Unlimited annual leave allowances

Unlimited annual leave is a relatively new concept that has become popular amongst large global companies and boutique, forward-thinking employers.

While the traditional practice of offering contractual or statutory annual leave, works for so many businesses—giving your employees the freedom and flexibility to take as many days off as they wish has its perks, and not just for staff…

Read on to discover the role an unlimited annual leave policy could play in improving your workplace culture and retaining top talent.

How unlimited annual leave works

How it works is up to you. Some businesses have chosen to provide their staff total freedom with their annual leave, giving them the choice to take as many days as they want—when they want. Simply asking that they continue to get approval for this paid time off from a manager with enough notice.

Others take a slightly more controlled approach. Introducing “unlimited annual leave” but with a cap on how many days can be taken at one time.

What companies use unlimited holiday allowance?

IBM, Netflix, and LinkedIn are some of the world’s most well-known employers now offering unlimited paid time off for employees. For a company like LinkedIn this happened way before the wave of flexible working.

Rewind 10 years to when LinkedIn first introduced their initiative for unlimited holidays. Their aim was to give their employees some ownership over their work-life balance. LinkedIn called this their "Discretionary Time Off" (DTO) policy. Which allowed staff to take time off, as much as they needed, when they wanted.

Since then, it has become an increasingly popular incentive amongst other Silicon Valley tech giants, offering benefits such as:

• Improved work-life balance

• A greater workplace culture based on trust

• An incentive for new talent

• Greater staff retention rates

• Improved productivity with greater time for rest and recovery

These benefits of course caught the attention of other businesses in all types of industries, resulting in an increase of queries related to ‘offering unlimited paid time off’.

What the law says about unlimited annual leave allowances?

There’s no law in the UK prohibiting you from offering your staff more than the statutory amount of annual leave. And no cap to determine how much is too much either.

It’s up to you to decide what is right for your business. As long as you remain compliant with other employment laws. Such as those related to your employment contracts, offering unlimited paid time off won’t require approval from any legal department.

To ensure that you stay on the right side of the law when considering unlimited annual leave, it’s advisable to seek help from employment law experts.

Unlimited annual leave policies

For any business considering this as an option, an annual leave policy is a must-have HR document.

Allowing you to outline the details of your unlimited annual leave allowance, stating any terms and conditions, so your staff know exactly what to expect.

This can be a short document that simply explains your policy, why you offer it, and how it works. Just because you’re giving your employees the freedom to take as much holiday as they like doesn’t mean there shouldn’t be some rules.

For example, you may want to specify that two employees on the same team can not take an extended period of annual leave at the same time. Or that requests for annual leave must be approved by the relevant manager.

Just as you would with statutory annual leave allowances, making the rules clear helps to avoid any HR hiccups.

What if it doesn’t work?

It’s true that not every trend will work for your business. Sometimes the traditional methods are simply the best.

If you do wish to implement unlimited annual leave allowances, it may be a good idea to trial the policy first, before making it a permanent element of your employment contracts.

By trialling this process for an entire holiday year, you can review your implementation process, its pros and cons, and make an informed decision whether to keep or get rid of the policy.

For any changes like this within your business, it’s always a good idea to engage with your employees. To involve them as much as possible and to receive their feedback.

While unlimited annual leave may sound very appealing to an employee, it doesn’t always work out the way people expect. Bringing with it some unexpected disadvantages:

• Employees may find it harder to manage their annual leave

• Could create a stigma around taking too much time off

• Cause issues between colleagues

• May make holiday pay harder to calculate

That said, according to a report by Empower, even with an unlimited paid time off policy in place, employees at some companies continued to take the average amount of holiday. Raising the question—is unlimited an unnecessary HR trend?

Need assistance with your annual leave allowances?

Whether you’re deciding to implement an unlimited annual leave allowance or not, managing your staff annual leave will always be made simpler with a leave management software.

With BrightHR’s staff holiday planner you can approve or deny holiday requests in seconds. Eliminating holiday clashes between colleagues and providing a single-pane view of your entire team’s annual leave throughout the year. Making it easy to keep track of your employees’ availability.

Book your free demo today to discover how easy leave management can be with a digital staff holiday planner.