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Unlimited vacation: flashy gimmick or prudent policy?

Sir Richard Branson recently announced a change to Virgin’s vacation policy. According to virgin.com the policy:

permits all salaried staff to take off whenever they want for as long as they want. 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.

Branson decided to implement the policy after learning that Netflix had experienced a marked increase in morale, creativity and productivity from a similar model. Unlimited vacation policies, it has been argued, better reflect the shifting nature of work in our lives. For many employees the 9-5 workday is a relic of a by-gone era. Email and smartphones now stretch the work day, removing it from the confines of an office.

The concept of unlimited vacation is not unique to Netflix and Virgin. Other employers that have adopted this approach include Groupon, Ask.com, Eventbrite and SurveyMonkey. Whether such policies become the norm will depend on whether claims around increased productivity and efficiency are proven.

Prior to implementing a similar policy, Canadian employers should consider:

  1. The culture of your workplace: in short, workplace culture is the accepted values, visions and language that exists in the workplace. It will affect whether your employees are likely to self-police (and in reality not take much more vacation than you currently provide) or whether employees may take an increased amount of vacation resulting in a negative impact on your operations.
  2. The size of your workforce: If you operate a small business, thought should be given to what tasks need to be accomplished and how this will be successfully completed with a potential increase in employee absence due to vacation.
  3. The diversity of your operations: Consider whether your business is based solely on an office set-up, or do you employ office workers, factory personnel and vehicle operators? If your workforce is varied, perhaps unlimited vacation time is only suitable for a particular class of employees.
  4. Unionization: If some or all of your employees are subject to a collective bargaining regime, you will need to consider the impact of any vacation policy on this relationship, and proactively engage with all affected parties before taking unilateral action.
  5. Communication of the change: The change, and how it will function, must be clearly communicated to all affected staff. It may also be advisable to provide a mechanism for feedback on the change.
  6. The practical reality of implementation: if you shift to an unlimited vacation policy, consider accompanied changes that may be required to your existing software, systems and/or processes.
  7. A cap on absences: Consider whether you will introduce a cap on the number of people that may be away from the workplace on vacation at once.
  8. Notice: Consider what notice, if any, will you require before employees take vacation.
  9. Human rights concerns: Consider whether you will put in place a mechanism to ensure that issues which could potentially be better hidden under an unlimited vacation regime, such as alcoholism, are monitored.
  10. Termination for excessive absenteeism: Consider the effect of unlimited vacation on your right to terminate employment for cause in cases of chronic absenteeism. Perhaps this could be addressed by differentiation in your policy between vacation and other types of leave – specifying when each shall be activated.
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Vey Willetts LLP

Employment and labour lawyers at Vey Willetts
Vey Willetts LLP is an Ottawa-based workplace law firm, serving individuals and employers across Eastern Ontario. They recognize that operating a business is complex and maintaining an efficient and legally-compliant workplace is a continuous challenge. The firm helps simplify legal workplace obligations so that employers can focus on what matters: their business. Learn more about Vey Willetts LLP by contacting Andrew Vey, or Paul Willetts or by visiting the firm’s website.
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