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For millennials, unlimited vacation isn’t always a perk

Unlimited vacation policies are still uncommon, but when startups and tech companies opt in, the practice can be more marketing tactic than employee benefit.

For millennials, unlimited vacation isn’t always a perk
[Photo: Toni Cuenca/Unsplash]

When Alicia* started her first job out of college, she was granted unlimited vacation—a policy that workers caught in the net of hustle culture might view as a perk. But it wasn’t all it was cracked up to be. “Every time I would take days off to go visit my family, they were never treated by the company as ‘real vacation days,'” she says. “I was always expected to be on call and help out or staff phone calls as needed.”

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Those expectations weren’t set ahead of time, Alicia says, but she also felt like she didn’t have a leg to stand on as someone new to the workforce. “I was poor,” she says. “I wasn’t taking vacations to other countries. So I never had the excuse that I’d be unreachable.”

Unlimited vacation is still a rare employee benefit, but data from job platform Indeed indicates the policy is trending up, at least among the companies that openly advertise it. Since 2015, the number of job postings touting unlimited vacation nearly tripled, from 450 per million postings to almost 1,300. Tech jobs are six to eight times more likely to offer unlimited vacation when compared against other job postings. On the whole, unlimited vacation is more prevalent at startups, likely due to the example set by tech companies like Netflix and Dropbox.

Some leaders claim to have seen positive results. Nathan Christensen, CEO of MammothHR, decided to test the policy for a year. “Over the course of the year, the policy became one of our employees’ most valued benefits,” he wrote in Fast Company. “In a survey we conducted just before we hit the one-year mark, our employees ranked unlimited vacation third-highest among the benefits we offer, just behind health insurance and a 401(k).”

Aron Ain, the CEO of workforce management company Kronos, wrote in Harvard Business Review that despite some growing pains, moving to an unlimited vacation policy had been a positive change for his company, too, and that employees—albeit mostly older employees—were taking off more time.

But unlimited vacation policies can be a Trojan horse, particularly for young people who are newer to the workforce and less likely to take time off in the first place. On the surface, the offer seems generous, even altruistic; it implies employers trust their employees and encourage work-life balance. In practice, however, “unlimited vacation” is a misnomer. Employees often take fewer vacation days if their company has an unlimited policy, since there’s no framework for how many days they can—or should—take off.

Managers can decline to approve time off, especially if there’s an implicit assumption that nobody can take more than two to three weeks of vacation per year. And when they leave the company, employees can’t cash out on the paid time off that they have accrued (which is required by law in a number of states). For workers in their twenties who are more likely to job hop and let vacation time go unused, that can mean foregoing a sizable chunk of cash.

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Denise Rousseau, a professor of organizational behavior and public policy at Carnegie Mellon University, points out that the U.S. has long had a culture of overwork. “Americans don’t always take all the vacation time they have when it’s formally allotted,” she says. “So that’s a phenomenon in itself.” As for unlimited vacation? Rousseau says it can be a form of virtue signaling. “Companies partly adopt the open-ended vacation policy to signal to a new generation of workers that they are a cool employer of choice,” she says. “A lot of the benefit in that signal is reaped just by having people join the company.”

In other words, unlimited vacation can be more of a marketing tactic for companies looking to attract top talent, rather than an employee benefit. “It works best when employees are highly trusted and their skills are valued, and both they understand what their employer wants from them, and the employer understands what the valued employee [wants],” she says. “With newer people, neither of those hold.”

When newer employees are drawn to a company that boasts unlimited vacations, they don’t have a strong understanding of the organization and culture, and the company hasn’t built trust with the employee either. “If the expectations are very loose, the chances are misaligned expectations,” she says. “Employees don’t live up to employers’ expectations, and employees start feeling uncomfortable that if they take a vacation, they’re going to be judged. And of course they are being judged—they’re new.”

That’s even more likely at smaller startups, where hours are long and cash flow is inconsistent. The projected culture—”perks” like flexible hours and unlimited vacation—might give workers a false sense of agency.

“I think that’s a really common problem at startups with unlimited vacation policies,” says Charlie Custer, who has worked at a number of tech startups. “Nobody is actively pressuring you not to take time off, but because of the high workload and limited staff at a startup, it’s hard to feel like you can.” At a previous job in his early twenties, he found that taking vacation often just doubled his workload for the following week. And it didn’t help that his CEO never seemed to take much time off, either.

Other startup employees I heard from recounted instances when they were told they had taken too much vacation. When Jason* worked for a tech startup, he took a total of two weeks off for two separate vacations—though he ended up working anyway, during both trips. “When I got back, I was told that even though there is an unlimited vacation policy, I could not go on any more trips for ‘a little while,’ as other corporate employees were talking about it,” he says. The CEO then told Jason it was “unfair to everyone else” for him to take so much vacation.

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Some of the pitfalls of unlimited vacation policies could be mitigated if companies took a hard look at employee behavior. When Buffer crunched the numbers, the social media management platform found that more than half its employees were taking less than 15 days of leave. Buffer tried incentivizing employees to take vacation days by paying them $1,000, but quickly realized that approach wasn’t financially feasible. (Given its vacation policy, the company does not pay out unused PTO days.)

So in 2016, Buffer introduced a minimum vacation policy, which clearly indicates to employees that the company endorses at least 15 days of vacation. “We actually have someone on our People team keep track of how many vacation days every teammate has taken throughout the year,” says Hailley Griffis, Buffer’s head of PR. If an employee is falling short of the minimum, their manager will be alerted.

Buffer also offers an upper limit for vacation time, of about six to eight weeks, at which point employees are encouraged to have a conversation with their manager. As a fully remote team with far-flung employees, Buffer also tweaked its recommendations to account for cultural differences in vacation policy. (In Canada and France, for example, the recommended minimum is higher.) Other companies like Kik and HubSpot also have minimum vacation policies.

Not all companies have noble intentions when implementing unlimited vacation policies. But for those that do, plainly articulating the parameters of the policy is half the battle. Addressing the fact that employees are being denied additional income helps, too. When Kronos shifted its vacation policy, it reinvested the money that would have previously paid out accrued PTO when employees left the company. Instead of absorbing the savings, Kronos increased parental leave and its 401(k) match; the company also started a scholarship program for employees’ children and childcare assistance program and put $500 a year toward employees’ student loans.

Striking the right tone as a company is also crucial, regardless of your vacation policy. Before she worked for Buffer, Griffis was more hesitant to take time off. “I was working at a San Francisco startup right before I joined Buffer, and I definitely had that experience of being too young to know what is appropriate to ask for,” she says. “No one was taking time off, and it would take a really long time for my vacation to get approved.” When she started working at Buffer, she was surprised to find that managers actually encouraged employees to take vacations—even before Buffer shifted to a minimum vacation policy.

In many ways, the unlimited vacation model seems fitting for a generation of workaholics seeking a semblance of balance. Making it work for employees, however, requires companies to see past their bottom line. Despite her experience, Alicia—like other millennials—hasn’t sworn off jobs with unlimited vacation. But she sees more clearly now. “If I loved the company and the opportunity, it wouldn’t be a deal breaker, “she says. “But I don’t view it as an employee perk.”

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*These individuals have been identified by a pseudonym to protect their anonymity.

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About the author

Pavithra Mohan is an assistant editor for Fast Company Digital. Her writing has previously been featured in Gizmodo and Popular Science magazine.

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