Do holidays matter? The issues with creating an international ‘paid time off’ policy

Taking time off is good for employees and also for business. Not only are holidays good for our health, they are the one employee benefit that many people favour over a pay rise.

Do holidays matter? The issues with creating an international ‘paid time off’ policy

However, the Global Paid Time off Study (2018) by Asinta, a global partnership of independent employee health and welfare consultancies in partnership with Punter Southall Health & Protection, highlighted the challenges when creating a ‘time-off strategy’ as well as the variations in paid leave around the world.

The importance of taking time-off

The study first looked at whether paid time off actually matters and concluded it does. They looked at the Framingham Heart Study – a long-term, ongoing cardiovascular cohort study on residents of the city of Framingham, Massachusetts – and found that men who don’t take their holidays were 30 per cent more likely to have a heart attack, while women were 50 per cent more likely.

It’s also a highly valued employee benefit. The Perks and Insurance Survey (2015) found that paid time off was the top employee benefit by employees. And the Employment Confidence Survey (2015) found that 60 per cent of employees take benefits and perks into account before accepting a job and 80 per cent would choose additional benefits over a pay rise.

The issue for many international companies though is how to create a paid time-off policy that will work across multiple countries. Challenges include dealing with variations across industry type, location, workplace demographics, culture and religion, as well as mandatory paid time off requirements, public holidays and unusual special leave.

Paid leave around the world

The Asinta study found that counting mandatory paid holidays, public holidays and supplemental typically provided holidays, Spain is the most generous country for annual leave, typically offering workers 44 days of holiday.

Germany was second with 41 days and Brazil third, with 30 mandatory paid holidays and 8 public holidays. The UK has 33 days, on a par with the UAE. Under European law, all countries are required to give staff 20 days of paid leave, but many companies across the world will offer more than the legal requirement.

The USA is the only OECD nation which does not mandate paid leave and holidays for employees. This doesn’t mean the workers in the USA don’t receive holiday, it is just offered at the discretion of the company and Americans on average take 15 to 21 days off.

In China, which is among the least generous nation for holiday benefits, workers aren’t entitled to any paid leave during their first year of employment. In Japan, where there is an ageing population, some companies are cutting working hours and the government is introducing legislation to force workers to take at least five days holiday each year.

Other anomalies are the types of leave offered in different countries. Study leave is offered in Germany and time off is offered for religious ceremonies in Arabic countries such the UAE, which provides 30 days unpaid leave for their employees to go on a pilgrimage. Other countries offer leave for workers moving to a new house or even for blood donations.

Trend towards unlimited leave

Although it’s clear there are wide variations across different nations, it’s important companies develop a robust strategy – as their holiday and paid leave policy will reflect on how they are perceived as an employer. This has led to some leading global companies to take the bold step to offer unlimited leave.

This approach is favoured by companies such as Netflix, Virgin and LinkedIn. Netflix’s rationale is based on the fact it doesn’t count the out of hours employees do in the evenings and on weekends, so it wasn’t fair to track their holidays either. 

Most employees would be overjoyed with this policy; however it won’t suit every business and can present its own set of issues. These include how to manage time off and ensure it’s business as usual at all times, as well as avoiding staff taking more leave than is fair.

But this trend does highlight how the modern workplace is evolving with policies being adapted to the way we do business. For example, technology advancements are such that the workplace is no longer confined to the traditional nine-to-five, and so employee benefits must evolve to reflect changing working patterns.

A global strategy

For companies putting together a global strategy it is sensible to take advice to ensure the right strategy is implemented for the business and employees. Paid time off can represent a significant cost and is a complex area. Companies don’t want to risk making mistakes.

What is the best approach? First, attempting a common approach globally is one option, but this is challenging when countries have more generous paid time off allowances than local markets. In other countries, the policy could fall below what other local employers offer.

What is often more successful is a local approach, whereby companies create a ‘locally appropriate’ policy based on market norms in the sector, employee benefit benchmarks and any minimum leave they wish to apply. This can be more cost-effective; however a trusted local benefits adviser would be needed in each country for this to work.

A one-size-fits-all approach can be tricky, but as there is a genuine business case for paid time off, including supporting employee engagement, retention and recruitment. Therefore, it’s important to get it right and develop a policy that works within the overall employee benefits framework.

The author is John Dean, commercial director at Punter Southall Health & Protection.

This article was provided by Punter Southall Health & Protection.

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