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How much paid leave should employers provide?

New Global Paid Time off Study from Asinta and Punter Southall Health and Protection reveals major global differences and complexities

 Taking a holiday is essential for recharging our batteries, to get away from work stress and to have time to ourselves. But how much paid time off should employers give their staff and how do entitlements differ globally? Which countries are the most generous with their holidays? Are there standard practices?

Asinta, a global partnership of independent employee health and welfare consultancies in partnership with Punter Southall Health & Protection have investigated and published their findings in a new ‘Global Paid Time off Study’, which looks at paid time off entitlements around the world. The insights of the Asinta Partners (who recently convened at a conference in London, hosted by Punter Southall Health & Protection) are included in the study.

John Dean, Chief Commercial Officer at Punter Southall Health & Protection said: “Our clients sending staff overseas often ask how much paid leave they should provide. It’s a complex issue, as industry type, employee demographics, location, culture and even religion all need to be considered. When you add in mandatory paid time off requirements, public holidays and unusual special leave, global harmonisation is far from simple.”

The study asked, does paid time off matter? It does. The study highlights that holidays are good for our health and that not taking leave can have a big toll. According to the Framingham Heart Study[i] men who don’t take their holidays were 30% more likely to have a heart attack, while women were 50% more likely. It’s also a highly valued employee benefit. Employee research[ii] highlighted that paid time off was the top employee benefit by employees.

Dean added, “Undertaking this study we found there is a genuine business case for paid time off. It supports employee 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.”

How do businesses approach time off? 

The shift towards unlimited leave favoured by companies such as Netflix, Virgin and LinkedIn was highlighted in the Study. Netflix’s rationale is based on the fact it doesn’t count the out of hours work employees do in the evenings and on weekends, so it wasn’t fair to track their holidays either.

Dean says, “Clearly the Netflix approach to holiday entitlement won’t suit every business, but it highlights how the workplace has evolved. Technology advancements are such that we’re no longer confined to the traditional ‘9 to 5’ and employee benefits must evolve too.”

How should companies build a global paid time off strategy? 

Punter Southall Health & Protection says that building a global paid time off strategy is tricky; complicated by paid time off rules varying globally, making harmonisation challenging and costly.  However, the company advocates two approaches:

  1. Common approach – companies could attempt a common approach globally, but this is challenging when some countries will have more generous paid time off allowances than local markets. In other countries, the policy could fall below what other local employers offer.
  1. Local approach – companies can create a ‘locally appropriate’ policy based on market norms in the sector, employee benefit benchmarks and any minimum leave they wish to apply and this approach can be more cost effective. However, a trusted local benefits adviser would be needed in each country for this to work.

Which countries are the most generous with paid time off? 

Counting mandatory paid holidays, public holidays and supplemental typically provided holidays, Spain is the most generous country for holidays typically offering workers 44 days of paid leave. 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 requirements.

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 nations 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 for example, time off is offered for religious ceremonies in Arabic countries such as the UAE, who provide 30 days unpaid leave for their employees to go on a pilgrimage. Others countries offer leave for workers moving to a new house or even for blood donations.

Wendi Pickerel, Global Executive Director, Asinta said, “Determining paid time off is a real headache for international companies. Deciding which approach to take requires a good understanding of local paid time off rules and how this fits within the company’s overall global benefits.

“Our study brings together the insight and expertise of our global partners and what’s clear is there is no ‘one size fits all’ solution and most companies will need specialist advice to build the right strategy for their business,” she added.