Paid annual leave is one of the best perks of ongoing full-time work, but most people are restricted to four weeks a year.
You save it up, ration it out, take one week at Christmas, a couple of weeks over school holidays to look after the kids, and before you know it there’s not much left for a real holiday.
But some companies are allowing workers to take as many days off as they want — offering unlimited paid annual leave to all employees.
Dr Amantha Imber introduced an unlimited annual leave policy at her Melbourne-based innovation consulting firm Inventium two years ago.
She said no-one had rorted the system, and sick leave, which is often used as a measure of the health of a company, had halved.
“It’s very simple; you take however much leave you want to maintain a balance between work and life,” she told ABC Melbourne’s Jon Faine.
“So on average, before we implemented this policy two years ago, people were taking four weeks annual leave. But two years on, now that we’ve implemented unlimited leave, that’s now an average of five-and-a-half weeks.
“So it’s increased significantly but not to the point where anyone’s taking advantage of it.”
Dr Imber said one idea behind the policy was to make up for unpaid overtime.
In the consulting industry most employment contracts specify a 38-hour week, but it’s not unusual for consultants to work in excess of 50 hours a week.
“That’s not good for anyone,” Dr Imber said.
“It’s not good for staff, it’s not good for the business when people are doing all this unpaid overtime and presumably getting pretty worn out or burnt out in the process … that’s terrible for productivity.”
She said capping annual leave but not capping hours was “a little bit unfair” and the unlimited leave policy — known at Inventium as ‘rebalance leave’ — was a way to reduce that inequity.
But should this policy be rolled out more broadly?
Culture Amp, an employee feedback platform that began in Melbourne, has collected data to help it understand trends in people and culture and their impact on employee engagement.
Lead people scientist Chloe Hamman said introducing unlimited annual leave had worked in some cases, but in many workplaces it was a failure and employees ended up taking less leave than before.
“Unlimited leave policy has appeared to work, or more so, not backfired, when the policy is supported by leaders and managers who role model the desired behaviours,” she said.
“Such companies also tend to still carefully track the amount of leave people take and encourage employees to take leave when they haven’t.
“Just look at your leaders; if they tend to not take leave, work all hours and then you see similar behaviour in employees, it’s probably not a good idea.”
But not all companies introduce the policy solely to improve employees’ wellbeing.
“My understanding is that some tech firms offer it because it’s a way to save money in leave payouts by not accruing any leave on your liabilities ledger,” Ms Hamman said.
“The downside for employees is that without any specified leave entitlements, you cannot actually accrue any to be paid out if you leave the company.”
Ms Hamman said unlimited annual leave might seem like a magic bullet, but perks and benefits alone were not enough to fix cultural issues within an organisation.
“If your employees are feeling overworked and under pressure, then this certainly isn’t going to fix that,” she said.
“People with busy diaries will still have busy diaries, only now they’ll have the added pressure of trying to work out how much leave is appropriate.
“For some overly dedicated employees, no leave might feel like the answer.”
Ms Hamman said a better way to ensure employees took sufficient holidays could be to offer four weeks’ annual leave and an additional two weeks of flexible leave that didn’t accrue.
She also warned against a one-size-fits-all model when introducing non-traditional employee perks; for example, not all employees are going to be won over by the offer of free Friday night drinks.
“If your benefits are really only benefiting a particular group, then they may not be inclusive and therefore not attracting a diverse group of employees.”
What does flexibility look like?
Professor Anne Bardoel, who has researched balancing work and family life, said remuneration and job security were important factors in staff satisfaction, but genuine flexible working options were also highly sought after.
And the good news for small businesses, which often can’t afford perks like gym memberships or on-site child care, is that flexible work options are relatively inexpensive.
She said the key was to ask employees what flexibility looked like to them.
“The employee needs to have some sense of autonomy and control.
“Flexibility can come across in many ways.”
Professor Bardoel said it was also important to ensure any policies, such as unlimited annual leave, were actually promoted and utilised by management.
“You can offer all the benefits you like, but if there’s a culture of everybody working long hours and you can never access them, it’s not much use,” she said.
“People are very quick to pick up on if there will be negative career ramifications.”
Dr Imber said Inventium was still a profitable business despite the generous offer of unlimited paid annual leave.
She said the policy had been a positive change in her office but agreed it certainly would not work in every workplace.
“You need a really strong, healthy culture,” she said.
“If employees aren’t engaged and happy, then yeah [staff] probably would take advantage.
“I think there needs to be a high level of trust and respect between leaders in the business and fellow staff members. That’s definitely present at Inventium and I think it’s why it works so well.
“But if that’s not present in a business, I think it could go pretty badly.”