Have you seen problems with “unmetered” paid-time-off?

I've always had an open policy.

If the company is small, everyone knows if someone is taking advantage, so either they don't (of course) or when they do and you reprimand/fire, everyone else agrees.

If you can't trust your employees to break wisely, why do you think they're using time wisely while physically sitting at their desk?

At Blue Fish, I started out with more of a "take what you need" approach to benefits, but over the years, it has changed to a more structured, well-defined benefits program.

What I found was that when my company was smaller (less than 10 people) and each employee was young, had no children, and was very committed to the success of the business, the less structured approach seemed to work well. We were all working nights and weekends and the level of commitment from all team members was obvious. Nobody was upset when someone took time off because it was obvious that they deserved it.

But as we grew and aged and the company became more successful, we didn't have to work all those nights and weekends. It was less obvious if someone was working a ton of hours, and some employees never seemed to work long hours. Some employees started to resent others for not having as strong a work ethic as they would like. Others started to have children and wanted to spend more time with their families, away from work. I understood both perspectives.

All this led to our employees asking for more structure in their work schedule; they wanted to know what was expected of them, and they wanted everyone to live up to those expectations. They wanted it to be fair, and the "take what you need" approach didn't seem fair anymore.

We ended up establishing an expected number of hours each person should work per week. We now give each employee 3 weeks of vacation, track it, and have rules for whether or not unused vacation can "roll over" to the next year. We have set company holidays. We don't track the number of sick days someone takes - we trust our employees not to abuse that.

We augment this with a healthy dose of "management discretion" - if an employee puts in a couple of brutal weeks in a row, we give them a couple of extra days off. If they need to take more than 3 weeks off in a year, we work it out with them - sometimes it's unpaid, other times we let them borrow from the next year.

We also reward loyalty with extra time off. When an employee reaches her 5 year anniversary, we give her an entire week off and pay for her to take a vacation trip during her time off. And when we have a good, profitable year, we close the office for a week and take the employees and their families on a beach trip or a ski trip.

I have to admit I was surprised when my team asked for us to put a structure in place. If I had been in their shoes, I would have rather had the old unstructured system. But one thing I've learned is that there's a big difference between an entrepreneur and an employee, and this is just one of the differences.

My initial thoughts... are you hiring?

My employer uses a Paid Time Off system that covers both sick, vacation and maternity/paternity leave. Due to state law in Delaware, any unused time under 40 hours carries over into the next calendar year. Anything over 40 hours gets paid out at our hourly rate.

This system, in a word, sucks. It's great for the business because it doesn't matter if you're "really" sick or not. For the employees it means forgoing time off "just in case" you get sick.

Whether or not your open system will work depends greatly on the type of business trying to apply it.

If your staff has a heavy bias towards knowledge workers who can literally do their job from anywhere (writers, programmers, doctors, lawyers, etc.) I think it would work well both from a recruiting and a operational stand point.

If, however, your business relies mostly on the type of labor that absolutely has to be in the building to be of value (like waitstaff, phone operators, secretaries/admin assistants) then you could be in for a slight headache if a large number of the staff are away simultaneously. Restricting the number of days/weeks these folks can be out reduces that likelihood.

I've observed friends at a former employer of mine that has switched to this system, and have seen that, as far as I can tell, they're getting substantially less time off now than they would have before. This is ripe for 'abuse by pressure' - as in the weird looks you might get if you try to plan to take a 2 or 3 week trip.

Check out the book Why Work Sucks and How to Fix it. It is about this kind of policy and written by the people how implemented it with great success at the Best Buy coporate office.

Vacations are useful both to employees and to companies. Working an entire year without taking 2-3 weeks of time off isn't good for an employee and isn't a healthy working culture.

I disagree with an unmetered, request driven time off policy because you shouldn't have to advocate for vacation, it's a right and a benefit for everyone involved.

As the end of 2009 approaches, my manager pulled me aside to remind me of the high number of vacation days I still have, which is both a reflection on the busy year of startup life and how poorly I've been at taking time for myself.

Using all of your vacation time, 2-3 weeks worth, should be an expectation from both sides. Allocating that reasonable amount of time in advance helps encourage using it.

An international perspective: the EU has a Working Time Directive that requires (in the UK) 28 paid holidays per year for each employee. That's about five and a half weeks.

Naturally there's a whole raft of exceptions, opt-outs and complications around this, but in a nutshell those of us in the EU have a clear demarcation between founders (who would opt-out) and employees (who are covered by the Directive).

This has legal teeth. I hope I never have to do this, but if we need to lose someone because they didn't put the hours it at a crunch time, they could claim they were being asked to work an unreasonably long work week and weren't able to take their holiday entitlement.

I have a very simple policy. An employee is paid for 8 hours a day. I don't care how they do it but I want 8 hours of work product for 8 hours of pay. Fortunately my employees (90% professional exempt), work until the job is done. No one wants to go home without some measure of daily success. Non-exempt employees tend to take advantage but not on a consistant basis and if it gets out of hand they are talked to. I do not complain if the 15 minute break runs into 30 minutes for example as long as the job is done. I have had this policy for 15 years and it works well for us. Treat adults as adults until they become childish.

I work for a company of 80 people which has had just this policy in place since the early 1970s. In thirty years, there have been some abuses and some hard feelings, but mostly, it works.

Interestingly, I'm not sure I'd do it with a startup. With an established company and an established workforce, you can kind of come into it with expectations already in place. At my company, when the policy was implemented, people were already used to having 2 or 3 or 4 weeks vacation. That's what they continued to take, with a few extra days thrown in. New hires have come into a situation where the expectation is that they'll take a couple weeks off and tend to roll with the expectation. The ones who are going to abuse the situation "out" themselves pretty quickly and don't last long.

As an employee who needs flexibility, and who has a very flexible employer that uses your non-system, let me say:

I want structure.

See, I want to be fair to the company, but I also don't want to be exploited. You counting my vacation days is a service to me.

The ideal system would probably look like this:

• Don't track sick days.
• Arrange how many hours everyone should work per week, and allow work hours to be shifted one week at the employee's discretion (I have something personally important this week, so I'll shift five hours into next week. But I must balance my work hours next week.)
• Your system for vacations seems fine, but please, count the days. Otherwise I always feel like I'm either betraying the company because I might inadvertently take too many days off, or feeling self-exploited because I don't "claim" enough free days (and let's face it, even if the company is awesome, we still all want some time with the significant other or friends or family or personal project)
• Allow holidays to roll over for one year
• Employ common sense, be fair, and ask for fairness (as per your description)
• Be flexible. Someone wants to take three months off to go on a pilgrimage or whatever, work this out with them. This might of course not be possible in a startup with a small team where everyone's constant input is important.

So, in essence: Be fair, be reasonable, be flexible. And count my days for me.