Should employees be trusted with unlimited annual leave?

by John Hilton07 Nov 2016
Even though organisations have differing methods to handle leave requests dependent on the nature of the work, an ‘honour system’ of unlimited leave is becoming more popular in US organisations.

‘Unlimited leave’ is used as a catch-all term for heavily relaxed leave policies, although in practice these still often involve structure to some degree, such as an individual’s leave having to be approved by their team.
Katie Burke, Vice president of culture and experience at Hubspot, said their company has had an unlimited vacation policy since 2010.
“Since we’ve started it, we’ve added five new offices (including Sydney) and over one thousand people,” she said.
Hubspot have almost 1,500 employees who have logged countless airline miles, enjoyed flexible time with their children and significant others, and taken up or expanded upon their hobbies.
“We believe that your work should fit into your life rather than your life fitting in to your job,” she said.
“We hire remarkable people and give them a considerable amount of responsibility and autonomy.
“Instead of reduced productivity, we believe people are more engaged and focused because they can spend less time on permissions slips and more time on work they love doing.”
However, Rebecca Nash, Group executive people & culture, Perpetual, added that there is no one-size-fits-all approach.
“It’s important for employees to work with their employers to determine how, where and when they work, to cultivate a culture that encourages and promotes flexibility,” said Nash.
“Flexibility is about empowering your people to be the best they can be, and there are many different ways to achieve that.

“If unlimited annual leave is part of the toolkit – if an organisation feels they are ready to offer it as an option to their employees – then absolutely it is something that should be explored.”
Indeed, when you have a fundamentally healthy culture, unlimited leave is more likely to be effective, added Amantha Imber, founder, at Inventium.
“Just keep an eye on the impact of social norms and how these can impact the success of such a policy,” she said.
“For example, if the norm in your company is one of people not wanting to take leave for fear of being seen as slacking off, then unlimited leave will probably not fix this.”
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  • by Dave 7/11/2016 3:19:09 PM

    Where this policy has been adopted in the USA, the previous accrual of leave has been 'quarantined' and no further accruals are made. Staff who have been in their organization for long periods of time will therefore no longer accrue leave. Leave is only granted where staff can be relieved, in busy offices it is hard to believe that those busy staff will be allowed to take time off, so they will not benefit.

    In Australia, staff will still be entitled to accrue 4 weeks leave per year, therefore any 'unlimited' leave will be accessible above this. Is it intended that staff will use up their accrued leave first before being entitled to the 'unlimited' leave.
    Perhaps the adoption of a leave purchase scheme is more applicable in an Australian context as this enables both the company and the individual to control their leave.

  • by Peter 7/11/2016 4:59:00 PM

    Dave is right in his comment above. In the US unlimited leave is more workable because for the organisation offering it, their people no longer accrue leave. This means the organisation does not have unused leave sitting as a liability on their books and it also means there is no leave payout when a person finishes employment. Likewise in much of the US there are no sick leave entitlements. I'm not sure the Fair Work Act would allow organisations to bargain those items away to make a similar situation work here.

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