One example of a long-accepted U.S. practice that is back in vogue and now garnering global attention is unlimited or “open” vacation policies. The concept of unlimited vacation (or paid time off) developed in the U.S. over the past decade, as companies searched for ways to give employees greater time off flexibility, reduce administrative tracking burdens and cut costs by avoiding payout of accrued and unused vacation under state laws. While this policy has clear benefits, it can be tricky to implement even in the U.S. (with the crop of new paid sick leave, for example), and a whole new set of challenges arise when considering global implementation of unlimited vacation.
While the idea of open-ended vacation access can be exciting and motivating for a global workforce, prior to implementing an unlimited vacation policy outside the U.S., however, there are several key factors that companies should consider, to ensure that they roll out a policy that both reflects the company’s practices and intentions and also complies with local laws.
As a starting point, it is important to first understand the minimum statutory vacation / holiday entitlements that non-U.S. employees enjoy on a country-by-country basis. This is because the unlimited vacation policies can only offer vacation days that are in addition to these statutory entitlements. Practically, this means non-U.S. employers may need to separately manage statutory and unlimited time off, among other requirements.
Then, the unlimited vacation policy will need to be carefully drafted for use outside the U.S. to mitigate against several risks, including:
- the policy becoming an acquired right;
- potential discrimination if not granted by managers equitably; and
- application to unpaid leaves and abuse of the policy.
Further, implementation steps such as notice, consultation and translations requirements should also be considered. Finally, companies should determine the potential cost savings and administrative costs involved in implementing an unlimited vacation policy outside the U.S.