You may remember the International Foundation’s “Benefits Madness” in March, where participants voted for top employee benefits in the form of a March Madness basketball bracket. Vacation time was one of the top benefits, making it to the championship round (health care won in overtime). What does this say about vacation time? It’s one of the top picks for employee benefits. Now imagine this favorite benefit is suddenly limitless and employees can take as much (or as few) vacation days as they want. According to the International Foundation’s Employee Benefits Survey 2016, only 3% of organizations (Netflix and Virgin were early adopters) currently offer unlimited vacation time and there are pros and cons to the emerging benefit.

Using vacation time is important because overworking leads to stress and burnout, which lead to irritability, depression, memory loss and health problems (high blood pressure, heart disease, weight gain, etc.). Working relationships with colleagues and customers are put in jeopardy, productivity is lower and slower reaction times (mistakes) are more likely. Vacation breaks the stress cycle, allowing employees time to rest, relax and recuperate.

From the employer’s perspective, unlimited vacation time shows that the organization and management respect and trust their employees. They know employees can manage time off, get work done and make good decisions. It encourages teamwork and trust between co-workers and between employees and management and shows that organizations value well-being and work/life balance. It also cuts down on tracking vacation time, lowering administrative costs.

Moving on to the cons . . . One would think that employees would take advantage of the unlimited vacation system, but it’s actually the opposite. Organizations have found that employees with unlimited vacation aren’t taking enough vacation days! When an unlimited vacation policy is first implemented, some employees perceive that management wants them to take less time. Employees decide not to take advantage because it’s too hard to figure out the right amount to take. Unlimited vacation is also difficult because people are easily overwhelmed by seemingly unlimited resources.

[Related: 35th Annual Employee Benefits Symposium, September 18-21, 2016, Baltimore, Maryland]

Effective communication of the new policy and a more trusting company culture are the solution. Organizations also really have to encourage taking time off in order for an unlimited vacation policy to work. Check out what the digital-sharing company Evernote does: It offers its employees a yearly $1,000 subsidy for taking more than one week of vacation at a time.

A successful unlimited vacation policy all comes down to a culture of trust and encouraged time off in the workplace. Do you or someone you know receive unlimited vacation time as a benefit? Comment below with your thoughts—Is it awesome or not?

Anne Killian
Communications Associate at the International Foundation