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Email etiquette, sometimes referred to as netiquette in broad terms, is a complicated thing. It’s certainly not appropriate to fail to respond to email, especially from individuals, but we all get busy at times and may be able to do no more than to acknowledge the receipt of emails and promise to write in more detail at a later point. The question as to whether it is appropriate to send an automatic response to all emails is also complex.
In general, it’s considered inappropriate to send an automatic response to all emails when you are fully capable of returning a response. The practice is becoming more common even when people are capable of answering their mail, and this would seem a violation of email etiquette. On the other hand, if you plan to take a vacation and you’re a private individual, work for a small business, or have a private practice as a lawyer or doctor, people could wait for several days to several weeks hoping for a response from you that may take more time than they expected. If you receive large amounts of email, email etiquette experts recommend that you compose a suitable reply and send an automatic response to all emails if you plan to be absent from your computer or an email source for more than 48 hours during the business week.
The reply you frame should be polite and businesslike, since you may receive letters from friends or professionals. State your absence, though there’s no need to state why, and give a time estimate as to when you plan to start responding to emails. Give yourself a few days extra time particularly if you generally get a large number of emails. This way you can fulfill your obligations to answer emails while still giving yourself time to get back into gear after being away for a few days.
Note that some of your emails are likely to bounce when you use an automatic responder, especially if you receive a lot of SPAM or Bacn emails. In fact, if you subscribe to newsgroups or social networking sites, you might want to unsubscribe while you’re on vacation. This way you don’t fill up other people’s mailboxes with multiple messages about how you’re away, which is considered rude. Theoretically, if you’re going to use an automatic response to all emails while you’re away, you should make sure you’ll only be receiving messages of a personal or business nature. If you don’t want to miss out on newsgroup or Bacn emails, subscribe to these under a different email address than the one you use for personal or business correspondence.
Large companies or businesses that receive a considerable amount of email may use an automatic response system to acknowledge receipt of email. It’s considered polite for any company to send an automatic response to all emails because it acknowledges receipt of these. This situation is analogous to a busy waitress nodding to you at a restaurant. She lets you know that she sees you and will get to your table as soon as she can. A large company that will ultimately respond to your email is essentially giving that friendly nod with the promise of a personal response in a few days’ or weeks’ time.
It is especially important for doctors, therapists, and any allied health professionals who use email correspondence with patients to send an automatic response to all emails when they will be out of town during the business week for more than two days. If a patient has an immediate concern, health professionals can indicate an alternative contact so that the patient needn’t wait for several days and fail to address a health concern that might need attention right away.
I think it's impolite for private individuals to have auto replies to emails when they are _not_ on vacation. To alert potential emailers that you are on vacation makes sense because there will likely be a longer than expected turnaround time. But to alert emailers that you received their email and will get to it when you can is filling up their email box with junk and wasting their time. Better to just get to your emails in a reasonable time (whatever that is) than just clog up the inbox of the people who email you, I think.