Your Finance Team

Creating a Vacation Policy For Use, Not Abuse


The vacation policy has gone from a once stringent set of rules and tracking to being a benefit used to lure in new talent when recruiting. Companies tout unlimited vacation policies as a major perk and in many communities, like startups, it’s just considered the “norm.” The “use it or lose it” policy of the past is more often being replaced by an unlimited vacation plan, but is that really the answer to the perfect vacation policy?

There are a few things you should take into consideration when creating your vacation policy, and not all of them circle around how much time off employees get. We’re covering the elusive unlimited vacation plan as well as alternatives and other things to consider.

Pro’s and Con’s of an Unlimited Vacation Policy

Unlimited vacation policies sound very appealing to employees. The idea of complete freedom to take the time that you need promotes a good company culture with work-life balance. It also shows that you put trust in your employees to do what is right and not abuse the system.

At first glance, it seems that an unlimited vacation policy is a must – you need it to be relevant and compete for the best talent. But in reality, it does have some downsides. Unlimited vacation opens the doors to grey areas, making it easy to abuse without even realizing it. Employees often stop paying attention to exactly how much time they are taking off and the time out of the office adds up and can trickle down through the team as negativity. The other downside of unlimited is that it can make employees feel guilty about taking time off, especially if you rely on the “I don’t care as long as your work gets done” way of thinking. This is frequently more common in employees with large workloads – they tend to feel bad about leaving work undone and don’t get their much needed R&R.

Alternatives & Modifications to Unlimited Vacation

There are a few other ways to tackle vacation policies outside of unlimited vacation without reverting back to a strict limit.

  1. Consider requiring time off. Go the other direction and instead of telling people what they can take, tell them what they are required to take. This promotes the same work-life balance and alleviates some of the guilt associated with taking time off.
  2. Use a large limit. Go back to putting a ceiling on the time off, but make it a large one – like 6 weeks. This way there is an idea of having earned the time off without implementing the worry of running out of time if it’s needed.
  3. Create an open or transparent policy. This one is good for teams that don’t have the guilt of taking time off, but rather fall into the grey area of abusing an unlimited plan. Create a PTO Slack channel or company calendar where team members need to announce their time off to everyone.

Communicating & Requesting Time Off

No matter what type of policy you decide to implement, like most processes and policies, the more you communicate, the better the end results. This should come from both sides.

Be sure to communicate with your team what you expect of them when taking time off. Who should they notify? Should they post it anywhere? Make sure they know if they need to find coverage for their workload, use an out of office email responder, and who they should direct questions to in their absence.

Employees should also clearly communicate with their manager what they are working on, any due dates or deadlines, what questions might come up while they are gone, and any team members that are expecting work from them. This will help eliminate surprises and keep work flowing.

Company Holidays

As companies are starting to grow, an oft forgotten communication is what days the company is closed. Communicate these with your team and plan specific days to close the company. It might even be a random holiday that your company celebrates. By telling people ahead of time or having it clearly marked on a company calendar, you give people the chance to plan ahead so they can do something fun with the time and then come back feeling charged up. This also shows that you really do believe in work-life balance because you want your employees to take time for themselves.

Be In the Moment

The reason that unlimited vacation policies gained in popularity is because it was an indicator to employees that companies really cared about them and their personal life. So all in all, it’s not really about the unlimited part – it really boils down to appreciating the balance between work and personal life. Whatever policy you go with, this should be the goal. But add on to it with smaller breaks too. Take time as a team to grab lunch or a drink after work. If your team has just wrapped up a particularly challenging project, take a moment to stop and celebrate. You can also consider team off-sites or a day out of the office for some company fun.

Related Posts