COVID-19 disrupted multiple Human Resources (HR) policies, including that relating to employees' time off. While multinational companies offered special COVID-19 and mental health leave, startups turned innovative by adding the word “unlimited” to leave.

Generally, an unlimited leave policy allows employees to take as much time off as they want as long as it does not interfere with their assigned duties. The mechanism depends on the company and its policy, but the general idea is to promote flexibility.

Experts say this is the need of the hour because Indian employees are too shy of availing leave. According to staffing firm Randstad India, 35-40 percent of Indian employees do not take leave and around 25 percent avoid it due to FOMO -- fear of missing out -- at work.

HR platform Namely analysed data from over 125,000 employees and found that the concept of an unlimited vacation was under-utilised. Employees with unlimited leave take 13 days off a year versus 15 for those with traditional paid time off.

So, is the ‘unlimited leaves policy’ working?

Creativity takes centre stage  

SG Analytics, a global insights and analytics company introduced a Leave Donation/Transfer policy. All employees can donate/transfer accrued all-purpose leave from their unused balance to colleagues who require these in an emergency and have exhausted their leave.

This policy creates an opportunity and environment within the organisation to help each other and promotes camaraderie and a sense of teamwork among individuals, says Dr Kiran Bala, Chief People Officer at SG Analytics.

To underline its goal to foster a healthy work-life balance among the workforce, Direct-To-Consumer (D2C) mattress brand Wakefit launched the wellness leave policy, which extends no-questions-asked leave to all employees once a month.

“Employees can avail these wellness leaves to support their physical, mental, or emotional well-being or to opt for leisure activities by taking time off to unwind and rejuvenate themselves,” says Umanath Nayak, head of Human Resources at Wakefit.

The wellness leave is over and above the regular leaves that the employees are offered. Construction and Architecture project management firm Powerplay has a “no leave policy”. Employees can avail of unlimited leave without any justification or reasoning.

Where many organisations have leave policies dedicated to parenting, menstrual cycle, grief or sex change, Powerplay says it doesn't want people to limit themselves to any such situations to avail of leave.

“They are free to take a leave anytime and as a mandate, we do not practise 'counting' these leaves. It dissolves the whole purpose otherwise,” says Ankita Sen, who leads HR and Culture at Powerplay.

Have employees started taking more time off? 

When MakeMyTrip realised that leave consumption never went beyond 70 per cent - 75 per cent in 2016-17, it introduced the ‘uncapped leave’ policy. Currently, Srivastava revealed the numbers indicate that the leave consumption pattern remains more or less the same.

Startups including Powerplay, Trucknetic and SG Analytics, irrespective of a large or small headcount, have also not reported any major changes in the habit of employees availing leaves.

Here, CDK Global is an exception. In 2021, CDK Global allowed its employees and contractors to club all leave together. This includes earned, casual, sick leave and so on. Besides, the company follows a flexible holiday policy which means employees can choose their festival holidays apart from the mandatory national holidays.

With no restrictions on the clubbing of leave, the usage of casual leave has gone up along with in-service leave encashment.

In 2021, on average 7.8 casual leave days were availed of by each employee and 56 percent of employees made use of leave encashment benefits. This number went up in 2022 with an average of 8.4 casual leave days being availed of with over 60 percent of employees encashing their leave.

“Companies that follow progressive leave policies usually have high engagement levels as opposed to companies that have leave policies that are designed to just comply with the laws of the land,” says Ramachandran Chittur, head of Total Rewards & HR Operations at CDK Global India.

Similarly, with Gameskraft, Women’s Wellness Leave is a unique leave policy for female employees to take a no-questions-asked, no-approvals-needed leave for a day every month. Introduced in March 2022, about 75 percent of all women in the company have utilised this leave.

“This bold discussion helped normalise menses to our employees and combat stigmas regarding this issue,” says Nitin Nahata, chief human resource officer at Gameskraft.

What’s the deal then? 

HR experts say companies are engaged in a race to differentiate themselves and attract top talent and reduce dropout. They say these policies are often good for employer branding.

HR leader Amit Sharma was once involved with revamping leave options in an organisation and his mandate was to draft policies that have a low impact on business, but a high impact on motivation.

“The criterion was to find policies like Sabbaticals, marriage leave, work milestone leave etc. which have lesser utilisation but would be valuable to employees,” he said, adding: “Even though very few would take these leaves, the possibility itself increased employee motivation.”

He believes consistent messaging is key. For example, he adds unlimited leaves that have to be accompanied by the removal of managerial approval for it to make an impact. “Otherwise, the limitation has just moved from policy to person and has no bearing.”

Something similar was done by the health-tech start-up Curefit. It decided not to have a leave policy at all, unlike most organisations that categorise employee leave across buckets of casual, sick, privilege, or emergencies.

Curefit neither has caps on leaves nor does it categorise them into buckets. Employees do not “request” leaves, but “intimate” the details of their absence to project stakeholders. This is designed to be a ‘no-questions-asked’ system and hence relieves the employees of any guilt involved in applying for leave.

“There are no levels of approvals incorporated - by virtue of intimation, the absence is considered auto-approved,” says Ankit Gupta, head of products and engineering, Curefit.

Surprisingly, this isn’t monitored by a tool or any specific employee in the organisation, and the startup has never felt the need to change this.

It's all about the environment  

Since the revamped leave policy hasn't affected the number of days off, companies see a higher sense of responsibility among individuals.

“Everyone taking leave is mindful of their work and tend to complete their work before they take a week off,” says Ankita Sen of Powerplay. She feels introducing such a leave policy has made people plan and execute their leave better.

“We have people who plan their weeks-long travel months ahead and complete all their assigned tasks before their flights,” Sen says.

Though the leave policy at Trucknetic has brought a marginal increase in the number of leave taken, it facilitated an “exponential increase” in productivity. “Our employees now put more effort into their work and realise that the policy should not be misused but used in a way that brings out the best from them,” a Trucknetic spokesperson said.

In most companies, the number of leave days drops once unlimited time off policies are launched because managers are still operating with the old mindset, observes HR expert Sharma.

“Companies that operate out of fear are terrible for unlimited PTO (paid time off) as people fear a poor performance rating or even being tagged a slacker,” he said, adding: “Unlimited PTO should not be the start of a culture change but the culmination of it.”