The Leave Policy That Makes Employees Take Less Holiday

Unlimited annual leave looks brilliant on a job ad. It signals trust. It signals freedom. It tells candidates: we treat you like adults.

Then reality shows up.

The team stops taking leave. Not because they're workaholics (although some are). Because when there's no number attached to their entitlement, it stops feeling like theirs. They wait for permission that never quite feels granted. They watch what the MD does. And if the MD hasn't taken a week off since 2022, nobody else is booking Tuscany in August.

This is the conversation happening in HR circles right now, and if you're an agency owner considering unlimited leave or you already have it in your contracts and you're wondering why it's not working you need to hear what practitioners are actually experiencing on the ground.

The paradox nobody tells you about

The research backs this up, and so does every HR professional who has ever implemented unlimited leave in practice: people take less time off, not more. Without a concrete number, leave stops feeling like a benefit and starts feeling like a grey area. Most employees, especially conscientious ones (and agencies tend to attract those), will under-use it rather than risk looking like they're taking advantage.

What you end up with is not a liberated, rested team. You end up with a team that is burning out while technically having access to unlimited time off.

For creative agencies, this is not a minor inconvenience. Burnout in creative industries is already endemic.

It is the number one reason your best people leave, and the one pain point that almost no competitor in your sector is addressing properly. An unlimited leave policy that results in people taking fewer holidays is not a wellbeing benefit.

It is a liability dressed up as a perk.

The culture problem you can't policy your way out of

Here is the thing about unlimited leave that no contract clause can fix: it is entirely driven by culture, and culture is entirely driven by behaviour at the top.

If senior leaders are not visibly, consistently taking leave, if they are replying to Slack at 11pm during their so-called "time off", the team will mirror that behaviour regardless of what the handbook says.

Unlimited leave requires a level of psychological safety and genuine cultural modelling that most agencies have not yet built. It also requires that the people with the authority to grant leave are actively encouraging its use, not passively permitting it.

In agencies where unlimited leave has been scrapped, the reason is usually one of two things: a handful of people booking 50 or 60 days while the rest take almost nothing, or a general atmosphere of guilt and uncertainty that drains the goodwill the policy was meant to generate.

Both are management problems. And both are predictable.

The compliance headache you did not sign up for

Even if your leave policy says "unlimited," UK employment law still requires that your employees take their statutory minimum entitlement — currently 5.6 weeks for full-time workers. That obligation does not disappear because you've been generous with the upper limit.

In practice, this means you still need to track who has taken what. You still need to intervene if someone is not taking enough. You still need a process for maternity and other statutory leave that defines what accrues and how. The admin burden does not go away; it often gets worse, because you have removed the natural structure that a fixed allowance provides.

What actually works

The agencies and businesses that have had the best results tend to use a version of the same model: a defined minimum, a recommended average and genuine flexibility above that.

Something like: everyone takes their statutory minimum as a floor, we recommend six weeks as an average, and if you need more for a specific reason, you apply and it's considered. Carry-over is removed. Leave counts against statutory entitlement first.

The policy is framed around wellbeing rather than just permission.

This gives people the thing they actually want from unlimited leave: certainty that they will not run out, without the psychological ambiguity that makes unlimited leave stop working in practice.

You also need to build the process: how leave is booked and authorised, how cover is arranged, what the deadlines are for requests and how performance is managed in someone's absence.

These are not bureaucratic niceties. They are what makes flexibility sustainable in a small agency where everyone's absence has a real operational impact.

The bottom line

If you are considering unlimited leave because you want to signal trust and attract talent, the intention is right.

But the execution matters more than the headline. A policy that results in people taking less leave than they are legally entitled to is not a benefit. It is a problem waiting to become a grievance.

Get the structure right first.

The generosity will follow naturally.

If you are unsure whether your current leave policy is working the way you think it is, or if you are building your first proper HR handbook and want to get this right from the start, that is exactly the kind of work we do here.

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