Unlimited holiday is 'click-bait HR policy'

Stockbroker firm, FinnCapp, HR consultancy CharlieHR and media agency The7stars. Three very different companies with one thing in common: they’ve all implemented unlimited holiday for employees and they have all justified it on its capacity for reducing sickness and burnout.

FinCapp is the latest firm to go down this route, announcing its plans only last week.

According to CEO Sam Smith, staff feel guilty about taking holiday at the best of times, but since the pandemic, this has been even more so. As such the company is asking its investment bankers, salespeople and back-office staff to take at least four weeks’ holiday a year and two or three days a quarter.

But while it all sounds great, and CEOs have belatedly fallen in love with it (Perkbox finds 70% of bosses think unlimited holiday is either a good or great idea), can FinnCapp really look forward to having the rested, more motivated and more productive staff it imagines it will from this initiative?

The pros and cons of unlimited holiday:

Unlimited holiday offered by more companies

Senior staff receive more benefits than junior employees

Unlimited holiday great alternative to flexible working

Well, not necessarily. According to Ben Gately, CEO and co-founder, Charlie HR, the arrangement it first introduced in 2018 has been so bad for the staff, it has decided to cease it – for good.

Talking to HR magazine he said: “Unlimited holiday is click-bait HR policy – it creates a lot of interest in a company, and no doubt it helps with recruitment, but we just found it didn’t work for the team.”

According to Gately, without an actual statutory limit to aim for, people were rudderless and didn’t actually take what they needed. Many hovered at taking around 21 days per year, which he claims isn’t enough.

He said: “People were wondering what the ‘right’ level of holiday was, and it was causing decision anxiety.

"It also tended to favour those with partners and kids, and people who earned more, whereas single people and those earning less just weren’t taking their holiday."

Other businesses have experienced the same results. Data from HR firm Namely has found employees with unlimited vacation plans generally took less time off than those on a traditional holiday plan, often because they felt guilty about taking more time off than their colleagues.

But Gately added it was also the heaping on work on others that created problems. He said: “Already high performers would get extra workload, and it absolutely created resentment.”

Claire Crompton, director of The Audit Lab, which also offers unlimited holiday, says a halfway house approach is needed. Since it introduced unlimited holiday some years back, sickness absence has fallen by 34%, but she’s adamant that proper planning and work management is needed so that colleagues aren’t affected.

She also said business continuity comes first.

Speaking to HR magazine she said: “With our unlimited holiday there’s a catch. Our priority is to not only keep employees happy but our clients as well, and there’s nothing worse than a clients' main point of contact never being in.

"So if there are any important meetings, we sometimes have to decline employee holidays.”

She added: “We allow people to book a week off here and there, and long weekends throughout the year, but we will start cracking down if people book two weeks off every few months for example. We also don't allow last-minute days off.

"We need at least a week's notice where possible, as this allows us to protect client resource and other people’s workload.”

Does that mean Gately should have had better rules in place? He thinks not: “We thought that the more we needed to explain the complexities of the policy, the less impact it actually had.

"When you have too much complexity it takes away from what the policy should be."

He added: "Good policies should be simple. This wasn’t. We now find people actually take more holiday now that unlimited holiday has been scrapped."

So what is his advice to FinnCap?

“I don’t believe there are good policies or bad policies, just effective or ineffective ones,” Gately says.

“A company's policies, though, are part of the culture it wants to create, and this might well work for FinnCapp if there’s a particular culture it wants. But there are things it needs to think about though. For us, unlimited holiday did a worse job of supporting teams and supporting mental health.”

Gately does not regret the experiment, though. ”You have to try things, otherwise you won’t know," he said.

"We’ve not given up on policies to improve people's work-life balance. In fact we’re two months into a six-month nine-day fortnight trial. We should know how this has fared by the end of Q1 2022.”

Unlimited holiday: the statistics

Perkbox finds:

  • 33% of staff agree unlimited holidays alleviate stress and burnout and that more holidays are needed to compensate for intense day-to-day working schedules.
  • 26% of staff believe unlimited holidays has decreased the number of sick leave days taken, rising to 37% of C-suite level