Unlimited vacation: Benefit or gimmick?
Amdocs announced a new unlimited vacation policy, but while data show that employees take fewer days off they also feel uncomfortable when they do - and it may even harm them financially. How are companies that have adopted such a policy coping?
After two grueling years of work during the Covid-19 pandemic with closures, isolation, illness, working from the office then working at home, working alone, dealing with children at home, and a heavy cloud of uncertainty, if there is one thing that workers need it’s a vacation. But the reality is that precisely during this challenging period over these last two years, workers have not gone on vacations, nor do they simply just take days off.
This past week, in the face of fierce competition to attract workers in all fields, especially in high-tech, Amdocs announced that it will give all 29,000 of its employees around the world "unlimited vacation days." In doing so, it joins a number of other companies, which provide their employees with this benefit, which begs the question of whether and to what extent it really benefits employees.
According to data from Sorbet, an Israeli startup which develops a platform for managing employee vacation days for companies, the unlimited vacation days policy instituted by U.S. companies, especially in the high-tech field, causes an average loss of $2,000 per employee each year. This is because in companies that offer unlimited vacation, employees take an average of 13 vacation days a year compared to 15 out of an average of 20 days given to them in companies with regulated vacation.
"People tend to think that the Israeli employee will take advantage of all vacation days you offer them, but we see that in practice it is not so," says Vital Eilat-Raichel, co-founder and CEO of Sorbet. "When there are a set number of days off as a policy then there is someone who calculates it and managers have to keep an eye on it and there are also financial implications for the company, so there is at least preoccupation with how people take advantage of their days off. But when working 24/7 in a stressful and intense job you are not really encouraged to go on vacation. If there are no supportive processes, it just does not happen and people take fewer days off.”
Liat Shahar, Minute Media’s Chief People Officer, says that “over the past two years we have led internal processes in the company to examine work models that will allow each and every one of us to conduct ourselves in the best way while maintaining balance and personal well-being."
In addition to combining work from home and the office, we have also created a hybrid vacation model that expresses people's trust and responsibility to manage their time and their vacations. We all know that because of hybrid work the boundaries have blurred.
“In our model employees have their annual leave as before, but also the ability to take additional days without limit. In this way we preserve the importance of defined days off - so that there is no situation where employees do not take days off and if there are days off that were not taken by employees - they are paid if the employee leaves the company.
Unlike what is done in larger companies there is no need to ask for time off from bosses. “We trust each other and encourage personal responsibility. The assumption is that employees will not take a day off, for example, on the day there is a version release or any other very busy period," says Shahar. She explains that the policy has no effect on the number of days off that employees take because the allocation of days off has remained as before and there is an annual allotment.
Tailor Brands, a startup which employs 120 people, started an unlimited vacation days policy when the company was founded in 2015. "Our worldview is about outputs and not work hours, and when that's your worldview - it should be incorporated not only in day-to-day policy (where we allow hybrid work that suits the team members) but also in vacation policy," says Yael Sapir- Zehavi, VP of Human Resources at the company.
She strongly believes that in order for such an unlimited vacation policy to work, executives must take time off too. "In a company where there is such a policy, and managers do not take time off - it sends a strong message to the staff. But when all managers take time off - it gives a personal example and a strong message of a proper balance between work life and personal life.
Another way to encourage taking vacation days, is to make sure the vacation approval process is easy. The policy works so that when a team member wants time off - they confirm it with their manager, and send an email to update that they will be off, so that we can close it in an organizational holiday log, so people can see they are not there and won’t schedule appointments. That's all. The company asks employees to approve very long vacations two months in advance so that they can prepare backups.”
Is offering unlimited vacation even legal in Israel?
Unlike the United States, Israel has a minimum statutory number of vacation days, so the question arises as to whether an unlimited vacation policy is legal and whether it means that employees' entitlement to vacation days will be determined by the minimum in the law.
"The law in Israel stipulates a minimum quota of vacation days that the employer is obligated to give to the employee, according to the employee's seniority in the workplace. Any employer can grant the employee a vacation quota that exceeds the minimum quota set by law,” explains Tamar Golan, Partner and Director of the Labor Law Department at M. Firon & Co.
“However, employers can allow a higher quota of vacation days than stipulated by law in the employment contract. Thus, even when there is an unlimited vacation policy the employees will not lose the payment for the vacation days they are entitled to in case of termination of employment.