Reward insight
John Dean, commercial director, Punter Southall Health & Protection, reveals the importance of this employee benefit
P aid time off is a highly valued benefit for most employees and needs to be considered as an important part of a company’s benefit strategy. Not only are holidays good for employees’ health and wellbeing, paid time off – and employee benefits in general – are increasingly a major factor when people consider whether to accept a job offer or not. However, for companies sending staff to work overseas, paid time off is a complex area, as industry type, location, workplace demographics, culture and religion all must be considered. Add into this mandatory paid time off requirements, public holidays and unusual special leave, it’s easy to see the challenges facing organisations when creating a time off strategy. The recent Global paid time off study (‘the study’; https://bit.ly/2BVEp8a) by Asinta, a global partnership of independent employee health and welfare consultancies, in partnership with Punter Southall Health & Protection, investigated how paid time off entitlements vary around the world and asked, does paid time off matter? The conclusions were clear – paid time off really does matter. According to the Framingham Heart Study (https://bit. ly/1H66t3F), men who don’t take their holidays were thirty per cent more likely to have a heart attack, while women were fifty per cent more likely. It’s also a highly valued employee benefit with research (https:// bit.ly/2MY9Gvl) highlighting it is the top employee benefit. Interestingly, when it comes to paid leave it’s often thought the UK is one of the most generous places, but the study revealed it’s Spain with 44 days, Germany with 41 days and Brazil with 38 days a year which are the most generous countries. On the other end of the spectrum are countries like the USA which does
not mandate paid leave and holidays for employees. But 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. ...important to recognise there is a genuine business case for paid time off... China is among the least generous nation for holiday benefits, as 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, for example, and time off is offered for religious ceremonies in Arabic countries, e.g. United Arab Emirates, which provide thirty days of 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. What does this all mean for companies when creating a time off strategy? The approach taken when developing a strategy can say a lot about an employer and there has been a move recently to shake up things in this area. For example, the study noted that some global employers are removing paid time off allowances altogether in favour of empowering their staff to manage their time at and away from work to suit their individual lives. Leading this trend was Netflix which
decided to switch to unlimited paid time off for its Silicon Valley employees in 2004. The company made the choice after employees pointed out that they didn’t count the out- of-hours work they did on evenings and weekends for the company, so it wasn’t fair for their relaxation time to be tracked either. Virgin, Twitter and other companies have followed suit. While this approach won’t fit all businesses, it highlights that as the way people work has changed, along with technology advances, employees are no longer confined to the traditional ‘9 to 5’. Employee benefits therefore must also evolve. Global harmonisation around paid time off will always be difficult. It can represent a significant cost and it is a complex area, so it makes sense for companies to take advice to ensure that the right strategy is implemented for their business and employees. There are usually two approaches: ● Attempting a common approach globally 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. ● The 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 approach can be more cost effective; however, a trusted local benefits adviser would be needed in each country for this to work. Whatever companies decide it’s important to recognise there is a genuine business case for paid time off. It supports engagement, helps staff feel valued and they tend to return from holidays refreshed and motivated. A generous paid time off allowance will also support employee retention and recruitment. n
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Issue 44 | October 2018
| Professional in Payroll, Pensions and Reward |
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