Some firms are offering unlimited time off for employees. Will it work? What experts say

The COVID-19 pandemic has changed the concept of work in more ways than one. With work-from-home and hybrid office cultures becoming a reality for many, time-off policies are also changing.

Last week, Microsoft became the latest company to announce that all its salaried U.S. employees will get unlimited time off, under its new policy known as “Discretionary Time Off,” The Verge reported. In Canada, construction services company ElissDon, and software provider, RL Solutions, already have in place an unlimited time-off policy, according to Monster.ca, an employment website.

However, some experts feel that while such policies could boost morale and engagement, they also come with the risk of pushing employees to take fewer vacation days amid fears that employers might perceive them as not valuing work enough.

It’s “problematic” because it’s putting the onus on the employee,” said Rachael Pettigrew, assistant professor at Bissett School of Business at Mount Royal University in Calgary, Alberta.

It appears “empowering, but the challenge is that it can trigger a sense of, are you actually loyal to the organization or are you actually invested in your job if you’re choosing to take vacation time?”

This is especially challenging in a work culture that values work and productivity over all else, says Pettigrew. She explains that Americans in general are not known for taking a lot of time off, so their allocated vacation time is often lower compared to other countries.

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According to the Canadian Payroll Services website, “Americans are known to be workaholics and while Canadians are just as dedicated to their work, they take more breaks and are more likely to completely tune out after their workday.”

Unlike Americans, Canadians are also more likely to use all of their vacation time, the company adds.

“Companies can offer any policy…but the culture of the organization and the managers’ attitudes can inhibit the use of those policies,” said Pettigrew.

“If I still report to someone with archaic views around vacation time…I’m not going to benefit…I’ll probably take less vacation time than I used to before, because when I go to my boss, it’s seen as discretionary, it’s seen as a choice. And so that will inhibit my ability to take it,” she added.

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There are benefits to the policy though, says Pettigrew as employees will have autonomy and choice about how and when to use their days.

“They may end up more satisfied at work and it would be more productive for those who can do work quickly…it means that if they get their work done at a fast pace, they can benefit from taking some time off,” she said.

Diane-Gabrielle Tremblay, a professor in the economics and management department at TÉLUQ University, says the new policy will be something a lot of people will look forward to.

“They will certainly appreciate the autonomy, the flexibility, and I think at the moment, that’s what a lot of firms are trying to gain — to try to not only attract workers, but also retain them,” said Tremblay.

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With the current labour shortage, Tremblay says that firms are trying to differentiate themselves by offering such flexible arrangements.

“Whether it’s offering a four-day work week or the idea of having more vacation, clearly this is for attracting and retaining all workers, both young and those who are close to retirement,” she said.

Tremblay explains that those who are close to retirement can actually be convinced to stay on longer if they have more flexibility and the time to go on longer vacations.

Pettigrew also thinks this new policy is a recruitment tool.

She explains that potential employees want flexibility and applying to an organization that offers unlimited vacation is “highly tantalizing.”

“The challenge is…everyone’s aware, but is it actually available once I’m in the door? So, the risk is if the policy is there, but then organizational culture doesn’t support it… That triggers a breach of my psychological contracts with the organization and then it leads to turnover,” Pettigrew said.

Tremblay also echoed that same sentiment and said that “it’s up to the manager to speak out” and let people know that it’s okay to take time off.

Both Tremblay and Pettigrew agree that firms in North America will continue to try and make themselves stand out by announcing and implementing these new policies to employees and job seekers who are very clear and assertive about their demands, now more than ever.

“I think it’s happening partly because of COVID-19…which made people think over things…but I would say labour shortage is really quite determinate in the sense that people are putting forward these preferences (for flexibility) that they have,” said Tremblay.

She explains that when young people came into the labour market in the 80s and 90s, the attitude was that if you had a job, and you were happy, it didn’t matter if it was part-time or came with bad working conditions.

“You couldn’t ask for longer weekends or four-day work weeks, things like that….but this labour shortage has forced companies to respond and meet these demands that are coming from basically all groups to attract and retain workers,” Tremblay said.

Pettigrew also acknowledges that employers are spending more time investing and thinking critically around time-use and flexible policies because “the composition of the workforce is really changing.”

“When we look at the retiring baby boomers, they kind of have a live-to-work versus work-to-live mentality,” said Pettigrew.

“Now younger generations are much more invested in kind of the work-to-live perspective. They want work-life balance, they want flexibility…And so a lot of that (policy) is responding to social pressure and demographic shifts,” she added.