The pros and cons of an unlimited time off policy for employers

Did you know that 78% of employees want a better work-life balance? This has prompted the number of companies offering an unlimited time off policy to have risen sharply in recent years, as these forward-thinking employers recognize the benefit as a gateway to a more flexible workplace. Under an unlimited time off policy, employees can take as much time off as they wish. But, before you picture an empty office with all employees perpetually on holiday, you should know that a key caveat of the policy is that employees must still be able to perform their functions normally and that company business isn’t disrupted. 

Without further ado, let’s dig deeper into the topic and explore the pros and cons of an unlimited time off policy from an employer perspective in this Pacific Prime article. 

An unlimited time off policy improves employee morale…

When an employee gets told that they can take as much time off as possible as long as their work is done, it signals to them that their employer trusts them enough not to micromanage or require their presence in the office just for the sake of it. It also shows employees that their employers value their mental and physical health and appreciate that they’ve got a life outside of work. This improves employee morale and contributes to a more positive workplace environment, which in turn brings its own share of benefits like increased productivity. 

…and can help fight employee burnout. 

Due to the impact of the COVID-19 pandemic, the cost of living crisis, and other stressors on employees’ lives, many are becoming increasingly burnt out. This can either lead to absenteeism, where employees take sick leave or are absent from work, or presenteeism, where employees are physically present in the office but not as productive. It goes without saying that both phenomena are very costly. For example, the American Productivity Audit estimates that presenteeism costs the U.S. economy USD $150 billion in lost productivity every year. 

This improves talent attraction and retention for employers…

Who wouldn’t want to work for an employer who trusts them and cares about their wellbeing by offering an unlimited time off policy? This leads to improved talent attraction and retention for employers, which has the potential to enhance business outcomes. After all, talented employees are the backbone of any organization as they bring with them the necessary knowledge, skills, experience, innovative capabilities, and dedication that can put your company ahead of your competitors. 

…and saves them plenty of money. 

Speaking of talent attraction and retention, an unlimited time off policy can also save your company plenty of money. If your company isn’t facing a high turnover rate due to issues of employee morale or employee burnout, then you’re effectively saving money on recruitment efforts, which can really add up and cost your business. To give you a rough idea, recruitment efforts include costs for things such as:

• Internal HR costs 
• Job board advertisement fees
• Background checks and security clearance
• Lost time due to interviewing, training, and onboarding 
• And more. 

But an unlimited time off policy is often underused and/or abused…

An unlimited time off policy is often underused as employees are afraid of overstepping – particularly in highly competitive industries where employees need to prove themselves. This leads to employees taking less time off than those under the traditional time off policy, which effectively defeats the purpose of an unlimited time off policy. On the other end of the spectrum, an unlimited time off policy can also be abused, burdening colleagues and hindering workflows. As such, employers need to encourage employees to take full use of the policy

…and disruptions can occur if the policy has no restrictions. 

Even if employees don’t intend to abuse the unlimited time off policy, disruptions can occur if the policy is put in place hastily and without guidelines or restrictions. For example, if many employees take time off during popular periods like summer and winter holidays, it could still burden colleagues and hinder workflows. To get around this problem, employers can increase communication around time off, discussing one-to-one plans with employees and encouraging them to discuss amongst each other. 

For all things employee benefits, get in touch with Pacific Prime today!

If you’ve read to the end of the article, then it’s clear you care about employee benefits such as unlimited time off. There’s a whole world of employee benefits out there for you to explore and Pacific Prime is here to support you. As a reputable and experienced global health insurance and employee benefits brokerage, we have over two decades of experience helping employers like yourself design, tailor, manage, and optimize their benefits offerings. We adopt a tailored, technology-driven approach that puts your organizational needs first. 

To consult an employee benefits advisor, you’re welcome to reach out to our corporate team today!

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Suphanida Thakral

Senior Content Creator at Pacific Prime

Suphanida is a Senior Content Creator at Pacific Prime, an award-winning global health insurance and employee benefits specialist.

With over 5 years of experience in the field, Suphanida spends the majority of her day synthesizing complex pieces of insurance-related information and translating this into easy-to-understand, engaging, and effective content across a variety of media such as articles, infographics, whitepapers, videos, and more.

Suphanida is also responsible for planning and publishing three whitepapers released annually by Pacific Prime: The State of Health Insurance Report, The Cost of Health Insurance Report, and The Global Employee Benefits Trends Report. Additionally, she handles the LinkedIn profiles of Pacific Prime’s Founder and CEO, as well as Global HR Lead.

Suphanida’s strengths lie in her strong research and analytical skills, which she has gained from her BA in Politics from the University of Warwick and Erasmus Mundus Joint MA in Journalism from Aarhus University and City, University of London.

Being of Thai-Indian origin and having lived, studied, and worked in Thailand, the UK, and Denmark, Suphanida also has a unique, multicultural perspective that helps her understand the struggles of expats and globetrotters.

Outside of work, she enjoys traveling to new places and immersing herself in different cultures.

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