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Commentary: More companies offer unlimited paid leave, but many workers end up not using it

Should companies offer unlimited paid vacation days to stand out in a tight labour market? It bears remembering that what matters to workers isn’t the quantity of leave, but the quality, says HR expert Adrian Tan.

SINGAPORE: Besides being a game changer for entertainment, Netflix was also a pioneer in human resource strategies. As part of its strategy to attract the best talent, it introduced an unlimited paid vacation policy in 2003, after the company went public.

Since then, other companies such as Sony, Evernote and LinkedIn have started to embrace their version of the policy. Goldman Sachs is among the latest to have jumped the bandwagon, announcing in May that senior staff will be able to take unlimited paid vacation.

From a Singapore lens, such corporate perks seem almost too good to be true. 

Workers covered by the Employment Act are entitled to a minimum of seven days of paid annual leave if they have served their employer for at least three months. An extra day is added for every year of completed service but the entitlement is capped at 14 days.

Contrast that to the infinite number of vacation days many companies are dishing out. What’s in it for them to offer unlimited leave?

Sometimes it could be for very pragmatic reasons of administration. Netflix initially had standard leave quotas but administered on an honour system, where employees could take leave as needed after informing their managers. But when the company was listed, auditors went into a tizzy and insisted employees’ time off be accounted for. 

To avoid the need for a formal tracking mechanism, Netflix offered an unlimited paid vacation policy instead.

JOBSEEKERS NO LONGER SATISFIED WITH JUST HIGH PAY

But for companies like Goldman Sachs, the reason could be staffing-related as companies are struggling to fill seats after the Great Resignation Wave. Jobseekers are now less willing to work 100 hours per week just for a banker’s fat pay cheque.

Companies in such high-pressure sectors can’t significantly reduce the heavy workload that comes with the job but could introduce other benefits like unlimited paid leave.

The same is happening in Singapore. According to recruitment company Randstad, half of all employees in Singapore will receive a bonus in 2022. But another of its surveys showed one in three workers were thinking about changing employers in the first half of 2022.

The top three motivations of employees who had already switched jobs were work-life balance (64 per cent), salary and employee benefits (63 per cent) and a pleasant work atmosphere (51 per cent).

Unlimited paid leave isn’t just possible in the United States – local companies have adopted it too, such as public relations agency SYNC PR in 2019 and web design firm Fixx Digital in 2015.

SYNC PR shared with me its key objective is to build trust with employees by giving them control over leave, putting the onus on them to work efficiently and manage their time. It also reduced administrative headaches especially if leave day mandates differ across countries.

Most importantly, unlimited paid leave helps attract good staff in a competitive market, which has been a struggle for the PR industry. SYNC PR’s growth from three to 25 employees over a span of three years is a strong indicator it is working out for them.

(Photo: iStock)

WHEN UNLIMITED LEAVE IS ABUSED, OR NOT TAKEN AT ALL

But there are pitfalls when an unlimited paid vacation policy turns into a free-for-all. Employees could abuse the system by deliberately taking leave to avoid deadlines or crunch time. 

To ensure teams are fully present when work has to be done, one Singapore company limits employees to taking leave only in the first month of each quarter.

Others face the opposite problem of employees not using the policy at all. Local media company SGAG implemented one in 2015 to promote work-life balance, but employees were concerned about making colleagues cover for them or giving the impression of slacking off, and so abstained from taking leave. The company eventually went back to offering 21 days of annual leave.

San Francisco start-up Buffer experienced the same issue in 2017, when staff only took five to 10 days off annually after an unlimited paid vacation policy was introduced. The company then added a component requiring all employees to take at least three weeks off per year. 

Managers had to use up those three weeks and consequently, led by example.

SHOULD YOU CONSIDER COMPANIES WITH UNLIMITED VACATION POLICIES?

With mental wellness a hot talking point among corporate leaders since the pandemic, should more companies offer unlimited paid leave, letting working professionals decide for themselves the amount of time they need individually to recharge?

As demonstrated from companies’ experiences, it works for some and doesn’t for others. Some went back to the old ways because it resulted in worse outcomes.

Whether an unlimited paid leave policy plays out well depends very much on a team’s dynamic. If the boss is a demanding workaholic, no employees will dare put in a leave application. A culture of encouraging rest is crucial.

Most importantly, it’s not just about the quantity of annual leave, but the quality. Will employees commit to disconnecting fully on their off days, and can managers respect that?

When I was in a corporate job years ago, I had to bring my laptop on a one-week family trip to Taiwan. I spent a few nights working on spreadsheets while my wife and kids had dinner via room service.

Conversely, a former colleague of mine from Germany embarked on a 45-day cruise around Europe. It was agreed she would be completely uncontactable and the company simply had to work around that.

Until we learn to detach completely from work (and realise the sky will not fall down from that), no number of vacation days may matter since we are only escaping the office – but we are not escaping our work.

Adrian Tan is a former HR entrepreneur turned marketing strategist who writes about the future of work.

Source: CNA/geh

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