Unlimited vacation policies are gaining lots of traction among North American organizations. While we may believe this type of offer to only be possible in Silicon Valley, more and more Quebec-based companies are adopting this type of vacation policy.

While certain organizations see this as an administrative nightmare, it’s important to note that the goal of this type of unlimited vacation is actually to simplify vacation management and empower employees.

 

Frequently asked questions about unlimited vacation

  • Will this system be abused?
  • Will employees shy away from asking for too many vacation days and not take enough?
  • How should I calculate the 4% indemnization of employees leaving my organization?
  • Are all absences paid for?
  • Is it more profitable to simply pay overtime?

While it is true that this type of policy can be abused, you can avoid this by stating clear rules around the unlimited vacation policy (more on this under the “Implementation” section of this post).

Certain employees, more used to the traditional vacation model, can also be afraid of requesting too many days off. In this case, it is up to their manager to raise awareness regarding taking time off.

When signing the employment contract, it’s important to come to an agreement regarding the number of paid vacation weeks to be paid out in the case of the departure of an employee.

Yes, all days off are paid for. You simply need to pay the employee’s salary regularly, without consideration for the number of days off they’ve taken.

The main risk with paying overtime is that employees will generally work longer hours while accomplishing less. They’re aiming for a better pay but end up burning themselves out by trying to obtain it. This will end up costing your organization more than a simple unlimited vacation policy.

 

Implementation

 

Establish clear rules

It’s important to establish a few base-line rules to ensure that your employees don’t all leave on vacation at the same time at any time of the year. Ideally, it’s recommendable that vacation days taken are not detrimental your organization’s projects, your team and your customers.

If these three rules are respected, the manager can then approve or deny the vacation request. By establishing these clear rules and giving the manager the right to “veto” any request, you can easily avoid any potential abuse.

When it comes to a traditional vacation policy, it’s important to note that these conditions must also be respected before time off is approved anyways. Same conditions, different implementation!

 

Inciting employees to take time off

Managers must ensure that members of their respective teams take time off to recharge.

To validate whether or not your employees need time off, the easiest way to do so is to take note of their vacation days in a single place. Entering this information in an Excel spreadsheet or in a calendar can require a good amount of time and effort.

Ideally, you’ll want to use an HRIS (Human Resource Information System) such as CangarooHR. Since the system is directly connected to timesheets and employee records, you’ll be able to view the vacation history of each team member quickly and easily.

 

Managing Departure Indemnization

Have a sit-down with your friends in your finance department and establish a paid vacation percentage when writing up an employment contract.

As an example, let’s take the traditional number of 4%. In other words, 2 paid weeks per year.

If an employee misses out on more than 2 weeks of work during the year and decides to leave your organization, they will not receive the 4% indemnization. Whether the employee has taken 2, 4 or 6 weeks off during the year, the end result is the same.

If the employee misses less than 2 weeks of work, they will receive an indemnization corresponding to the number of days off taken.

  • 1 week off = 1 paid week
  • 0 weeks off = 2 paid weeks

 

Advantages

 

Reducing the amount of administrative work

The traditional vacation policy implies calculating the number of days worked by employees to know the number of days they’re allowed to take off.

With an unlimited vacation policy, the wait is officially over! Employees can leave on vacation, whether they have been a part of your organization for 1 month or 4 years. This is a very convincing argument when hiring new members for your staff during peak vacation months such as summer.

In short, employees receive the same pay all year long, without vacation days having any impact on their salary.

 

Better productivity

Having an unlimited vacation policy allows you to reduce the amount of stress related to the number of days off taken by members of your staff. You’ll often hear employees mention things such as having taken too many days off already and showing up for work ill.

This causes them to show up at work, offer diminished performance as well as possibly contaminate colleagues and affect the department’s productivity as a whole in a negative manner.

Unless they are well controlled, paying overtime incites employees to over-extend themselves to the detriment of their health. When overtime isn’t paid, they will instead better respect their 35-40 hour schedule and be healthier overall.

I highly recommend that any organization that is open to change to try this vacation policy. This allows you to get rid of the concept of sick days, allowing your employees to take time off when they need it without worrying.

This type of policy is beneficial for both your employees and your company’s image: your team will feel empowered and potential candidates will be strongly enticed by this type of advantage.