The Pros and Cons of Open Leave and Set Vacation Days

​The past few years have been tough on employees. During the pandemic, when many businesses switched to remote work, nearly 70 percent of employees reported working on weekends and 45 percent revealed they worked extended hours during the week. Additionally, by the end of 2021, research from the Society for Human Resource Management (SHRM) found that most workers hadn't taken their allotted vacation days. Fortunately, it appears that's starting to change.

"We saw during the pandemic that not many employees took vacation. However, we're now starting to see more and more employees using their time off, which is a positive shift," said Chelsea Pyrzenski, global chief people officer at WalkMe, a digital adoption platform based in San Francisco.

Like many other companies, WalkMe stresses the importance of vacation days to its 500 employees. The firm provides up to 21 days per year, along with time off for holidays and five "RefreshMe" days each calendar year so that employees can take any Friday off to enjoy a long weekend, Pyrzenski said.

While some businesses choose a similar type of structured policy, others prefer open leave in which employees can take off as much time as they like, as long as they fulfill their job responsibilities and get approval from their boss.

To be sure, there are pros and cons of both approaches, and understanding those is critical before creating, modifying or implementing a new plan for employee time off.  

The Pitfalls of Open Leave

While open leave or flexible paid time off (PTO) may seem like a great option on paper, in reality it can be detrimental to employees, say some employment experts.

At Next PR, a public relations agency with 50 team members and locations nationally, CEO Heather Kelly chose to create a structured policy rather than provide open leave. Team members receive a set number of days based on their job title and company tenure.

"I structured our policy due to the pitfalls that come with unlimited vacation," Kelly said. "Most companies that offer unlimited time off have such ambiguity around the amount of time the team is 'allowed' to take off. Research shows that employees with unlimited time take less time off than those who get a fixed number of days. I didn't want my team guessing when to take time off; it's time they've earned, and they should feel empowered to enjoy it," she explained.

Pyrzenski echoed a similar sentiment.

"Compared to the open-leave option, we've found that employees are more inclined to take time away from work when they are able to see the number of hours they are allowed to take off, how much they are accruing and how much they may not be accruing because they haven't taken enough time off," she said.

At Next PR, Kelly said, a set vacation policy ends up being much more favorable to employees instead of to the business, which is the way it should be. "Accruing PTO allows team members to roll over or pay out their PTO at the end of the year. If they don't use all of their days in a given year or they leave the company, they deserve to be compensated for those days they earned," she said. "With unlimited PTO, the money is kept in the company's pockets instead."

When Open Leave Makes Sense

Companies that offer a bank of paid time off as opposed to paid open leave are still in the majority; only 6 percent of companies indicated they provide open leave, according to the SHRM 2022 Employee Benefits Survey. Still, there is a case to be made for open leave. Research shows younger workers tend to expect more flexibility in their schedules and want greater control over their work/life balance, especially in light of the past few years.

"Many [Millennials and Generation Z employees] have re-evaluated their career choices," said Kristi Johnson-Noble, director of people at Austin-based lifestyle services provider Spruce, which has 94 employees and an unlimited PTO policy. "Some have quit the workforce altogether."

Vacation days appear to be "a huge factor in choosing where they want to work [because of] the fact that they are seen and valued. Offering someone the opportunity to manage their time off based on need and not the number of accrued hours on the spreadsheet is a major piece of this," Johnson-Noble said.

The Los Angeles-based company MerchantMaverick.com, which has 26 employees and creates guides on financial business products, also offers unlimited PTO to all full-time employees.

"Our time-off policy is structured this way to offer flexibility to our team members and also to relieve the administrative burden of accruing and tracking PTO," HR director Charlotte Kackley said. "We also recognize the impact PTO can have on mental health, so we consider it another tool to help maintain engagement and counteract burnout."

Whitney Hoffman-Bennett, SHRM-CP, vice president of talent and culture at CallRail, an intelligence platform with more than 300 employees in Atlanta, said her company has a flexible—not unlimited—PTO policy.

"In fairness, unlimited policies aren't really unlimited; if you don't show up to work for six months, you likely won't still have a job," she said. "That being said, we don't put a cap on how many days employees can take."

CallRail chooses to provide flexible PTO because it wants its employees to have a healthy work/life balance.

"It's so important for companies to understand that their employees have lives outside of work," Hoffman-Bennett said. "CallRail's policies have enabled me to spend more time with my family. As a mother to three young children, a flexible PTO schedule means so much to me and has allowed me to be there for key moments in my children's lives."

Best Practices for Your Vacation Policy

Whether you choose a structured or open-leave policy, there are several best practices to keep in mind. First, talk to your employees about what they want.

"Communication is critical," Johnson-Noble said. "The employer must communicate their expectations and understanding of the policy. And the employee must be very open in their need and planning with their team for time off."

According to Hoffman-Bennett, CallRail will share the annual average PTO that employees take as a guide, as well as encourage employees to take one continuous week of vacation per year.

"We encourage employees to take a week off for mental wellness or to focus on something they feel passionate about, something other than work," she said. "One of our core values is 'Turn it off,' meaning we encourage employees to close their laptops and be fully present on their vacation time."

Another smart guiding principle for HR is to focus on doing what works for your business and your company's culture, experts advise.

"If flexibility and autonomy are really important to your employees, then a structured vacation policy might not be the most fitting option," Kackley said. "On the other hand, if most of your employees are paid hourly, implement a set number of days."

It's always important to show your employees you care about their well-being, she added, and providing them with a vacation policy that meets their needs is how you can do just that.

"If your team doesn't take time off to step away from work, they're going to burn out," Kelly said. "I see a noticeable difference in my team when they return from vacation. It doesn't matter if they go on an extravagant European trip or take a day to focus on self-care—it's incredibly important for teams to be able to walk away from their desks and focus on themselves."

Kylie Ora Lobell is a freelance writer in Los Angeles.