Growing Pains

When I was going through the process of turning Added Bytes from a small one-man web development agency into a small three-person product company, there were a few issues I had to address. Things like … what hours we would work, what days we would work, and how much holiday everybody could take.

When you’re working alone and it’s your own company, decisions about holidays are simple. Can I afford to take a break? Can I find someone to cover my obligations while I’m away? How long can I take away from earning? How badly do I need to step away from work? You answer those questions, and you make a decision about where you’re going to go and how long for. Simple.

But for employees, making the decision in most companies is a little different and rather more simple. How much “holiday allowance” have I earned, how much do I have left, and how much will I need for later in the year?

My problem with the traditional model is that it forces people to ration their time off. We believe in working to live, not the other way around, and that means putting family and personal needs first, and rationing your days out of the office doesn’t fit that model at all.

The idea that someone would be unable to go to a family event because they had “run out” of days is crazy to me. Similarly, it makes no sense to the business to have someone who is burning out not take time away from the business to recharge because they need to “save” the time for later.

Looking back at when I was an employee myself, what I wanted from a holiday system was just to be treated like an adult. I was capable of managing my own time and understanding what the business needs from me. Now, as an employer, I wouldn’t hire anyone that I thought wasn’t capable of the same. So that’s the way we approach it as a company.

I’m also a firm believer in measuring performance rather than attendance. Someone arriving early and leaving late is no good if all they are doing is staring vacantly at their screen because they’re in a funk. Productivity is a tricky thing to measure, but it has been pretty well established by now that well-rested people do better work.

This is well-trodden ground now, at least when it comes to people thinking about the problem. I found these articles by Jacob Kaplan-Moss, Steve Konves and Mathias Meyer really helpful when it came to getting my thoughts in order.

What’s Wrong with “Unlimited Holiday”?

Unlimited holiday is a lovely concept, and in my wide-eyed and idealistic view it always seemed like an obvious solution to the issues with traditional holiday systems. But on reflection it has several significant problems.

Perhaps the biggest of these issues is that of expectation management. As an employee with the standard (in the UK) 28 days of holiday, you know how many days you have available to take in a given year. Those are your days and you are owed them as part of your total remuneration for working for the company.

With unlimited holiday, there is no set number of days. Instead, people need to form their own idea of what is acceptable and what is expected. Some will default to the standard 28 days. Others will take their cues from colleagues. The lack of clarity immediately leads to confusion, potentially to stress, and to imbalance – where one person might end up taking full advantage another may not feel confident doing so.

Most people will end up looking at their manager or the company owners to see what they are doing and that sets expectations too. If the boss is only taking 10 days a year, then that becomes “standard”. Yes, it’s different for the boss, but without anything else to look to for guidance, that becomes a problem.

Second, unlimited holiday isn’t really unlimited. In no company with unlimited holiday is it OK to take 364 days off in a year. It’s a misnomer, and it starts the conversation about holidays off on a bad footing.

Conversely, it fails to ensure people take enough holiday. The whole point is to make sure your team are well rested, not stressed about having to choose between cousin Jimmy’s wedding and seeing their kid sprint to victory on their sports day and putting their wellbeing first. In some companies, an “unlimited holiday” policy translates in reality to people taking less time off than they were under a traditional allowance system.

Similarly, people feel guilt when taking holidays already. When the holidays are from a set allocation that’s less of an issue as everyone is going to take the same time off. But when it’s imbalanced, some people will worry about the burden their holidays place on others, which can discourage them from taking time away.

Depending on the specifics of the system, people may not be paid for unused holiday – that being the amount of holiday they would have accrued under a traditional system, and that they would usually be paid for on leaving the job. That has led to a widespread backlash against unlimited holiday by people who see it as a cynical ploy by companies to simply pay less.

In the EU, we have minimum requirements for holiday allowances. Saying “unlimited holiday” in your contract may not be enough to satisfy the requirements of that directive.

So, it seems pretty clear that “unlimited holiday” needs a rebrand and far more clarity. It needs to be fairer, legally defensible, and needs to make sure it doesn’t backfire and lead to people taking less time off.

We have Flexible Holiday.

In the end, we devised a system which, we hope, combines the best of all worlds. At least, that’s what we’re hoping – we’ll write in future about how this works out for us. Our policy:

  • Treats people like adults, empowers them to take the time off they need and trusts them to manage their time and work.
  • Manages expectations. There’s a minimum expectation, and there’s guidance for what we think is going to be pretty typical.
  • Reduces uncertainty. Booking holiday over 20 days isn’t stressful, because you know where you stand and what is reasonable.
  • Gives the company the discretion to ensure the system isn’t abused.
  • Makes it simple for us to show we are adhering to the obligations we have under UK and EU law.

So without further ado, here it is:

The Added Bytes Holiday Policy

To make it a little easier to keep track of holiday taken, we make a distinction between company closures and holidays. The company is closed for a week over Christmas and on bank holidays.

How Much Holiday?
In a standard year, people have:

  • 11-ish days of company closures (Christmas and bank holidays)
  • 20 days of remaining statutory holiday allowance
  • Discretionary holiday with no set upper limit

How Much Is Too Little?
There is a company-wide minimum holiday expectation of 20 days per year for full-time employees (not including company closures, pro-rated for part-timers). Unused statutory holiday is not rolled over, so it’s definitely better to use those days!

How Much Is Too Much?
The company expects that people will opt to take around 25-35 days of holiday per year, not including company closures. Some years it will be more (and that’s OK), some will be less.

Does the Company Pay For Unused Holiday?
Unused discretionary holiday is not paid out when someone leaves. However, statutory holiday is accrued as it would be in any other company and unused statutory holiday is paid out when someone leaves.

For example, if someone leaves the company six months into a holiday year (which runs January to December) having taken ten days of holiday (not including company closures), they will have four accrued days left and get paid for those untaken days.

To Be Continued …

Company culture isn’t something you can set and forget. It needs to evolve as the company grows, and it depends in part on the people in the company too. So we expect to revisit and refine this over time as we grow and as we face new challenges.

But for now, this feels like it gets the balance right. It’s the policy we mean by “unlimited holiday”, but with clarity and managed expectations.

Now, I’m miles off my minimum, so I’m going to book a week off to make the most of another great British summer.

Dave is the founder of Added Bytes and has been building websites since the early 90s. He’s one of those fortunate people who gets to do what he loves for a living.