The current situation in Canada

Across practically all industries, the workforce is getting younger. Millennial and Gen Z talent increasingly demand a more flexible schedule and better work/life balance. They choose to work for companies that respect this, while the less agile companies continue to fall behind. Increased productivity, less burn-out and more freedom to work around one’s life (instead of living around one’s work) are all reasons employers should openly and actively encourage their employees to take time off. Despite this, one in three Canadians don’t take their allotted time off, and the vast majority of employers still only offer two weeks’ vacation. Unlimited paid vacation can be a solution, allowing more flexibility for both the employer and employee.

The benefits of unlimited paid vacation

As you’ll see, the benefits of offering unlimited paid vacation outweigh the risks, and your organization may even be better off because of it.

• Financial simplicity: You don’t need to worry about accruals or time off in its various forms. When time off is unlimited, there are no sick days, flex time, volunteer time, etc. to tie up your accounting. And, if an employee leaves the company, you don’t need to worry about paying out unused vacation days.
• Human resources simplicity: When time off is unlimited, an employee only needs to get manager approval. The HR department doesn’t need to track the purpose of the time off, and since fewer people are involved in the process, it eliminates any miscommunication or delay.
• Recruitment becomes easier: You’d be hard-pressed to find an employee who doesn’t like the idea of unlimited time off. It’s almost universally liked by those who have it (which makes talent retention easier), and practically all employees yearn for it. Unlimited time off is an excellent way to stand out from your competition.
• Productivity increases: It may seem counter-intuitive that more time away from work would lead to more work being done, but it’s true. Happy, rested, and focused employees tend to do more work than grumpy, burnt-out ones.
• Employees feel trusted: Giving employees full autonomy over their schedule will instill a sense of trust in them. They’ll feel empowered that the responsibility is on them to get their work done on a schedule that works for everyone.

Potential cons of unlimited paid vacation

If not planned and executed properly, unlimited paid vacation can have its downsides. They’re all easily avoidable, but you need to be diligent.

• Abuse: Bad actors in your company may take advantage of your unlimited time off policy. They’ll either take too much time off, to the detriment of their team, or take time off sporadically in the middle of the week. As long as there’s clear communication between management and employees regarding what needs to be done and when, these problems can be avoided.
• Scheduling conflicts: While employees are free to take as much time off as they want, when they take it can become problematic. Managers need to make sure they’re aware of their team’s workload and schedules, so conflicts don’t occur.
• Inexperience: Unlimited vacation is relatively new, and few HR professionals and managers have experience with such a policy. It’s important to make sure that everyone is fully educated and trained on how to work under this model, so the transition is as seamless as possible.

Considerations for implementing unlimited paid vacation

An unlimited paid vacation policy needs to be rolled out with careful consideration.

• Remember company culture : If morale is low, employees will be more inclined to abuse the policy. Company culture must be rooted in employees, with emphasis on trust and autonomy. Otherwise, it’s also possible that the opposite may occur—that employees won’t feel fully comfortable taking time off.
• Communication is key: Employees need to have clear lines of communication with their supervisors, who need clear lines of communication with Human Resources. This ensures proper lead time before employees take their time off and helps with scheduling.
• Start at the top: Executives and senior staff need vacations just as much as the rest of us. If they regularly and openly take time off, and employees see it’s still business as usual when the people in charge are away, more employees will be inclined to take time off themselves.
• Keep talking about it: Employees should feel empowered to take as much time off as they need and should know how the policy allows them to do so. Self-care should be prioritized, with company success coming from well-taken-care-of employees rather than metrics or performance indicators.

What needs to be included in your vacation policy

Make sure to keep a few important details in mind when drafting your policy:

• Alignment with labour laws: It’s crucial that your policy doesn’t violate any labour laws. The Canada Labour Code, for example, outlines vacation “entitlements” based on how long an employee has worked for you. If you choose to implement an unlimited time‑off policy, and an employee resigns or is terminated, you need to make sure you aren’t on the hook for owed or earned vacation pay as defined by the law. A clause added into your company’s employment agreement can solve this. See the Annual vacations page on Canada.ca for more information.
• Clear guidelines and rules: Unlimited time off isn’t a free-for-all. It needs to be delicately managed. Employees who repeatedly abuse the system or who don’t communicate with their managers need clearly defined consequences.
• A “blackout” period: To prevent employees from coming and going too often, one option is to implement a “blackout” period. This can be a week or more, but it’s basically time after returning from vacation wherein an employee cannot take time off again. It helps keep the policy fair for everyone and prevents employees from taking too much time off too often.
• Who gets to go, and when: First come, first served works most of the time. If two employees request time off at the same time, and having both of them out of the office would unreasonably delay projects or operations, there must be a contingency plan . Hiring temps or freelancers is a common workaround. You could also train other employees to fill in and expand your workforce’s skillset.

While still a relatively new concept, unlimited paid holiday is gaining traction among HR professionals looking to attract top young talent. It isn’t an easy sell—many companies are reluctant to overhaul their vacation policy in such a dramatic way. But for those bold enough to do it, they’re rewarded with a happier, healthier workforce. Related articles: 10 Recruiting Strategies for Hiring Great Employees