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Laura L. Rubenstein: The fallacy of an unlimited vacation policy

Laura Rubenstein

Laura Rubenstein

To many, the idea of being able to take as much paid time off from work sounds like a gift. After all, who wouldn’t want the option to come and go as she pleases, to show up to the office a couple times a week, and not have to worry about a paycheck penalty for doing so?

Unlimited vacation policies tout a flexible workplace culture intended to boost morale and retain exempt employees. In an ideal world, companies that offer such a benefit have faith in their professional staff, and co-workers trust one another to be reasonable and not take more than a couple weeks off each year. There is also the collateral benefit of direct cost cutting. With no accrued unused vacation days, there is no payout upon employees’ departures, no attendant administration costs and no liability on the balance sheet.  A win-win for all … at first glance.

Many companies, however, simply cannot offer this kind of benefit. They have contractual deadlines to meet, customers to be serviced or require in-person collaboration for creative projects. Still other companies are traditional and require old-fashioned face time from 9 to 5. For those businesses, it’s assumed that if you’re not in the office, you’re not working.

Businesses that can, but don’t, provide unlimited vacation are uncomfortable with the practice for one reason: trust. They distrust staff and anticipate employees will abuse the policy by taking off too much time. It’s feared that if unlimited time is offered, employees will abuse it and feel entitled to it. Consequently, the employer would lose control and be unable to terminate the policy.

And what about the responsible employees who take minimal vacation and are left behind to shoulder the extra burden? Do they feel unappreciated, worthless or invisible for holding the company together while others are galivanting about, posting photos of themselves on Facebook and flouting their unlimited vacation? That’s never helpful for morale or retention.

One business owner asked me, “Can’t other issues arise with unlimited vacation, like when it gets confused with sick leave? For example, what if someone has complications from surgery and has to extend his time off? Can a company’s unlimited paid vacation kick in? At some point, does it get capped? Doesn’t this complicate short-term or long-term disability benefits?” These all are realistic complications that would need to be vetted and analyzed in advance so that the policy isn’t applied discriminately.

Fortunately, abuse of unlimited vacation is rare. What keeps employees grounded in reality is their integrity. No employee wants to be responsible for missing a deadline, accused of low productivity, having customer complaints or feel ostracized by co-workers for not pulling their weight.

Surveys have shown that offering unlimited vacation may have the unanticipated consequence of employees taking no vacation. Competitive employees will forego vacations in hopes of advancing careers and being available to accept new projects, hoping for an early promotion, increased pay or a larger year-end bonus.

Sadly, one thing we can all agree on is that vacations are no longer pure or sacred. Gone are the days when you could sit on a beach, play in the sand, listen to the radio and enjoy time with family and friends from sunup to sundown without a worry about work. Vacationers are still “on” because they’re tethered to smart technology. They excuse themselves from the activity du jour to participate in conference calls, prepare documents, respond to emails and stay connected – anytime and from anywhere in the world. The point is, while employees on vacation may not be physically present in the office, they’re still mentally present. All told, a single 8-hour vacation day may only be a 6- or 7-hour work break.

So, is an unlimited vacation policy a fallacy? Is it practical? As most lawyers would say, it depends. It depends on the industry, leadership’s ability to trust its workers and a company’s tolerance for abuse. Some companies that tried unlimited vacation returned to a traditional policy with capped time off. Others have maintained the policy because it has never been abused. Whether vacations are provided on a limited or unlimited basis, employers should encourage employees to take time away from the office to recharge, refresh and return with an energized, fresh perspective to innovate, accomplish and thrive.

Laura L. Rubenstein is a partner in the Labor and Employment Practice Group at Wright, Constable & Skeen LLP in Baltimore. She can be reached at lrubenstein@wcslaw.com.