected, then having unlimited time off can actually make them want to work harder. A work hard, play hard situation.

They'll be keen to finish their work so they can properly enjoy their time off without any worries. We see this with companies like LinkedIn and Netflix – it's clearly working for them, and their employees must be pretty happy about it.

However, it does require a particular kind of company culture to flourish, if only because such an unrestricted policy will always be open to abuse and misuse.

Why do companies offer unlimited holidays?

So we’ve seen a couple of companies that offer unlimited holidays, but the big question is, why do they offer them in the first place? Especially in the UK, where there’s already a legally enforced minimum time off. 

Well, unlimited holidays can be an attractive bonus for prospective employees, and the policy makes a lot of sense in many ways. Why should it matter how many days you're in the office if all your work gets done? It's like saying, "Hey, you're grownups. You know what needs doing. You figure out the best way to get it done and recharge when you need to.” 

Unlimited holidays allow you and your team to take charge of your schedules.

They’re also a fantastic way to give a little something back to your team for all their hard work. Not only that, but it’s been found that the system can help to increase productivity. Unlimited annual leave policies are a brilliant motivator to get your work sorted so you can enjoy the time off you deserve. 

What are the benefits of unlimited annual leave for your team?

What's in it for your employees when you offer unlimited holidays? Here are a few of the benefits that unlimited time off can bring for your team: 

• Perfecting work-life balance: This is a big one. Unlimited holiday gives people the freedom to take time off when they actually need it, not just when their limited allowance allows. This can make a massive difference in balancing work with family life, personal appointments, or just those days when you need a mental health break.
• Reducing stress: Knowing you can take time off when you’re feeling overwhelmed or burnt out can significantly reduce stress levels. It removes the pressure of "saving" a few leave days for a just-in-case scenario.
• It shows you trust them: Offering unlimited holiday sends a powerful message to your employees: "We trust you." Giving them the autonomy to manage their time off can increase job satisfaction and bring a stronger sense of ownership over their work.
• Potentially better overall health: When people can take time off to properly recover from illness or simply de-stress, it can lead to better physical and mental health in the long run. They get more time for genuine recovery without feeling bad about wasting leave days.
• A feeling of being valued: Offering unlimited annual leave shows that a company values its employees' wellbeing and trusts their judgment. That feeling of being valued can boost loyalty and engagement.
• More meaningful time off: When people have more flexibility, they can take time off for things that are truly important to them – whether it's a big family event, pursuing a hobby, or extended travel. This leads to more fulfilling and rejuvenating breaks.

What is the downside of an unlimited holiday policy?

We've just looked at all the shiny, happy things about unlimited holiday. But, like with most things in life, it's not always a walk in the park. This kind of holiday setup doesn’t work with every company. And the whole "unlimited" bit isn't really as clear-cut as it sounds.

We've talked before about some of the challenges of unlimited holiday allowance, and a lot of them boil down to the elephant in the room: it's not really unlimited, is it?

The downside of unlimited annual leave for businesses 

Let's think about this from the company's side first. While "unlimited" sounds fantastic on paper, it can bring a few headaches for the business:

• It’s never really “unlimited”: Nobody can take every day off work. If you could, there'd rightfully be questions about why you're employed in the first place. So unlimited holidays are actually limited, but instead of a set number of days, those limits are more about things like getting your work done, your team's schedule, or other important business needs. The trouble is, these limits aren't always super clear. Goalposts can move, times can change, and unexpected issues can crop up, leading to confusion when it comes to planning.
• The potential for things to go wrong: Unfortunately, a system that's so open to interpretation can sometimes, in the wrong environment, be open to misuse. While most people are responsible, there's always the possibility of some taking more time off than is really fair to the rest of the team.
• Uneven workloads and grumpy teams: If some people take a lot of time off, those still at work have to pick up the extra slack. This can lead to uneven workloads, stress, and, understandably, some grumpy faces around the office.
• Planning can become a nightmare: Without a clear limit on time off, figuring out who's going to be around and when can make planning projects, meetings, and general day-to-day operations a guessing game. Unless you’re using a solid staff holiday booking system, of course.

The downside of unlimited annual leave for employees

Now, let's flip the coin and think about how unlimited holidays can cause problems for your employees:

• How much is too much: Because the limit isn't a clear number, many people end up feeling uncertain about how much time off they should take. They might worry about looking uncommitted or lazy if they take "too much". It's ironic, but sometimes with unlimited holidays, people end up taking less time off than they would with a fixed allowance! We've seen this happen in the UK, where some people with unlimited leave only take 21-22 days a year, even though the standard is often 28 days of paid leave.
• The guilt trip: Even when they do take time off, the lack of a set number can sometimes lead to a nagging feeling of guilt. Are they letting the team down? Should they be checking emails? That's not exactly the recipe for a relaxing holiday, is it? Not only that, but you can’t just take time off unexpectedly. It has to go through an approval process. And if your manager decides you can’t take that time off, then there’s not a lot you can do. 
• What happened to work-life balance? If someone decides to take a longer break, they're often pressured to work incredibly long and late hours before they go. And when they get back, they’re asked to make up for the time they were off. This can lead to an even more unhealthy work-life balance in the long run. That’s the exact opposite of what time off is supposed to achieve!
• More stress, not less: Whilst the idea of unlimited choice sounds great, for some people, having a set number of holiday days actually makes things easier. It provides a clear framework for planning their year, taking away all that stress and decision making about how much time is okay to take.

So, as you can see, while unlimited holiday has its shiny upsides, it definitely comes with challenges for both the business and the people working there. It's a system that needs a really specific kind of environment to truly thrive and benefit everyone involved.

How many days off should you take each year?

In the UK, if you work full time, you're entitled to 28 days of paid annual leave per year by law.  We’ve already discussed the benefits that come from the right amount of time off. So make sure you’re taking advantage of it, and sort out those much needed and well-deserved getaways!

If you're thinking of booking some time off work to give yourself a break, a study from 2012 done in the Netherlands found that eight days is the ideal holiday length. Health and wellbeing peaked on the eighth day, when participants took time off work.

Of course, everyone's different, and the perfect holiday length for you might be totally different to someone else. The main thing is, it's an excellent idea to make the most of your paid holidays every year. Remember, they're yours to use and enjoy! Don't let them go to waste – your future self will thank you for it.

Making time off management easy

So, we’ve taken a good look at the world of unlimited holiday – the shiny upsides, the not-so-shiny downsides - and even chatted about how much time off we should all aim for each year. 

The big takeaway from all of this? No matter what kind of annual leave policy your company has in place, managing it well is key to keeping your team happy, productive, and feeling valued.

Trying to juggle all those requests, figure out who's off when, and make sure everything's fair can feel like a full-time job in itself, especially as your team grows. And that's where having an excellent system in place can make a world of difference.

If you're looking to take the headache out of managing employee time off requests and keep it all running smoothly, then check out our holiday management software! It’s designed to make the whole process simple and straightforward. 

Timetastic helps you keep track of everything all in one place, which not only makes it easy for your team to request time off, but also gives you a clear overview of who's around, or not.

And since you’re here, why not have a FREE 30-day trial, on us! Start using Timetastic today to see how we can help make everything to do with managing staff holidays easier for you.