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 burnout and more freedom to work around one’s life (instead of living around one’s work) are all reasons why employees may be encouraged 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 may be a solution, offering greater flexibility for both the employer and the employee.

The benefits of unlimited paid vacation

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

• Financial simplicity: Various forms of accruals or time off will be less of an issue. When time off is unlimited, there are no sick days, flex time, volunteer time, and so on that consume your accounting department’s time. Be aware that unused vacation days may still need to be paid out in keeping with applicable labour laws.
• Human resources simplicity: When time off is unlimited, an employee likely 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 miscommunications or delays in approval.
• Recruitment becomes easier: It’s probably rare 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 would vouch for it. Unlimited time off is one way to stand out from your competition.
• Productivity increases: It may seem counterintuitive 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 may 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 it’s important to be diligent.

• Abuse: Some employees 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 may 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 implemented with careful consideration.

• Remember company culture : If morale is low, employees may be more inclined to abuse the policy. Company culture is rooted in employees, with an emphasis on trust and autonomy. Alternatively, it’s also possible that the opposite may occur—employees may not feel fully comfortable taking time off if they perceive that there will be negative consequences.
• 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 everyone else. 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: For employees to feel empowered to take as much time off as they need, they 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.

Guidance on what to include in your vacation policy

There are a few important details in mind when drafting your policy:

• Alignment with labour laws: Companies should be aware that labour laws, such as the Canada Labour Code, outline vacation entitlements based on an employee’s length of service. Employers may choose to clarify unlimited time-off policies in employment agreements and may consult legal professionals to ensure compliance. For more information, see the Annual vacations on Canada.ca.
• Clear guidelines and rules: Unlimited time off isn’t a free-for-all still requires management. Employees who repeatedly abuse the system or who don’t communicate with their managers may be subject to 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 is the period after returning from vacation during which an employee cannot take time off again. It could help keep the policy fair for everyone and prevent employees from taking too much time off too often.
• Who gets to go, and when: First come, first served may be a suitable option. If two employees request time off at the same time and have overlapping projects or tasks, having both of them out of the office could cause unreasonable delays, so it helps to have 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.

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