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IS UNLIMITED VACATION A RECIPE FOR BUSINESS SUCCESS?

A recent Globe & Mail article told of some companies which have adopted an unlimited vacation policy for certain employees. This strikes me as a short-term trend which won’t have much staying power.

It seems the concept of unlimited vacation is part of a Results Only Work Environment (ROWE) model. ROWE originates in a book, by authors Ressler and Thompson, called “Why Work Sucks and How to Fix It”.

The essence of ROWE seems to be that employees are free to do as they like as long as their assigned duties get completed.

ROWE apparently hasn’t been embraced on a widespread basis just yet, but at least a couple of companies have gone with the unlimited vacation concept for certain of their employees. Netflix (the U.S. based movie rental company) and IBM have, to a certain degree, freed themselves from allotting and tracking employees’ use of annual vacation.

A vice president at Netflix was quoted as saying that, “You’ve got to perform and do the job, so we give employees a lot of freedom and responsibility.” A representative of IBM stated, “… there is no policing, and employees are empowered to take vacation when they want.”

It is worth noting that neither Netflix nor IBM have extended the concept of unlimited vacation to assembly-line employees. It seems that the model is really only suitable for so-called office employees, whose duties and responsibilities don’t call for a specific daily production output.

The Globe & Mail cited statistics showing that not all employees use all of the annual vacation time they are allotted. That may reflect a sense of guilt over taking time off work as well as the pressures of working during tough economic times.

Interestingly, it seems that neither Netflix nor IBM has tracked the impact on actual vacation usage of the freedom they’ve given to their employees. The Netflix representative claimed “There’s no tracking, no record, no accounting” which is, of course, directly contrary to the “if you can’t measure it, you can’t manage it” school of thought.

Netflix does claim that productivity increased by 35% as a result, which makes me wonder whether that just means their employees had been drastically underperforming. Regardless, it seems Netflix is convinced the concept unlocked some hidden productivity potential in their employees.

Netflix’s care-free attitude towards record keeping wouldn’t fly in most jurisdictions in Canada. Taking B.C. as an example, the Employment Standards Act imposes on employers the obligation to keep records of items such as employees’ use of their annual vacation entitlement.

Not keeping those records would leave the employer vulnerable to claims by employees that they have not been provided with the statutory minimum vacation entitlement.

A skeptic might wonder if the concept of unlimited vacation is actually a strategy to get office employees to take less time off work. That possibility reminds me of the President of a company at which I worked, who espoused the view that “vacation is just an excuse to come to work without a necktie”.

It also seems to me that the concept of unlimited vacation may be a roaring success when business is on the upswing but not so much during a down cycle. Does it work both ways –does the employer expect the employee to take less vacation during tough times?

If that’s the case, then it’s another potential problem area when it comes to Canadian employment standards legislation. Providing employees less than the statutory minimum annual vacation entitlement is not an option.

There is a lot to be said for treating people like adults. It’s the workplace equivalent of the “Golden Rule” – treat people as you would have them treat you – and is an admirable objective for any employer.

But in a relationship which is still at its legal essence one of “master and servant” (notwithstanding the anachronistic feel of those words), can complete freedom to act as one chooses be a recipe for success?

There’s one sure way to find out. Wait for a few years and then look for news of whether Netflix and IBM are still on the unlimited vacation bandwagon.

Robert Smithson is a lawyer in Kelowna practicing exclusively in the areas of labour and employment law. For more information about his practice, or to view past “Legal Ease” columns, log onto www.pushormitchell.com. This subject matter is provided for general informational purposes only and is not intended to be relied upon as legal advice.

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