Unlimited Parental Leave: Does It Really Work?

Business.com / HR Solutions / Last Modified: February 22, 2017

It's no secret the U.S. is behind. Learn the benefits of unlimited parental leave policies, potential downfalls, and how to make it work.

It’s a common scenario many new parents in the United States face: They have a child, then, feel forced to return to work before they’re ready. This leads to feelings of guilt, separation anxiety and worse.

A few big name companies have stepped up to try to remedy this common situation. On August 4, Netflix announced that new parents will now be offered an unlimited leave option for the first year following a child’s birth or adoption.

New parents now have the option of returning part- or full-time. They’re also able to return to work and decide to leave again within in the year.

Keep reading to learn the benefits of unlimited parental leave policies, potential downfalls and how to make it work at your business.

Related Article: Digital Disrupt: What We Can All Learn From the Netflix Model

Other Countries Have Paved the Way

In many other countries, parents do not receive leave that varies depending on their employers. Instead, parental leave is mandated by the government. In fact, when the U.S.—without any government-mandated leave policy or pay—is compared to 38 other developed countries, where the average fully-paid time off for new mothers is 5 to 6 months, it becomes clear that there’s room to grow.

Just across our northern border, in Canada, new mothers receive one year of maternity leave, paid at 55%, some of which can be shared with the father. Mothers are able to return to work when they’re ready, without added pressure, eliminating stress and allowing them to establish a routine as a family.

It Simplifies the Process

In the U.S., there’s no government-mandated policy, so mothers can apply for short-term disability if it’s offered by their employers, or for FMLA if they’re eligible. Short-term disability provides a certain percentage of the mother’s salary, depending on the package. FMLA is unpaid, can be shared by both parents and comes with a variety of qualifying factors. It’s in place to protect employment, not to offer compensation.

Each of these options is viable, but the application process can be long and confusing, adding extra stress to an already stressful time. When a company steps forward to alleviate the pressure by offering unlimited leave, new parents can take advantage of adequate leave to prepare for the new baby and to settle into a life together without added stress or procedures.

In addition to being burdensome, only offering parental leave to the extent of which is required by law by FMLA decreases employee morale. Employees feel as though spending time with their child is not valuable to the company, and if forced to return before they're ready for financial reasons, they could harbor a lot of resentment towards management.

If that happens, they may leave and never come back. After all, you're not paying them anymore... 

Unlimited Parental Leave Promotes Freedom and Trust

When an employee feels undervalued and overworked, negative effects are likely to follow. Instead, companies like Netflix are letting employees know they are valued, trusted and free to make decisions that benefit both themselves and the company by offering unlimited leave.

This coincides perfectly with Netflix’s 2004 “Freedom and Responsibility” culture document, which was a landmark at the time. The new leave policy backs up this document as more than a set of words on paper.

It Could Bring Women Back to the Workplace

Studies prove that when women have to fight for maternity leave or fail to receive paid leave, they’re more likely to drop out of the workplace. In fact, around 43% of women leave the workforce for an extended period of time at some point following the birth of a child. In a 2014 survey, 61% of non-working female respondents claimed that family responsibilities were their reason for not working.

When women—and men—are empowered to spend time with their families while furthering their careers, they’re more likely to stay engaged at work and to return following the birth of a child.

Related Article: How Does Succession Planning Apply to Parental Leave?

Potential Downfalls of Unlimited Parental Leave

Unlimited leave sounds too good to be true for many people, but there are potential downfalls that employers should consider prior to making an official policy. These include:

  • Negative backlash if it falls through. After a large, groundbreaking announcement like Netflix, if the policy fails, there could be a PR nightmare and a mass exodus of employees. Once put in place, the policy should be there for the long haul.
  • Additional stress on management. When replacements are needed to fill parental leave gaps, there’s the added stress of training temporary employees or placing additional workloads on other employees. This effect could be multiplied when multiple employees must take leave at the same time.
  • Improper implementation. When the guidelines are not outlined explicitly, unlimited parental leave could lead to numerous problems, such as employees abusing the system.

Making It Work for Your Company

If unlimited parental leave is something you consider offering to your employees, follow the guidelines and suggestions to make it a success:

  • Consider all implications. Think about the parameters of “unlimited parental leave” at your company, and consider all possibilities for potential problems that could arise.
  • Think about if your current staffing level could handle it. Would management be able to cover the empty slots? Would you need to bring in additional employees to cover any gaps? What if multiple employees needed to take advantage of leave at the same time?
  • Give it a trial run. Start with one location or department. See what happens before offering unlimited parental leave to your entire company.
  • Research other companies. Do research or make calls to find out how other companies offering unlimited leave have fared.
  • Consider alternatives. While your company may not be able to support unlimited leave, there may be other options including extended leave at a paid rate, flexible working arrangements for new parents or something else entirely.

Unlimited parental leave can be beneficial to both employees and employers when the proper culture and guidelines are in place. Consider all pros and cons before unrolling it in your own workplace, along with the guidelines listed above for success.

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