Unlimited Vacation Company Policy Template

Unlimited vacation policies have gained traction in modern workplaces as a way to promote flexibility, autonomy, and employee well-being. Instead of accruing a fixed number of paid time off (PTO) days, employees under an unlimited vacation policy can take time off as needed — within reason and with manager approval. When implemented thoughtfully, unlimited vacation policies can foster a culture of trust and accountability, while encouraging employees to prioritize rest and avoid burnout.

But despite the name, "unlimited" doesn’t mean unchecked. A well-written vacation policy outlines clear expectations for how and when time off can be taken, ensures business continuity, and prevents misuse. It also helps managers lead by example and create psychologically safe environments where employees feel empowered to take time off — without fear of falling behind or being judged.

What an Unlimited Vacation Policy Should Include

An effective unlimited vacation policy should clearly outline:

• Eligibility: Who qualifies for unlimited vacation (e.g., full-time employees only).
• Expectations: Guidelines for planning, communicating, and taking vacation days.
• Manager Approval: A process for submitting and receiving approval for time off.
• Business Needs: A note that time off should not interfere with essential duties or team productivity.
• Minimum Usage Encouragement: A recommendation or requirement to take a minimum number of days off per year to combat burnout.
• Exclusions: Roles that may not be eligible due to the nature of the work, or policies for part-time/contract workers.
• Coordination with Other Leave Types: Clarity around how this policy interacts with parental leave, sick leave, bereavement leave, etc.
• Holidays: How company-observed holidays are handled in relation to vacation days.
• Departure Considerations: A statement that unused time is not paid out upon termination, since there is no accrued balance.

Why an Unlimited Vacation Policy Is Important

Unlimited vacation policies reflect a shift toward results-based work cultures, where employees are evaluated on performance — not hours logged. Offering this flexibility can:

• Attract and retain top talent who value work-life balance.
• Encourage rest and recovery, which reduces burnout and improves overall productivity.
• Foster a culture of trust between managers and employees.
• Reduce administrative overhead associated with tracking accrued PTO balances.
• Promote fairness, particularly when all employees are encouraged to take time off regularly.

But the benefits of unlimited vacation don’t happen automatically. Companies must proactively encourage its use and create psychological safety around taking time off. Without guidance, some employees may take less vacation, not more.

Sample Unlimited Vacation Policy

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Unlimited Vacation Policy

1. Purpose

This policy is designed to support our culture of flexibility, trust, and accountability. We believe employees are most effective when they have time to rest, recharge, and attend to personal responsibilities. This policy provides eligible employees with the flexibility to take time off as needed, without accruing a set number of vacation days.

2. Eligibility

This policy applies to all full-time, exempt employees. Part-time employees, temporary staff, contractors, and interns are not eligible for unlimited vacation and will continue to follow the paid time off policies applicable to their employment classification.

Employees on a performance improvement plan (PIP) or who have not completed their onboarding period may have limited access to vacation time, subject to manager discretion.

3. Policy Guidelines

• Vacation Time Is Not Accrued: Employees do not earn or accrue vacation days under this policy. Instead, time off is granted based on individual needs and subject to manager approval.
• No Payout at Separation: Because vacation time is not accrued, no payout will be made for unused vacation days upon separation from the company.
• Time Off Requests:
  • All vacation time must be pre-approved by an employee’s manager.
  • Requests should be submitted via [insert time-off tracking system or process] with as much advance notice as possible, ideally two weeks or more for extended absences.
  • Managers may decline vacation requests that conflict with critical business needs or team coverage.
• Encouraged Minimum Usage: We strongly encourage all employees to take at least three weeks (15 business days) of vacation per calendar year. This includes occasional long weekends and one or more extended breaks. Time off is critical to maintaining performance, mental health, and work-life balance.
• Responsible Time Off:
  • Employees are expected to use their best judgment and coordinate with their team to ensure that time off does not negatively affect deadlines, team deliverables, or customer commitments.
  • Time off should be spaced appropriately to avoid disruption of core responsibilities.
  • In cases of excessive or inappropriate time off, the company reserves the right to revisit eligibility or revoke the policy for individual employees.
• Team Communication:
  • Employees are responsible for communicating their vacation plans with their team in advance and documenting coverage plans, including out-of-office contacts and transition of responsibilities.
  • Managers should encourage time off and model this behavior by taking their own vacation.
• Holidays and Other Leave:
  • Company-observed holidays are separate from vacation time and are outlined in the Holiday Calendar.
  • Sick leave, parental leave, bereavement leave, and other types of protected leave are also separate and covered under individual policies.
  • Employees should not use vacation time to replace other types of leave without first discussing with HR.

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4. Roles and Responsibilities

• Employees:
  • Plan time off in collaboration with managers.
  • Submit vacation requests with adequate notice.
  • Ensure all work and responsibilities are transitioned appropriately before leave.
• Managers:
  • Review and approve requests promptly and fairly.
  • Balance individual requests with business continuity.
  • Encourage employees to take time off regularly and lead by example.
• People Team:
  • Monitor policy usage and identify trends or areas of concern.
  • Provide support and education around the benefits of rest and recovery.
  • Update this policy as needed to reflect business needs or legal changes.

5. Abuse and Misuse

The unlimited vacation policy is built on trust. Repeated or prolonged absences without proper notice, documentation, or approval may be treated as a performance issue and addressed through the appropriate HR channels. Misuse of this policy may result in corrective action, up to and including termination.

6. Policy Review

This policy will be reviewed annually to ensure it aligns with our organizational needs and supports employee well-being. Feedback from managers and employees will be considered during reviews.

Frequently Asked Questions

How much vacation time can I really take?
There is no formal cap, but time off must be reasonable, approved by your manager, and balanced with team and business needs. Employees are encouraged to take a minimum of three weeks per year.

Can I take a vacation during my first 90 days?
New hires are encouraged to complete onboarding before taking extended time off. Any vacation plans during this time must be disclosed during the hiring process and approved in advance.

How do I ensure my team isn’t overwhelmed when I’m away?
Plan ahead and coordinate with your manager and teammates. Share a coverage plan and delegate responsibilities so work continues smoothly in your absence.

Does this mean I don’t get paid for vacation?
No — as a full-time, salaried employee, your pay is not impacted when you take approved vacation under this policy.

What happens if I leave the company?
Because vacation is not accrued, there is no payout for unused days upon separation.

Can managers reject vacation requests?
Yes — managers can decline or reschedule vacation requests if they conflict with key deadlines, projects, or team coverage needs. Requests are evaluated based on timing, team impact, and fairness.

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