A number of high-profile employers have adopted flexible vacation policies in recent years. For example, one financial services company recently announced that its senior staff's annual leave entitlement will no longer be capped i.e. partners and managing directors are now free to take as much paid leave as they want. Junior employees will still have an entitlement to a fixed number of holiday days. But is a flexible vacation policy too good to be true?

The thought of taking as many holidays as you wish has an immediate appeal, at least on the face of it. However, employees still need to get their job done, so spending half the year on the beach will remain a pipe dream for most unless their lottery numbers come up.

There is a question mark over whether such policies achieve the goal of promoting rest and recharge in any event. A 2017 study by Namely found that employees with unlimited holiday allowances typically ended up taking fewer days off a year than under traditional systems. Without a fixed number of days to plan, employees may feel that expectations are unclear and become anxious about taking leave.

For this reason, some companies that have tried a flexible leave policy have reverted to a fixed (or at least minimum) number of days. By itself, a flexible leave policy is likely not to be enough to change a company's culture around taking annual leave. Other ways, such as making sure leaders take days off might well be more effective for ensuring that employees truly feel comfortable in doing so.

A two-tier approach, with unlimited leave for senior staff and a fixed entitlement for junior staff, brings with it a very real danger of resentment amongst junior employees and, in turn, wider employee relations issues.

Policy tips

The concept of flexible vacation policies is part of a wider trend of employers focusing on improving working conditions. Making your company an attractive place to work can help to attract new talent and, crucially, retain your existing talented workforce. Whether you are looking to implement an unlimited leave policy, encourage employees to take their fixed entitlement, or simply foster a better work-life balance amongst your staff, there are a number of points you might wish to consider:

• Set a minimum expectation of how much leave employees should take.
• Require employees to take at least one consecutive week of leave each year.
• Put in place clear procedures around the handover of work and clear communication that employees should leave work devices at home (or better still in the office) during their leave.
• Adopt a ban on weekend working, except in exceptional circumstances.
• Implement a "right to disconnect" out with working hours (read more in our Insight article).
• Review your flexible working policy to ensure it is sufficiently flexible to reflect the post-pandemic dynamic.
• Encourage the use of email signatures that acknowledge different working patterns and make it clear that the sender does not expect an out of hours response.