Is unlimited holiday a good idea?

July 3, 2023

By Bríd Price

Many employers are looking at new ways of attracting and retaining staff. One of the latest trends is to offer staff unlimited annual leave. Is this a good idea? And what are the legal considerations?

What does an unlimited holiday policy mean?

In theory, an ‘unlimited holiday’ policy means that employees are entitled to take as many paid days off work as they want.

In the UK, full-time workers are entitled to a minimum of 5.6 weeks’ paid holidays (28 days annually). Although employers are unable to offer their employees less annual leave than the statutory minimum, they can offer more. This is sometimes described as an enhanced holiday entitlement.

How could my organisation benefit from offering unlimited holiday?

Offering unlimited holidays can be an effective tool to attract talent, can help staff achieve a better work-life balance, and can decrease levels of work-related stress. It can also afford staff more freedom and flexibility in their personal and professional lives.

However, before introducing an unlimited holiday policy, employers should consider whether they should impose certain levels of constraints (e.g. a cap on the number of consecutive days off), or make unlimited holiday conditional on certain performance targets being met.

What problems can arise?

By providing unlimited holiday, employers may be faced with the problem of seeing some employees taking a significant number of days’ holiday, whilst other take far fewer than they might have done under a capped holiday policy. This could create an imbalance where more pressure is placed on those who take fewer days’ holiday, thus risking burnout, damaging staff morale and risking the employer breaching its duty of care towards some staff.

Our top legal tips for doing it effectively

  1. Always have a written policy;
  2. Ensure that staff still need written permission to take leave, i.e. so that they never just assume they can take the time off;
  3. State in your policy that staff should never book airline tickets or hotel reservations until this permission is granted;
  4. Consider having timing or consecutive days restrictions or conditions – e.g. to ensure that not everyone is on holiday at the same time and to maintain staffing levels;
  5. Ensure accurate records are kept of who is on holiday and when.
  6. Allow for a mechanism to withdraw unlimited holidays from staff who start underperforming, face disciplinary action or fail to meet standards set for them;
  7. Consider how you deal with those working their notice periods – e.g. will you remove the right to unlimited holiday for those working their notice periods or for those on garden leave?
  8. Allow for discretion to change the policy as your organisation’s needs require.

If you need any help with drafting an annual leave policy, please contact a member of our employment team, Bríd Price on 02920 829 113 or for a free initial chat to see how we can help you.

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