It’s the middle of winter and for many, accessing some annual leave and escaping to warmer climes to enjoy a relaxing holiday is a key motivator that keeps them getting out of bed on these chilly and bleak mornings.
We all know that as per the National Employment Standards, all full-time employees receive twenty days of annual leave per year with part time employees receiving the pro-rated equivalent. Over recent times, businesses such as IKEA, Apple and Bunnings, have all upped the ante and now offer increased leave entitlements so we thought we would take a look at whether this benefit is worth considering particularly in times when increases to salaries may not be viable.
Pros of Offering Additional Annual Leave
The are plenty of ticks in the benefits column for annual leave. 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 we do or the level of responsibility we have. Whether it is an extended weekend away camping or a four-week trip to Europe, encouraging your team to access their annual leave will deliver benefits to your business.
1. Enhanced Employee Satisfaction and Well-being
One of the most significant advantages of offering more than the mandated annual leave is the positive impact on employee satisfaction and well-being. Employees with more leave options are better able to rest, recharge, and maintain a healthy work-life balance. This, in turn, can lead to higher levels of job satisfaction and overall well-being, which are crucial for retaining top talent and fostering a positive workplace culture.
2. Improved Employee Retention
In a competitive job market, offering additional leave can be a powerful tool for attracting and retaining employees. Workers are increasingly valuing benefits that contribute to their quality of life, and generous leave policies can set your business apart from others. By offering more leave, you demonstrate a commitment to employee welfare, which can deliver flow on effects such as loyalty and reduced turnover rates.
3. Increased Productivity and Creativity
Well-rested employees are often more productive and creative. Additional leave can prevent burnout and help employees return to work with renewed energy and fresh perspectives. This can lead to improved performance, higher quality of work, and greater innovation all of which can increase or imp[rove productivity.
4. Positive Employer Branding
Offering generous leave policies can enhance your company’s reputation as a desirable place to work. This positive employer branding can attract higher calibre candidates and build a strong, motivated workforce. It can also improve public perception of your business, making it more attractive to customers and partners who value ethical and employee-friendly practices.
Cons of Offering Additional Annual Leave
With every upside come challenges that should be considered prior to going live with a new program.
1. Increased Costs
The most immediate downside of offering more than the legislated annual leave is the potential increase in costs. Paying employees for additional leave days means higher wage bills, which can be a significant burden for businesses with limited budgets. Moreover, covering for absent employees may require hiring temporary staff or paying overtime to existing employees, further adding to the costs.
2. Operational Disruptions
Managing increased leave entitlements can be challenging from an operational perspective. Ensuring that business operations run smoothly when employees are on extended leave requires careful planning and robust systems. For small to medium businesses, which may have fewer staff and resources, this can be particularly difficult. Key projects or client relationships might suffer if critical team members are absent frequently or for extended periods.
3. Reduction in revenue
For businesses who sell their employees time as their product service, providing employees with additional leave will impact on revenue, and budgets need to be adjusted accordingly.
4. Uneven Workload Distribution
Offering more leave can sometimes result in an uneven distribution of work among employees. Those who take less leave may feel overburdened, leading to dissatisfaction and potential burnout. It is important to ensure that workloads are managed equitably and that all employees have the opportunity to benefit from the additional leave.
Finding the balance
When considering whether to offer more than the legislated annual leave, it’s crucial to balance the potential benefits against the drawbacks.
1. Conduct a Cost-Benefit Analysis
Before implementing a more generous leave policy, conduct a thorough cost-benefit analysis. Consider the direct costs of additional leave and weigh them against the potential benefits in terms of employee satisfaction, retention, and productivity. This analysis can help you determine whether the investment is justified.
2. Tailor Leave Policies to Your Workforce
Different businesses have different needs, and a one-size-fits-all approach may not be appropriate. Tailor your leave policies to suit your workforce. For example, you might offer bonus leave as a reward for exceptional performance or you may offer additional leave that coincides with an annual shutdown period.
ANZ offers an additional five days paid annual leave – or “loyalty 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.
Alternatively, you might consider the option provided by Disney where they offer a leave without pay option that employees can utilise as a sabbatical or short term career break of up to twelve months with the certainty of having a role to which they can return.
3. A policy for purchasing
Instead of offering a fixed number of additional leave days, consider implementing a policy that allows employees to purchase additional leave. Employees can reduce their take home pay and ‘bank’ a small portion of their salary or wages each pay cycle meaning businesses can deliver a more affordable way in which employees can access increased annual leave than the regular 4 weeks.
Be aware that purchased leave will have implications for salary-based entitlements and you need to suggest your employees 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
Monitor and Review Policies Regularly
If you do choose to go ahead with a more generous leave policy, monitor its impact regularly. Collect feedback from employees, track leave usage, and assess the impact on productivity and morale. Regular reviews will help you make necessary adjustments and ensure that the policy continues to meet the needs of both the business and its employees.
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 to 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 with most companies.
Life in the 21st century is fast paced and many businesses have employees that work well beyond the regular 9 to 5. And for many, the right to disconnect legislation won’t change the fact that employees in some industries or roles of responsibility will need to be 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 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 because we are here to help when you need us.
