Unlimited vacations. Good for business?

Is it a master stroke of genius, or one step too far?

Virgin founder Richard Branson recently announced an unlimited vacation policy for parts of the Virgin Group in the UK and US. This policy states that salaried employees are permitted to take as much leave as they want provided their team or work output doesn’t suffer.

“There is no need to ask for prior approval and neither the employees themselves nor their managers are asked or expected to keep track of their days away from the office. It is left to the employee alone to decide if and when he or she feels like taking a few hours, a day, a week or a month off” Branson says.

This is not a new idea, and Branson says he got the idea from video streaming success story Netflix.
Netflix’s co-founder, Reed Hastings explained how the idea evolved, "My first company, Pure Software, was exciting and innovative in the first few years and bureaucratic and painful in the last few before it got acquired. The problem was, we tried to systemize everything and set up perfect procedures. We thought that was a good thing, but it killed freedom and responsibility. After the company was acquired, I reflected on what went wrong."

In fact, there are a number of organisations who offer a ‘sky’s the limit’ approach to paid vacations, these include Groupon, Glassdoor, Evernote, Ask.com and SurveyMonkey. It’s no surprise that the majority of these organisations are tech companies who need to attract the best talent in a Google inspired working culture, but whose employees can work all hours of the day or night in remote locations.

But is the unlimited holiday policy going to be detrimental to employees in the long run? In the US, where Virgin is trialling this new system, studies have shown employees only use 51% of their eligible paid vacation entitlements and 61% of our US counterparts work while on vacation.

But surely an unlimited vacation policy means the company wants me to take MORE time off doesn’t it? Not necessarily. Companies with the policy boast a spike in morale, but also a spike in productivity. Is this increase in output from rested employees working a 3 day week, or dedicated employees working long hours for an employer with the right image?

Tech start-up Quirky believes they have a better model, with 3 weeks during the year ‘blackout weeks’.
Quirky founder and CEO, Ben Kaufman explained that he found his employees worked in 90-day sprints, and that having quarterly company-wide breaks would keep the intensity of this cycle going as the company grew. Originally four (4) weeks mandatory paid leave, it was later scaled back to three (3) weeks to cover the busy Thanksgiving period.

In Australia, we are governed by legislation to track employees leave entitlements and a 'no policy' is not a guarantee that an Australian employer has met its obligations under the fair work act. For example, the National Employment Standards require a minimum of four weeks of annual leave per year of service (pro rata) with any accrued but untaken annual leave payable on termination. There are also strict record-keeping obligations and employers will still need to record taking of leave to ensure every employee receives their statutory minimum.

It remains to be seen if Virgin subsidiaries pickup this new policy and if Australian employees of the Virgin group will benefit. But, perhaps, one thing is true: an airline (say, Virgin Atlantic for instance) would surely benefit from everyone taking a little more time off to travel.