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The power of unlimited paid holiday: how the right employee benefits (and employer attitudes) drive team performance

At this stage, the next person to point out that the pandemic has led to a shake-up of working culture is unlikely to win any of the major prizes in this year’s Most Observant Commentator Awards.

For those of us who specialise in non-traditional and displaced working practices, issues like remote and hybrid working have dominated the conversation in recent times – and it can be tempting to carelessly throw topics like unlimited holiday onto that pile.

Alex Dick, Managing Director of Alexander Lyons Solutions explains that would be a mistake, however – not only because it’s an idea well worth exploring, but because unlimited paid holiday was making mainstream news before the pandemic hit.

For the uninitiated, unlimited holiday is as simple as its name suggests. Rather than assigning employees a set number of days for leave, workers can take as much holiday as they want – fully paid.

Of course, workers can also – and this is where the waters get murky – take as little holiday as they like. In the hands of an uncaring or unscrupulous company – and there are plenty around – unlimited leave can exert so much pressure on an employee that they refuse to take any holiday at all. This is a recipe for burnout.

That’s why it’s so important to talk about unlimited holiday: not only to explore a practice that can lead to employee and business benefits alike, but to ensure that we implement these practices in a sensitive fashion that genuinely puts employees first – rather than just paying lip service to mental and physical health while squeezing staff dry.

The business case for unlimited holiday

In many roles and across many organisations – including our own – the key metric by which we judge success, productivity, and good work is simply performance.

If workers achieve the appropriate number of goals, whether that be sales recorded, projects completed, or books balanced, then their performance can only be described as strong.

And, of course, the pandemic and its onslaught of displaced working has taught us that it doesn’t really matter how, where, or when this performance is achieved.

If a given employee has completed their tasks well and in good time, does it matter they did so at home, or on a Barbadian beach, or standing on their head?

The same principle applies to unlimited holiday. In fact, I’d go one further: if an employee were to walk into the office and make my company £300,000 in January, I’d be perfectly happy for them to take the next six months to put their feet up.

I suspect the employee would say much the same – after all, a recent report from Deloitte points out that some workers would rather have unlimited PTO than a 10 per cent pay rise, and there’s no question that implementing the policies that workers want will improve performance.

Of course, policies like unlimited paid leave aren’t just about maintaining employee productivity – they can actually enhance workers’ speed, efficiency, and retention.

Just look at recent experiments with four-day working weeks – according to Microsoft Japan, who trialled this idea in 2019, an extra day off led to a 40 per cent boost in productivity for the rest of the week. Clearly, giving workers more flexibility, freedom, and free time can produce tangible business benefits.

However, this strong business case comes with an important caveat: the wrong company culture, or the wrong motives, can cause unlimited holiday to take a less palatable turn in businesses more concerned with cash than contentment.

In other words: they exploit it.

It’s not just about business – it’s about employee wellbeing

The ‘darker side’ of unlimited holiday quickly rears its head in the abovementioned BBC report from 2019.

Citing the experiences of software firm CharlieHR, the report explains that a combination of workplace demands and general ambiguity left employees “scared” to take advantage of their purportedly unlimited leave.

As a result, unlimited holiday can sometimes lead to a reduction in the amount of leave taken – it doesn’t automatically lead to a more relaxed approach or a peaceful readjustment of employees’ work-life balance.

In fact, workers can start to feel pressure not to take any time off at all, with the report condemning unlimited holiday as not “so much a perk as a pitfall.”

We’ve had to address this problem ourselves, in fact, by contractually requiring our staff to take their basic holiday time off at minimum – and we require them to relax over Christmas whether they like it or not!

To my mind, the real worry isn’t just that this can happen, but that certain businesses might consider this lack of leave as good for their bottom line – they get to pay lip service to stress reduction while subtly preventing their employees from leaving their desks.

The right motivation

Does this mean unlimited holiday is a failed experiment? Of course not.

Clearly, it’s not some Utopian fantasy to claim that businesses can boost productivity while also giving their workers the flexibility to stay happy, stress-free, and – by extension – more likely to exercise that all-important sense of loyalty.

In order to achieve this vision, however, business leaders need to approach unlimited holiday with the right attitude. They need to genuinely want the best for their workers – otherwise the whole enterprise becomes a cynical lining of their own pockets.

Perhaps it goes without saying that trust, empathy, and respect can create a win-win situation for business leaders and workers alike – but if that’s the case, I’m happy to accept that I won’t do well at the Most Observant Commentator Awards either.