Unlimited leave is working so well for Australian companies, some are even offering it fully paid

He’s got this. Picture: Getty Images
  • Australian companies are starting to offer extra annual leave.
  • Some even let employees to decide how much time to take off.
  • There is strong evidence that more leave increases productivity.

Annual leave, long stuck at a non-stretchable four weeks, is starting to open up for Australians.

Until recently it has been rare for employers to offer anything more than the statutory amount (the legal minimum required under law).

Now there’s a movement to get a little more creative, add a couple of days here and there in the form of birthday days off, official mental health days or just a couple of extra days as a form of inducement to come to work for a particular company.

Some even offer unlimited annual leave. That means the company just leaves it to its staff to decide what an appropriate amount of time off is.

That comes with pressure on employees. If they take too much leave, will they be seen as slackers? And if they don’t go away on holiday, are they not working as a team?

After 12 months with an unlimited leave policy, Inventium, an Australian innovation consultancy, found that the average amount of leave taken was 24 days. After two years it was 27 days, or five weeks and two days.

“It means staff are taking what they need (which was clearly more than four weeks) but by the same token, the policy is not being abused,” says founder Dr Amantha Imber.

“Interestingly, five and a half weeks is about what I now take. This consists of a couple of weeks off over Christmas, a decent three-week family holiday in the middle of the year and the occasional long weekend where I’ll take the Friday off work.”

Other companies, including eHarmony, Hawker Britton and Student Flights, also have similar leave policies but the number is still small.

On a global scale, Australia does well. There is no minimum in the US, Canada has only ten annual leave days and the UK leads developed countries with 28 days, or more than five weeks.

Who takes all their leave?

However, in general Australians tend not to take the full complement of four weeks each year.

Some put that down to a touch of fear. What will happen when I am away? Will they discover that I’m not that essential?

A study in 2016 found that Australians on average have almost 16 days each of unused leave.

Other research shows 2.4 million full-time working Australians have gone over a year without taking leave, with 86% experiencing a level of burnout as a result of not taking enough.

Global jobs site Indeed has unlimited annual leave for employees here and in the US.

“Indeed began offering employees unlimited leave two and a half years ago,” Paul Wolfe, Head of Global Human Resources at Indeed, told Business Insider.

“While the company experienced a 20% year-on-year increase in leave days taken, 2017 saw an incredibly productive year with record company growth. What’s more, Indeed enjoys low staff attrition and high levels of employee engagement.

“As a company we believe that trusted, empowered and rested employees have a better chance of being happier and also performing better.

“Paid time off is one of the most coveted employee benefits and yet, as much as people value annual leave, research suggests that many people don’t fully use their allowance. That’s why we don’t just provide an unlimited paid annual leave policy, but actively work with managers to encourage employees to take time off.”

The benefits, both mental and physical, of annual leave are long and enticing.

The value of work

Bendelta, an Australian strategic leadership firm, says there is strong evidence that more leave increases productivity.

“This is because employees feel more able to put more energy into each working day, as they see that this will be balanced out by some respite on the horizon,” says Anthony Mitchell, the co-founder and Chief Potential Officer at Bendelta.

Every employee at Bendelta, no matter what their role, gets 27 days leave.

This includes Bendelta Day — a public holiday for anyone employed by Bendelta -– placed in the middle of winter to make up for the lack of public holidays at that time of year.

The last working day before Christmas Day is also a public holiday, so that people have a gap between the end of work and the start of the festive season.

“Bendelta believes deeply in the power and value of annual leave,” says Mitchell.

“However, we also believe in the value of work. Too often, while ‘holiday’ is portrayed positively, ‘work’ is portrayed as something negative, which is done only because we need money.

“In fact, research clearly shows that work, if designed in the right way, is vital to our sense of meaning and purpose and drives happiness, health and life expectancy.

“The key is how the work is perceived by the employee (which the company and its leaders greatly influence). If it is seen as providing opportunities for autonomy, mastery, stretch, purpose and connection to other human beings, then it is as valuable as holidays, and probably more so.”

Time off is important but, like work, is of greatest benefit when framed effectively.

“Holidays are of greatest benefit when they feel very different from one’s day job, but still have some of the same ingredients — stimulation, discovery and human connection,” he says.

“Doing nothing on holiday may seem good at the time, but a ‘full’ holiday occupies more ‘mental time’ in our brain and thus feels like it was longer and more restorative.”

Some companies don’t “give” more time off but allow staff to “buy” more holidays. At HSBC Australia, staff can buy up to two weeks extra.

“So basically we offer our people the chance to buy five or ten days extra leave per year, and they can then either opt in, opt out as they wish,” says Paul Murphy, Head of Human Resources, HSBC Australia.

The buy rate is at an individual’s pay rate. And if they want, the money can come out of monthly pay over 12 months. They still get sick leave and accumulate long service leave as normal.

“We also offer a holiday loan for people who want to take that up where it’s just a very modest interest free loan, where people can take $1200 in advance on the month they’re going on holiday, and they can pay that back over a period of 12 months,” says Murphy.

Murphy buys additional leave each year.

“I had to get to a family wedding, just got back last week, and before that I was in Japan for three weeks on holiday, and at the start of the year I had a good friend over from the UK, and it enabled me to take a couple weeks off spent some time with him,” he says.

“I’ve managed to achieve that balance as you get the family commitment, having the holiday, and seeing friends as well.”

Why aren’t more companies doing it?

Ross Reekie, the Founder of Rise, a workplace meaning and happiness consultancy, says flexible working and unlimited paid annual leave is not new.

“It’s been around for years, with big brand companies such as Virgin, a company which advocates employee well-being, having introduced this policy,” he says.

“The real question is, why aren’t more companies doing it when the policy will make employees happier and help them find more meaning in their work?

Rise has introduced an unlimited paid leave policy, to give employees the opportunity to pursue their passions, by giving them the freedom and flexibility to do the things they love.

There was shock in the room when Reekie announced the new leave policy.

“People wondered if they’d heard the announcement correctly,” he says. “One member of the team even burst into tears as she said the policy would take so much pressure off her shoulders.”

He says the policy has also brought the Rise team closer because it demonstrates that they care about each other’s lives and that everyone is valued.

“It has increased trust and, surprisingly, it makes me feel better about being a boss and has increased my level of work satisfaction too,” he says.

He likens Australia’s annual leave policy, while better than some countries, to a prison sentence; if you work hard, you get some time off for good behaviour.

“I introduced the policy as I wanted to find a way to improve the well-being of our employees while positively impacting people’s lives,” he says.

“It also differentiates our business from others and strengthens our culture by helping to instil happiness in the workplace.”

Technology, in the form of email, text and smartphones, has created an “always on” expectation which has led to a change in the work relationship.

Happiness

“Businesses are starting to realise that it can’t be all take from their side and they need to give something back to employees to avoid burnout and disengagement,” says Reekie.

“Businesses now want more engagement from staff and discretionary effort to drive bottom-line performance. Put simply, they want our hearts and minds, not just our time.

“Research also confirms the huge productivity, creativity, customer service, cultural, and financial benefits that come from increased meaning and happiness of employees.

“If businesses want to access the benefits from eliciting a deeper, more meaningful connection between happy employees and their work, it demands a big shift in mindset and discarding traditional management paradigms.

“This is fundamentally about trust and care, and wanting the best for your employees, not just the best from them. We must treat workers as responsible people who want to help us succeed and be part of the journey in a meaningful way.”

Having more annual leave isn’t a guarantee of happiness but it helps.

“An unlimited paid leave policy values the employee and validates their self-worth,” he says. “This helps people find more meaning in their work and feel happier as they have a higher sense of self-esteem and authenticity.

“It also allows the employee to pursue passions outside of work like travel or family time. When employees ask themselves why they go to work, with a policy like this they know that they are valued by the business and can live a balanced life.

“Another benefit of the policy is that it creates a positive culture shift because it increases trust. While helping to build better connections at all levels and reinforce a sense of belonging. In addition, the rest and rejuvenation also allow people to achieve more.”

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