Should you offer more annual leave?

It’s the middle of winter and for many the thought of a tropical island holiday is the only thing that keeps them getting out of bed on these chilly and bleak mornings.   We know that all full-time employees receive four weeks annual leave per year with part time employees receiving the pro-rated equivalent.  Now Virgin, Netflix and Melbourne-based Inventium have all upped the ante and now offer unlimited annual leave – should you?

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The benefits of taking annual leave are well known but let’s take a look at them anyway.  Everyone needs time to rest and recuperate – we aren’t robots and all of us need some downtime to regroup physically and mentally no matter what kind of work they are involved in doing.  Whether it is an extended weekend away in the country or a four-week trip to Europe, encouraging your team to access their annual leave will deliver the following benefits to your business:

• Reduction of stress which reduces the risk of anxiety and depression.
• Improvement in mood of individuals which will assist in improving social and businesses interactions  
• Improvements to the immune system as those who regularly take time away from the pressures of work are less likely to succumb to illness.
• Overall team morale is improved as happier individuals will deliver happier teams.
• Improved productivity as employees are well rested, healthy and motivated.
• Lowered turnover of staff reducing the costs associated with recruitment and the stress of training new appointees.
• Decreased absenteeism as your team are getting the balance in their lives that they need.

Isn’t four weeks enough?
Four weeks is a significant amount of time so why would companies feel the need to offer unlimited leave?  Inventium is an innovation consulting firm and they believe that their industry – like so many others – has employees who work well beyond the average 38 hours per week.  As such, they believe their employees are entitled to more than the average amount of leave to ‘rebalance’.   Founder and CEO of Inventium, Amantha Imber, calls it rebalance leave “because it wasn’t about more leave for leave’s sake, it was intended to help staff lead more balanced lives.”  Inventium has seen an increase in the amount of leave their people are taking but they do not believe the policy is being abused as people are taking the time they need.  One direct result is that sick leave has reduced by half.

Okay, so unlimited annual leave is a nice thought but not something you are comfortable initiating within your business.  Either it’s simply not practical or it may be something that would be too onerous to track and is open to abuse.  While you aren’t obliged to offer anything more than the legal entitlements, you may see the advantage in offering something a little more if your business can carry it.

Let them buy more
Purchased leave is a voluntary arrangement between you and your employees in which they can ‘buy’ additional leave by reducing their annual salary.  You may cap the amount your team may purchase – a week per person perhaps or more if it is manageable within your team.   It provides you with the opportunity to offer your employees the flexibility to take more leave without you experiencing a payroll that you simply can’t carry.  Be aware that purchased leave will have implications for salary-based entitlements and you need to ensure your employees may need to seek advice from their financial advisor before signing up.  Additionally, you may need your accountant or payroll manager to confirm your payroll system is set up so that it manages the adjustments necessary to manage purchased annual leave 

Pays to be loyal
Earlier this year, ANZ announced that they would provide an additional five days paid annual leave for employees who have had more than three years’ consecutive service.    ANZ see the offering as mutually beneficial – employees have additional time “doing what’s important to them personally, as well as to rest and recharge to ensure they are able to deliver great results” for their customers.  Aside from driving well-being, this type of leave offering may help you retain talent for a longer period reducing costs associated with staff turnover.  

Do we need more?
Let’s be honest, Australians have it pretty good when looking globally at annual leave provisions.  Not only do we have the minimum leave entitlements enshrined in law, we have 10-13 paid public holidays (depending on your state or territory) and then there are those industries that have RDO (rostered day off) provisions within their agreements.   Compare this to the US who have no federal or state laws that mandate minimum paid annual leave or paid public holidays – it is all at the discretion of the employer!  And the UK does not allow leave to accrue, it’s very much a use it or lose it policy from one year to the next.  
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But life in the 21st century is fast paced and many businesses have employees that work well beyond the regular 9 to 5 or are accessible via phone and email well past their official work hours.  If this is the case for your business, maybe it is worth looking at your annual leave policy and reviewing what your business alternatives your business can offer that will help you attract, retain and support the best talent.

If you are considering offering additional annual leave benefits to your employees and need assistance in establishing the policy, the HR Staff n’ Stuff team can assist.  Call or email – we are here to help when you need us. 

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