Benefits & Comp • 8 MIN READ
Unlimited Annual Leave: Does It Actually Work?
APR 25, 2026
Unlimited leave sounds like a dream perk. But the reality is more complicated. Here is the honest assessment HR leaders need.
The appeal of unlimited leave
Unlimited annual leave policies, where employees take as much time off as they need provided their work is done and performance remains strong, have become a staple of tech company benefits packages. The logic is appealing: treat employees as adults, trust them to manage their own time, and avoid the administrative overhead of tracking accrual. For candidates from traditional environments, it signals a progressive, high-trust culture.
Why it often backfires
The research on unlimited leave is mixed at best. Several studies have found that employees with unlimited leave policies take, on average, fewer days off than those with fixed entitlements. The reason is social: without a clear entitlement, employees are unsure what is acceptable and default to caution. Senior leaders who rarely take leave set an implicit norm. The result is a benefit that sounds generous but actually delivers less rest and recovery than a conventional 25-day policy.
How to make it work
If you want to offer unlimited leave, set a minimum rather than just a maximum. State explicitly that employees are expected to take at least 20 days per year. Track leave-taking data and flag anyone consistently taking fewer than 15 days for a conversation with their manager. Require senior leaders to take and publicly communicate their own leave, modelling the behaviour you want. Pair the policy with a clear performance framework so employees know their work output is what is measured, not the hours they are present.
The legal dimension
In the UK, all workers retain their statutory 5.6 weeks of annual leave regardless of any unlimited policy. The practical implication is that you cannot enforce a 'use it or lose it' provision on statutory leave without proper notice and opportunity to take it. Ensure your unlimited leave policy explicitly preserves statutory rights and that you have a process for paying out unused statutory leave on termination.
