Leave Up Your Sleeve: Productive or Destructive?Published: July 13, 2010 in Knowledge@Australian School of Business
What would you do if you were owed 123 million days of annual leave? How exactly would you spend the next 471,000 years? Growing very old on a tropical island, perhaps? Keeping your heart rate up with extreme sports? How about ignoring the need for rest and recreation, and instead spending your days at the office? Australians have voted with their annual leave forms and, overwhelmingly, are in favour of the third option – they are staying at work.
The astounding statistic of 123 million days of annual leave is what is owed to Australian workers, according to a study by Roy Morgan Research, and it's worth about A$33.3 billion in wages. What's more, the annual leave problem is endemic across all businesses and industries – large and small.
Typically, the Australian private sector offers 20 working days, or four weeks, of paid "holiday" leave each year, plus a minimum of 10 days paid personal – carer's or sick – leave. Public service workers are also entitled to four weeks through the Commonwealth Enterprise Agreement which says staff "will be encouraged to utilise" their annual leave, and can be forced to do so after 60 days have been accrued. The entitlement for annual leave in Australia is comparatively low. Workers in Finland, Brazil and France get 30 days of holiday every year. Their counterparts in the UK receive 28 days. That's well ahead of the US where there's no mandatory requirement – although US employees are typically allowed 15 days of vacation each year – while Chinese workers and Canadians are given only 10 days.
Stockpiling leave is facilitated by allowing workers to accrue leave over time. In countries such as Denmark and Switzerland leave entitlements must be taken annually.
While saving up leave is not unique to Australia, its workers have a growing propensity for keeping leave up their sleeves. Between 2006 and 2008, the Roy Morgan study found, annual leave accrual by full-time staff in Australia grew by 11%. Conducted during the global financial crisis, the study's results fly in the face of the widely reported trend for employers to encourage workers to use up leave to eliminate the liability from company balance sheets. Sending employees on holiday purportedly was a way companies managed to keep head counts up when workloads slumped.
Reasons why Australian workers hang on to their leave entitlements vary. Further research conducted by Sydney-based company, Jones Donald Strategy Partners for Tourism Australia, the federal government's tourism marketing agency, shows only 56% of people who stockpile leave feel their bosses are generally supportive of employees taking a holiday. This is a resounding perception among those who work for government departments. However, many public servants claim work-related barriers stop them from taking time out.
According to the Jones Donald research, a major deterrent is the build up of workloads – both before and after leave is taken. Another put-off is management failure to arrange for assigned duties to be covered in the leave-takers' absence. Others put holiday plans on hold due to the difficulty of scheduling a break when desired or around projects. Further reasons for stockpiling – defined as having more than 25 days annual leave owing – include people being focussed on taking a bigger, better holiday (which often never comes), the belief that nobody else can do their job, and the insecurity factor as employees, fearful of losing their jobs, save accrued leave as an "income protection policy".
Meet the Martyrs
The study also characterised the holiday hoarders. Among them was the martyr whose job is their identity. Martyrs tend to be longer tenure employees, older and often within the public sector, who believe things will fall apart if they go away, the survey report noted. Workaholics are more likely to live in non-family households. They believe they have too much going on at work to prioritise taking leave and are likely to be unaware of how much they accrued.
Annual leave plays an important role in the wellbeing of employees and the overall health of organisations, say experts. If it's not being used, then there may be a high price to pay on both sides of the employment relationship. The impact of stockpiling leave on employers includes not only the risk of unrealised costs as the value of leave rises, but an increase in workplace accidents and employees accessing sick leave. Levels of staff motivation and productivity are affected as well. And in time, this may damage the employer's reputation. Employees suffer through an increase in burnout and poor health, and a decrease in job satisfaction. For both, there are the negative effects of "presenteeism" – when an employee reports for work but their mind is not on the job.
There's a lot of talk about the wonders of labour market flexibility these days, but the capacity of people in the labour market to decide when they want to take leave has been much reduced, reports Michael Quinlan, a professor specialising in occupational health and safety at the Australian School of Business. Curiously, there is not a lot of academic research on annual leave, he notes.
Quinlan identifies a number of social and workplace trends that encourage the stockpiling of leave. For example, in relationships where both partners are working, couples often find it very difficult to dovetail their leave "and workers are not in any bargaining position to be able to negotiate that", he points out. "Work has been intensified. Not so many companies close down over Christmas as they once did. Beliefs that Christmas should entail a prolonged break, weekends should be sacrosanct and that there shouldn't be a 24/7 work culture are labelled as old-fashioned. We are told to embrace 'flexible work', but this phrase has no meaning – flexible for whom?"
Paul Dundon, managing director of absence management service provider Direct Health Solutions, says the symptoms of unhealthy workplace practices are showing. Increasingly, employees are taking their full annual entitlements for sick leave and carers' leave, but leaving their holiday entitlements untouched. "There's a point where working without leave simply can't be sustained," Dundon says. "That causes residual issues such as on-the-job performance problems. Ultimately, people crash and burn.
Ideally, staff should take one week off each quarter, suggests Dundon – but this is rarely possible. And the fault more often rests with the employer. "Most companies write into employment contracts that staff must have a continuous two-week break each year. It's [a requirement] for rest and occupational safety. But there are two issues with that – it is often not enforced, and people don't necessarily want to take a two-week break because then they only have two weeks left for the rest of the year. It makes them feel insecure." The National Employment Standards introduced from 1 January 2010 under the Fair Work Act specify no minimum or maximum amount of accrued annual leave that must be taken at a time.
However, many businesses impose rules, such as having to plan leave three months in advance, Dundon says. "Those rules rarely suit people's needs. That's one of the reasons people often fall back on sick leave, it's their only avenue to take time off at short notice."
Give Them a Break
Measures to address the issue of annual leave stockpiling begin with communication, advises Markus Groth, a professor at the Australian School of Business. Its causes are problematic policies and poor management, which means managers need to actively seek out the deterrents and take action. "The insecurity people feel about their jobs could be improved with better communication to make employees feel safe about taking holidays," he suggests. "Allowing shorter holidays is also important, as is encouraging staff to take them."
One outcome of the Tourism Australia study was a series of recommendations for employers, starting with an analysis of the issue and the need to understand the seriousness of the problem and its negative effects. The next step is profiling stockpilers to identify their barriers to taking leave. Subsequently, this knowledge can be used to address management issues and develop new strategies in consultation with staff. However, it's recommended that approaches to annual leave be constantly revisited, as changing economic environments reshape staff behaviour.
There are clear benefits for organisations that properly support the relaxation needs of their staff. Groth says the evidence is indisputable that holidays enhance engagement levels at work. Quinlan agrees. "It is a major social issue," he says. "A significant part of the workforce is working 49-plus hours a week and, according to the research, this has long-term adverse health effects. It's in society's interest that people take leave. When they take a break from work, they are healthier, they have more time to connect with their families and they are more relaxed. They return to work refreshed and, as a result, they are far more productive."