Netflix offers employees unlimited holidays — should all businesses try it?

Lydia SmithWriter, Yahoo Finance UK
Netflix HQ in Los Gatos, California, US. Photo: Getty
Netflix HQ in Los Gatos, California, US. Photo: Getty

At Netflix (NFLX), named one of the world’s best employers by Forbes, employees are offered unlimited holidays – just one of the many perks of working for the streaming giant.

This might seem like a pipedream for many of us, but endless paid time off is becoming a popular perk among start-ups and high-profile firms. 

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In the mid-90s, companies including IBM began to scrap traditional annual leave policies and instead let staff take as many holidays as they wanted. Fast-forward to 2019 and a number of start-ups and high-profile firms have jumped on the bandwagon, including Kronos, Songkick, Glassdoor and the Virgin Group.

At Netflix, the holiday policy is simple. Salaried employees can take as much time off as they like. Their days aren’t tracked – so it’s up to them to decide how much time they need or want off.

From an employee perspective, an unrestricted holiday allowance is the ultimate perk. Having control over your time off is believed to make workers happier and help them create a better work-life balance, giving them more flexibility over when they take a well-earned break from the workplace.

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Unlimited paid time off is also thought to be beneficial for businesses too, despite fears over workers disappearing for three-month trips abroad. These kind of policies are thought to make staff more productive and reduce stress from overwork, helping companies attract and retain skilled employees.

And when workers are entrusted by their employers to make their own decisions, it is also believed to help foster a positive working environment.

However, a number of problems are associated with unlimited time off – and it may seem like more of a bonus than it actually is.

When the software firm CharlieHR was founded in 2015, every employee received unlimited, fully-paid holiday days, no matter what role they filled. Yet last year, chief operating officer and co-founder Ben Gateley announced the policy was being scrapped.

One key reason was that staff were simply not taking the time off they were entitled to. “Putting a numerical limit on holiday time has a counterintuitive effect,” Gateley explained in a blog post on the company’s website. 

“If you are given 25 days holiday that are yours to take, then you are subconsciously motivated to take them. It's some kind of psychological quirk of ownership – when something belongs to you, then you immediately value it far more highly.

“Whereas the lack of a number – the very concept of unlimited – potentially meant you didn't value that holiday time in the same way.”

Although unlimited holiday policies aim to reduce stress and lower the risk of employee burnout, the reality is quite different. Many people feel guilty about booking too much time off, which can lead to anxiety.

When a holiday allowance is open and flexible, staff can feel uncomfortable about deciding how much time they should actually take off – so they don't bother and end up taking less time off than they would if they had a set 28 days of annual leave.

In a recent study, the HR firm Namely found that employees with unlimited vacation plans take an average of only 13 days off per year, whereas traditional plan employees average 15 days annually. 

In a company-wide survey at CharlieHR, one employee commented: “I remember guessing at whether I was taking the mick... and what other people across the company would think of my usage? I felt like I was somehow doing something against the best interest of the company and my team-mates.”

Uncapped leave schemes can also create tension in the workplace. Some employees may abuse the system or want to take more time off than others, leaving those left in the office to pick up the slack at work. 

READ MORE: Why leaving work on time is good for your career

Unlimited holidays aren’t actually unlimited, as there will be times when businesses need their staff to be available too. Smaller firms may struggle to implement unlimited holiday schemes if they can’t cover staff absenteeism.

While this might not be a problem for the larger technology companies that offer this perk, others may have to call employees back into work during busier times – which would no doubt lead to disgruntled workers.

Some companies have found a way to make unlimited holidays work for them, but it is clearly not a simple process. From managing vacation scheduling conflicts to ensuring staff actually take the time off they need, endless paid time off might be more of a headache than it is worth.

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