‘Flexible’, when combined with work, is the buzzword of the decade. A phrase on its heels, but not quite part of the HR lexicon, is ‘employee freedom’. Put these two concepts together and you get unlimited holidays for employees to take whenever they like.

Virgin’s Richard Branson recently announced a trial of unlimited annual leave for staff at Virgin Group offices in the United Kingdom and United States.

The idea made news, but it’s not new. Silicon Valley company Netflix was a trailblazer for uncapped holidays some years ago. Netflix observed that most companies curtail employee freedom as they grow, introducing more and more processes to avoid errors and ‘chaos’. Its alternative logic was that the more processes that are put in place, the less agile a company becomes and the less able it is to react and adapt to ‘disruptors’ in the industry who are working with new technology or alternative business models.

In line with its guiding principle of keeping rules to a minimum, Netflix abolished its vacation policy and ceased tracking holidays for salaried employees. Recognising that workplace flexibility meant working hours weren’t being tracked (whether at home, commuting to work or on the weekend), Netflix asked why should holidays be tracked?

So is an unlimited holiday policy possible in Australia’s highly regulated employment regime? Here are two major considerations.

 1. No tracking

First, employees have a legal right to a minimum four weeks of annual leave (five for some shift-workers). By law, that leave accumulates from year to year. But if you’re not keeping track of an employee’s leave, you can’t know how much they have accrued, which makes it tricky to ensure they get their full entitlement. This is most likely to become a problem when an employee leaves the company and is entitled to be paid out his unused annual leave.

A more immediate problem is that employers are required by law to keep leave records for seven years under the Fair Work Act 2009 and related regulations. Failure to do so can result in a civil penalty being imposed on the employer.

2. When is leave-taking okay?

Branson’s blog talks about employees being able to decide when to take time off, with the assumption being that they will do it only when they feel comfortable that they and their team are up to date on every project and their absence won’t damage the business or their careers.

This concept introduces another HR minefield. What if an employee’s view about things being up to date isn’t shared by their manager or team? If an employee reaches the conclusion that she won’t be missed and takes some (unapproved and uannounced) holidays, but her boss disagrees, is that grounds for performance management or disciplinary action?

And besides, how many of us ever reach the point where everything is 100 per cent up to date? If that’s the test, would anyone ever take annual leave? What would happen to work-life balance?

For now, the legal hurdles for a Virgin-like ‘no policy’ policy might be insurmountable in Australia. But stay tuned for other ‘flexibility’ innovations that pose interesting conundrums for employers.

Kerryn Tredwell is a partner at Hall & Wilcox Lawyers.