Unlimited Holiday Policy UK: Pros, Cons & How to Make It Work (2026)
Unlimited holiday sounds generous — but does it actually work? We examine the legal requirements, the evidence on whether people take more or less leave, and how to implement the policy properly if you decide to go ahead.
What is Unlimited Holiday?
An unlimited holiday policy — sometimes called unlimited paid time off (PTO) or flexible leave — allows employees to take as much annual leave as they want, provided their work gets done and their manager approves the time off. There is no fixed allowance of 25 or 28 days. In theory, employees simply book time off when they need it.
The concept originated in US tech companies, notably Netflix, which introduced it in the early 2000s. It has since been adopted by a growing number of UK businesses, particularly in technology, creative industries, and professional services. Companies like Goldman Sachs, LinkedIn, and several UK startups and scale-ups have implemented some version of the policy.
But unlimited holiday is more nuanced than it appears. Before you introduce it, you need to understand the UK legal position, the real-world evidence on how it plays out, and the practical steps required to make it work.
The Legal Position in the UK
This is the single most important thing to understand: unlimited holiday does not mean employees can take zero days off.
UK Statutory Minimum
Under the Working Time Regulations 1998, all full-time workers in the UK are entitled to a minimum of 5.6 weeks' paid annual leave per year — that is 28 days for someone working five days a week (including bank holidays, unless your contract provides them on top).
An unlimited holiday policy sits on top of this statutory minimum. You cannot contract out of it. Even if your policy says “take as much as you like,” employees must still take at least 28 days, and you must still track that they do. For more on statutory entitlements, see our UK annual leave entitlement guide.
Holiday Pay Implications
With a traditional leave policy, when an employee leaves the company, they are entitled to payment for any accrued but untaken holiday. With unlimited holiday, there is no fixed entitlement to accrue against — which means, in practice, no holiday pay on termination beyond the statutory minimum.
This is one reason some critics view unlimited holiday as a cost-saving measure for employers rather than a genuine benefit. You should take legal advice on how to handle holiday pay on termination if you adopt this policy.
Contract Wording
Your employment contracts must still reference the statutory minimum. A common approach is to state that employees are entitled to unlimited paid leave “inclusive of the 5.6 weeks' statutory entitlement.” Your policy document should make clear that the statutory minimum is non-negotiable and that employees are expected to take at least this amount.
The Pros of Unlimited Holiday
Advantages
- Talent attraction and retention — unlimited holiday is a powerful recruiting tool, particularly for younger workers and in competitive sectors. It signals trust and a modern approach to work.
- Demonstrates trust — treating employees as adults who can manage their own time builds a culture of mutual respect and accountability.
- Reduced admin — no more year-end calculations of accrued leave, carry-over disputes, or “use it or lose it” rushes in December.
- Better work-life balance (in theory) — employees can take time off when they need it without worrying about running out of days.
- No holiday pay liability on termination — with no fixed entitlement above the statutory minimum, there is less accrued holiday debt on the books.
The Cons of Unlimited Holiday
Disadvantages
- People often take less leave — this is the most well-documented downside. Without a fixed allowance, employees lose the “use it or lose it” motivation. Research consistently shows that employees at companies with unlimited holiday take fewer days on average than those with a fixed allowance.
- Guilt and peer pressure — in many workplaces, taking time off feels like a sign of weakness or lack of commitment. Without a clear entitlement, employees worry about being judged for booking holidays.
- Inconsistency between teams — some managers are generous approvers; others are not. Without a standard entitlement, the actual holiday experience can vary wildly depending on your line manager.
- Harder to manage team coverage — with no defined limits, it can be difficult to ensure adequate team coverage at all times, especially during popular holiday periods.
- Perceived as a cost-saving trick — some employees see through the “generous” framing and view it as a way for companies to avoid paying out accrued holiday.
- You still need to track it — you are legally required to ensure employees take at least the statutory minimum. This means tracking is still necessary, even if you are not capping days.
The Evidence: Do People Take More or Less Leave?
The evidence is fairly clear, and it is not what advocates of unlimited holiday might hope for.
A widely cited study by the HR platform Namely found that employees with unlimited holiday took an average of 13 days per year, compared to 15 days for those with a traditional fixed allowance. Other studies have found similar or even larger gaps. In the UK, where the statutory minimum is 28 days (including bank holidays), the gap may be less dramatic — but the trend holds.
The reasons are psychological. A fixed allowance creates a clear entitlement — employees feel they have “earned” those days and should use them. Remove the fixed number, and the social pressure shifts: instead of “I have five days left, I should use them,” it becomes “Is now really a good time to be off?”
This is why implementation matters just as much as the policy itself.
How to Make Unlimited Holiday Work
If you decide to adopt unlimited holiday, these practical steps will help you avoid the common pitfalls:
Set a minimum, not just a maximum
Require employees to take a minimum number of days — ideally above the statutory 28 days. Some companies mandate a minimum of 25 days excluding bank holidays. This combats the “people take less” problem directly.
Lead from the top
Senior leaders must visibly take holiday themselves. If the CEO never takes time off, nobody else will feel comfortable doing so. Share when you are taking time off and be genuinely unreachable during it.
Track leave — yes, even unlimited leave
You must track leave to ensure statutory compliance. But tracking also helps you spot employees who are not taking enough time off, which is the more common problem. Use a tool like TimeTally's annual leave tracker to maintain visibility.
Train managers to approve generously
The policy is only as good as the managers implementing it. Train them to default to “yes” and to actively encourage their teams to take time off. An approval workflow through leave management software keeps this consistent.
Monitor for inequity
Review leave taken by team, department, and demographic to check for disparities. If one team takes 30 days on average and another takes 15, something is wrong with the culture in the second team.
Set reasonable notice periods
Unlimited does not mean unplanned. Require reasonable notice for non-emergency leave — typically one week for one to two days off, and two weeks for longer periods. Use a staff holiday tracker with a team calendar to make planning visible.
Review annually
After the first year, review the data. How many days did people take on average? Was there a drop compared to the previous fixed-allowance policy? Are there signs of burnout? Adjust the policy based on evidence, not assumptions.
Alternatives to Consider
If unlimited holiday feels too radical but you want to offer something more flexible than a fixed 25-day allowance, consider these alternatives:
- Generous fixed allowance — 30–35 days is noticeably above the UK average and avoids the psychological pitfalls of unlimited leave
- Buy/sell holiday schemes — let employees purchase additional days or sell unused ones, giving flexibility within a structured framework
- Increasing entitlement with tenure — reward loyalty with an extra day per year of service, up to a cap
- “Minimum holiday” policy — set a high minimum (e.g. 30 days) but do not cap the maximum, combining structure with flexibility
Why You Still Need to Track Leave
Whether you adopt unlimited holiday or stick with a fixed allowance, you need to track leave. For unlimited policies, tracking is essential to:
- Ensure every employee takes at least the statutory 28 days
- Identify employees who are not taking enough leave (a burnout risk)
- Maintain a team calendar so managers can plan coverage
- Provide data for annual reviews of the policy
- Keep accurate records for payroll and compliance purposes
TimeTally makes this straightforward with annual leave tracking, custom leave types, approval workflows, and a team calendar — all at £2 per employee per month. Whether you have a fixed allowance or unlimited leave, the system adapts to your policy.
Summary
Unlimited holiday can work, but it requires more thoughtful implementation than simply removing the cap on leave days. The evidence suggests that without deliberate countermeasures — minimum days, leadership modelling, manager training, and active monitoring — employees tend to take less leave, not more.
Key takeaways:
- UK law still requires a minimum of 5.6 weeks (28 days) paid leave — unlimited holiday sits on top of this
- Employees with unlimited holiday often take fewer days than those with a fixed allowance
- Set a minimum number of days, not just a theoretical maximum
- Leaders must model the behaviour they want to see
- You still need to track leave for compliance and to spot under-use
- Consider alternatives like generous fixed allowances or buy/sell schemes
Related resources: