Unlimited annual leave builds trust, helps staff balance their lives

While the concept of unlimited paid leave is new in Australia, it has been around for several years in the US.

Amantha Imber and some features of a potential interview. Add to that unlimited annual leave.

Australian employees are entitled to four weeks of paid annual leave, and most employment contracts state that a full-time employee works a 38-hour week.

But at many workplaces this is not the case. White-collar workers can find themselves regularly working 50, 60 or even 70-hour weeks. This represents significant inequity: organisations are happy to cap leave yet not cap hours.

Australian innovation consultancy Inventium recently announced staff would receive unlimited paid annual leave. The policy was designed to help reduce that inequity and make it easier for staff to balance the demands of working in a busy consultancy with having time for family, relaxing and switching off.

While the concept of unlimited paid leave is new in Australia, it has been around for several years in the US even though only about 1 per cent of companies use it.

Netflix announced it was giving staff unlimited annual leave in 2010. Since then, several progressive technology companies such as LinkedIn followed, as well as companies such as Virgin America.

An unlimited leave policy works when there is trust between managers and staff, and when employee engagement levels are high. If trust is lacking, managers will constantly be concerned about the possibility of employees taking advantage of the system.

If staff members are not happy in their jobs, it’s likely they will take a lot of leave, perhaps to avoid being at work and because an environment where they’re unhappy is stressful in itself.

In a company where trust and engagement levels are high, there are many advantages in an unlimited leave policy.

Given the war for talent is ferocious, having an unlimited leave policy can act as a great differentiator for job applicants who are deciding between your organisation and others. It also signals to potential candidates that there is a high level of trust in the organisation.

A policy such as this treats people as adults, not children. Unlim­ited paid leave tells staff they are trusted to behave like adults and make decisions that will be in the best interests of themselves, their team and the company.

It helps to reduce burnout. If a staff member has been working exceptionally hard yet has used up all their leave on a big holiday, they have no choice but to keep working hard unless they are happy to take unpaid leave.

By providing more flexibility, employees can self-manage their energy levels and take leave when they need it rather than waiting for when they have saved enough up to be able to take a proper break. Improved energy levels are also likely to result in improved productivity.

If you are considering implementing an unlimited policy, Mammoth HR chief executive Nathan Christensen recommends thinking carefully about how you label it. Mammoth introduced flexible extra leave in 2014 and Christensen says calling it unlim­ited paid time off is not appropriate as there are limits to the amount of time his employees can take off, such as if their work is not getting done.

At Inventium, the policy is called rebalance leave to reflect the intent, which is to help employees get balance back into their lives after periods of intense work and/or travel.

Amantha Imber is the founder of innovation consultancy company Inventium.