3 Things I Learned By Giving My Staff Unlimited Paid Leave

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Two years ago, at an all-staff meeting, I announced that we would be introducing unlimited annual leave. To be clear, I wasn’t talking about unlimited unpaid leave. Rather, staff would now be able to take as much leave as their hearts desired and every single day of it would be paid.

I had made the decision because I felt that employment law around leave in Australia was fundamentally unfair. It is heavily biased towards employers. In a standard full-time job, staff are entitled to four weeks of annual leave and are expected to work 38 hours per week. But in management consulting, the industry in which Inventium falls (we're an innovation consultancy), it is not uncommon for staff to work 50+ hour weeks and travel interstate or overseas relatively frequently. So while annual leave is capped, working hours are not.

To rectify this imbalance, and help bring more balance into my team’s lives, unlimited leave was launched. We called it Rebalance Leave, because it wasn’t about more leave for leaves’ sake, it was intended to help staff lead more balanced lives. And two years on, I can confirm that it has made a huge difference.

Sick leave is often seen as a good indicator of the “health” of a company. When employees are engaged and thriving, sick leave tends to be lower. The average worker in Australia takes between eight and nine sick days per year. Inventium was already pretty “healthy” with our average sick leave in the year prior to unlimited leave being 2.45 days. Two years on, that has almost halved to an average of 1.4 days per employee, which is almost unheard of in Australia.

Despite our success, there are many companies (mostly US-based) where unlimited leave has received much criticism and been a major flop. Rather than taking more leave, staff took less leave for fear that they would be judged by their manager as taking too much leave. We didn’t have this issue, and here are the biggest learnings I took from it in making unlimited leave successful.

Is It Legal To Substitute Annual Leave For Sick Leave?

Picture the scene. you've organised a week off work for some much-needed R&R. On the first day of your holiday, you're struck down with the flu. Instead of sunning it up on the beach, you spend the entire week coughing up phlegm in bed.

If you'd been at work, you definitely would have called in sick on these days - so why should annual leave be any different? Let's take a look at the legalities.

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Four weeks isn’t enough

Before I introduced unlimited leave, staff took an average of 19 leave days per year. So they were pretty much using up all their leave – which is actually unusual. The average worker in Australia has accrued 20 days leave, meaning they are not actually taking their full four weeks every year.

One year after launch, the average amount of leave taken was 24 days, and two years on, it is up to 27 days. As a business owner, I see this as a huge success. It means staff are taking what they need (which was clearly more than four weeks) but by the same token, the policy is not being abused.

Interestingly, five and a half weeks is about what I now take. This consists of a couple of weeks off over Christmas, a decent three-week family holiday in the middle of the year and the occasional long weekend where I’ll take the Friday off work.

Model it from the top and the sides

I think that it’s no coincidence that my own leave amount mirrors what staff now take. Before launching the policy, I did a tonne of reading about other companies that had gone down a similar route and what had happened. I wanted to be careful to avoid the trap of the amount of leave being taken decreasing rather than increasing.

What I took from reading about other companies failed efforts were two things. First, there still needs to be a minimum amount of leave to take and it needs to be tracked. This at least gives staff comfort in taking the bare minimum. Second, it needs to be modelled from the top. I think that if I still took the bare minimum in leave, it wouldn’t be seen as acceptable for others to take more.

In addition, when someone took a Rebalance day or several after a period of a few hectic weeks, I would talk about that publicly in all-staff meetings and reinforce what a great thing it was that this person was taking care of themselves.

But it wasn’t just about me modelling it and talking about it. What started to happen was that team members would look out for each other. I frequently heard stories about individuals on my team who had encouraged others to take a Rebalance Day because they looked like they were having a stressful few weeks. And if it wasn’t for the nudge, some people told me they probably wouldn’t have taken it. The power of peers should never be underestimated in making a policy like this successful.

It’s about the intent, not the instruction

I remember when I launched unlimited leave thinking carefully about whether we needed a set of rules to govern how it was to be used. But laying out a set of instructions seemed like a patronising thing to do, given one of the points of the policy was about treating people like adults and empowering them to make decisions for themselves.

So instead of creating a set of instructions, I launched it with a clear intent. The intent was about using the additional leave to achieve balance in one’s life. Hence the name: Rebalance Leave. I made it clear that it was not to replace other kinds of leave that have specific purposes, such as Parental Leave, Sick Leave, Carer’s Leave and so on.

There have been numerous examples where this has been respected. One example was a person on the team who wanted to take more than the one month’s parental leave that we offer. He assumed (correctly) that it would be unpaid given the intent was spending more time with the little people in his family rather than needing time off because he was “unbalanced”.

Another member of the team moved to Spain for eight months to spend time with her husband who was living there for a year for work. Again, it was assumed that this would be unpaid given it wasn’t about rebalancing, it was simply about capitalising on a once in a lifetime opportunity.

One of the key ingredients that I believe made unlimited leave successful at Inventium is a high amount of trust between everyone on the team. In addition, because leave doesn’t have to be “approved”, it takes a respectful and thoughtful team to not end up with everyone on leave all at once and create issues for our clients and the work that needs to be done.

Dr Amantha Imber is the Founder of Inventium, Australia’s leading innovation consultancy.


Comments

    Interesting article, and mirrors the same attitude towards employees as Riccardo Semler (author of Maverick), that they are a integral and valued part of the organisation, rather than brainless drones, though arguably, he had to because the company was in trouble.

    The social contract element is what binds this so effectively to the staff, but it would be an interesting experiment(?) to see how this scaled for a larger organisation.
    The staff base isn't mentioned, but typically these initiatives are more successful in smaller companies, because of the more personal nature of the employee base.
    Larger organisations tend to have more disengaged employees, who absolutely would take advantage of this in an unfair way, which in turn would lead to restrictions, and we're back at SQ1.

    All the same, this was a big leap of faith by the owner, and appears to have worked well for both the management and employees .
    Bravo !

    If pay rises, bonuses and promotions are based on work done, unlimited leave is meaningless.

      You're confusing number of hours spent at work and outcomes ... promotions and bonuses etc are determined on the measured performance you achieved , not the number of hours you spent. Arguably, a person that achieves the same outcome by spending less time deserves to be promoted and paid higher ...

        It depends on the nature of the role. Some roles you are being paid for your time, to physically be there or be available. One that comes to mind is customer service - if you have a commitment to customers to be available to them at certain hours, you are being paid for your time, not 'outcomes'. In some cases these may be combined - you could also have a customer satisfaction or case resolution KPI.

        In other cases, for example sales, you may be getting paid to hit a specific target. There's obvious motivation there to achieve higher and earn more if its bonus or commission based. But with that said, I know of at least one salesperson who was a classic 'ninja' - never in the office but achieved the highest targets anyway. this person never took annual leave, because they didn't have to - nobody cared when or where they were because they were bringing in the sales.

        A person who takes 6 months leave will not do the same work as someone who doesn’t. They will also be noticed by those handing out the pay rises.

        Unlimited leave is nice PR, but in practice it’s meaningless.

    I think having a truly uncapped amount of leave is unrealistic and it'd be better to take the approach that a lot of Government departments have with flexible working hours/variable working hours (whatever you like to call the scheme). If you genuinely have people working 50+ hour weeks all the time, taking 2 or 3 extra days off a year doesn't actually cover that.

    If you take the fairly standard 9-5 (8 hour) work day as your base, then staff are easily racking up a day and a half extra in a week. Even if you said the base day was 9 hours then someone working more than 50 hours a week is going to be making *at least* half a day a week.

    Anyway, back to flex time. The way the system worked was that your hours were monitored and any time you worked over a standard day was "banked" and you could effectively use it as time off. So if you worked a 50 hour week when the standard was 40 you had 10 hours time off to use. Some people would use it to work a couple short days, or have a couple mornings or afternoons off, or to take a whole day.

    I think it is a much more equitable system in both directions. Employees know they are compensated for all the extra work with time off. The employer knows that employees aren't milking days off because they know the people worked that time and deserve it.

    Plus it's easier to put the rules in black and white.

    How does this work for people who take less than the award (20 days) of leave per year. Is there any form of roll-over, that would allow them to be paid out when they leave the business?

      @malWiggin, this is should be covered by the standard employment conditions, ie a maximum number of days per year are allowed to accumulate and rollover but it would depend very much on the employment laws in your country. From memory, Australia gives a standard 4 weeks per year with can rollover from year to year. However, an employer can force you to take annual leave if, for example, the business is closed over Christmas or you have excessive annual leave accumulated. Depending on the award, you can "cash out" annual leave if you and your employer agree. All covered on the Government Fairwork site.
      https://www.fairwork.gov.au/leave

        this is should be covered by the standard employment conditions
        But these are specifically not standard employment conditions.
        I've seen examples of "unlimited leave" contracts that contain clauses specifying that untaken leave does not accrue. I'm wondering whether that's the case with Dr Imber's business.

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