How offering your people unlimited leave can work to your benefit

Trusting and empowering your people can have a huge impact on your talent attraction strategy, retention, and overall organisational success. Here are four reasons you should consider offering your people unlimited leave. 

When it comes to paid annual leave, Aussie workers are lucky. The average Australian enjoys a standard statutory minimum of 20 days leave a year. In stark contrast, there is no mandated minimum annual leave in the US and many Americans receive only 10 days of paid holiday leave each year from their employer.

Aussies have a reputation for enjoying a great quality of life and you’d expect us to use up our annual leave to hit the beach or travel overseas. Sadly not. According to a Roy Morgan Study, the Australian workforce has racked up about 134 million days of unused annual leave, a huge figure for a population of only 24 million. The report claims each worker has about 16 unused days on average.

While the statistics are shocking, there are a few obvious reasons why Aussies don’t take their time off. A report from the Australian Institute revealed 12% of workers felt guilty about taking leave, and 26% said they had too much work on their plate. A further 31% said they “didn’t need” the time, while 33% said work was too busy.

The true cost of hoarding leave

Like many workers across the globe, Australians are in danger of being overworked. Global studies show annual leave plays a key role in boosting morale, recharging the batteries, staying productive, and maintaining a healthy lifestyle. Without annual leave, workers are at risk of developing work-related stress conditions.

Research reveals not taking leave can cause work performance to suffer, leading to absenteeism and more mistakes. While the economic effects are well-documented, the effects on our long-term health make for troubling reading. A recent study compared the health risks of work-related stress to second-hand smoke inhalation and predicted a 20% surge in death rates related to longer working hours and high-stress environments.

Open leave: the right solution?

Is there a solution to this problem? Global employers, led by pioneers including Virgin Group and Netflix, have started to offer unlimited annual leave. Unlimited leave, or Open PTO as it is sometimes known, is a system where employers do not cap annual leave, leaving workers to take as much time as they need.  While unlimited leave was unthinkable in years gone by, organisation are exploring the concept to ensure workers have enough time to recuperate.

It is estimated that 1%-2% of US organisations offer unlimited leave, and Australian employers including eHarmony, Hawker Britton, Inventium and Student Flights offer similar policies.

The thought of unlimited leave might raise fears workers will abandon the office and abuse their holiday quota. Yet statistics show it can lead to employees taking less time off due to internal competition and feelings of guilt. So uncapped leave won’t solve all of Australia’s annual leave problems. It also requires a shift in approach in the workplace to a mindset that encourages time off.

An estimated 51% of Australian workers store up their annual leave. Leave-hoarding is a byproduct of Australia’s annual leave model, where workers need to earn extra days off over a period of time. In the UK, leave-hoarding is less of a problem as employees are given 5.6 weeks leave as soon as they start a role. So rather than saving up time and toughing it out, unlimited PTO gives workers a rest when they need it the most.

Four reasons to consider unlimited leave

Indeed started offering employees unlimited leave more than two years ago and we have been impressed by the results. While leave days taken have risen by 20% globally, this has been outweighed by an increase in productivity. The company experienced record growth in 2017, and we have experienced low attrition rates and strong engagement with employees.

We believe there are four main reasons to consider unlimited leave:

1. Get a morale boost – Greater trust and respect between employers and employees. An entrepreneurial approach, rather than a prescriptive one, leads to an improved sense of worth.
2. Hire the best – Unlimited leave will give you an edge when you’re hiring and is viewed as one of the top employment perks.
3. Attract millennials – This growing demographic believes flexible working is important. Flexibility is linked to improved performance, personal benefit, and loyalty.
4. Cut costs – organisations often track unused leave as a liability. Unlimited leave eradicates the problem.

We believe unlimited leave works. Trusted, empowered, and rested employees have a better chance of being happy and performing in their roles. With 134 million days of unused leave across Australia, a move to uncapped time off could help organisations reduce the risk of burnout in the workforce, and make employees healthier and more productive. As long as it is introduced in the right way and respected across the workplace, unlimited leave really could work to your benefit.

Paul Wolfe is SVP, Head of Global Human Resources at Indeed, the #1 global search engine for jobs. He has over 15 years of experience as a human resources executive having served as a VP and SVP in a number of well-known companies, including Match.com, Orbitz, Conde Nast and Ticketmaster. His specialties include talent acquisition and management, succession planning, performance management, and leadership development.