How much paid leave should global employers provide? How much paid leave should global employers provide?

How much paid leave should global employers provide?
02 Aug 2018

Employers with international workforces often find it very challenging to create a common policy for paid time off.

Paid leave is a complex area as different industry sectors, countries, workplace demographics, culture and religion must all be taken into consideration. Mandatory paid time off requirements, public holidays and unusual special leave must also be thought about. 

As a result, it is easy to see why developing a coherent strategy here can be a headache. 

A recent report entitled ‘Global Paid Time Off Study’, published by Asinta, a global partnership of independent employee health and welfare consultancies together with consultancy Punter Southall Health & Protection, analysed how paid time off entitlements vary around the world.

Interestingly, while the UK is perceived to be one of the most generous places in the world when it comes to holiday entitlement, the reality is quite different. The study revealed its employees take on average 33 days off per year, including mandatory paid holidays and public holidays. But the most generous countries are actually Spain, which offers 44 days of paid leave, Germany at 41 and Brazil at 38. 

The most meagre entitlements are found in Mexico, where workers receive just six days paid holiday and five public holidays, and the US, which does not mandate any paid leave and holidays at all. Instead time off is offered at an employer’s discretion, although most US citizens take between 15 and 21 days-worth of vacation on average.

China is also among the stingiest nations in terms of providing holiday benefits as its workers are likewise not entitled to any paid leave, at least during their first year of employment.

Numerous options 

But there are anomalies in the different types of leave offered by different countries too. For example, Germany routinely offers study leave, while Arab countries such as the United Arab Emirates provide time off for religious ceremonies. This equates to 30 days of unpaid leave so their employees can go on a pilgrimage. Other countries permit their workers to take paid leave when moving house, or even when giving blood.

If sick pay is added to the equation though, the study reveals even more global variations. For instance, the US is one of the few developed, industrial nations that does not legally guarantee paid sick leave. By way of contrast, an employee in the Netherlands is entitled to a minimum of 70% of their wages for their first 104 weeks of sickness/disability. 

In Europe, meanwhile, it is again the UK that offers the least generous sick leave. Here workers are paid a flat rate of £92.05 (US$120.76) per week for 28 weeks. Under Australia’s National Employment Standards, however, all full-time employees are entitled to a minimum of 10 days paid personal leave each year, which includes sick and carer’s leave. 

Whether statutory benefits are generous or rather less lavish though, the report highlights that most employees value paid time off highly - something that it also of benefit to the business, not least in terms of staff engagement and retention.

Another factor worth considering is that employees who do not take enough leave are also more likely to become unwell, stressed and, therefore, less productive. In fact, according to the Framingham Heart Study, men who fail to take holidays are 30% more likely to have a heart attack, while the figure rises to 50% for women. 

Interestingly though, some global employers have over recent years started doing away with paid time off altogether in favour of enabling staff to manage their own time at, and away from, work in order to suit their individual lifestyles. 

No one-size-fits-all approach

Netflix, for example, switched to unlimited paid time off for its Silicon Valley workers a number of years ago now. The company revealed the decision was taken after employees pointed out that the activities they undertook on behalf of the company at evenings and weekends were not counted as work, which made it unfair to track their vacation time.

Richard Branson later followed suit in relation to his UK and US-based Virgin staff, allowing them to take leave whenever it suited them. The only condition was that if someone took time out, it would have no negative effect on the running of the business.

While this approach certainly would not work for all companies, it highlights how many employees are no longer working traditional ‘9 to 5’ hours. This means it is important that employee benefits adapt and evolve to cope.

Although harmonisation at a global level will never be easy, it make sense to ensure that the right strategy is in place for both the business and its employees. One option is to introduce a common approach across the world, bearing in mind that doing so can prove challenging as some countries routinely provide more generous paid time off allowances than others.

Another possibility is to create a ‘locally-appropriate’ policy based on your sector’s norms, employee benefit benchmarks and any minimum leave entitlements you believe are appropriate to apply. While this kind of approach can prove more cost-effective than the former, it is likely you will need to take on trusted local benefits advisers in each country to make it work.

But whatever route you decide to take, it is clear that, when it comes to paid time off, there is simply no ‘one-size-fits-all’ solution.

John Dean

John Dean is chief commercial officer at Punter Southall Health & Protection. Prior to launching the consultancy in 2007, he held roles at both leading insurance suppliers and other advisory firms. John speaks at many wellbeing and insurance events in both the UK and overseas.

 

 

Employers with international workforces often find it very challenging to create a common policy for paid time off.

Paid leave is a complex area as different industry sectors, countries, workplace demographics, culture and religion must all be taken into consideration. Mandatory paid time off requirements, public holidays and unusual special leave must also be thought about. 

As a result, it is easy to see why developing a coherent strategy here can be a headache. 

A recent report entitled ‘Global Paid Time Off Study’, published by Asinta, a global partnership of independent employee health and welfare consultancies together with consultancy Punter Southall Health & Protection, analysed how paid time off entitlements vary around the world.

Interestingly, while the UK is perceived to be one of the most generous places in the world when it comes to holiday entitlement, the reality is quite different. The study revealed its employees take on average 33 days off per year, including mandatory paid holidays and public holidays. But the most generous countries are actually Spain, which offers 44 days of paid leave, Germany at 41 and Brazil at 38. 

The most meagre entitlements are found in Mexico, where workers receive just six days paid holiday and five public holidays, and the US, which does not mandate any paid leave and holidays at all. Instead time off is offered at an employer’s discretion, although most US citizens take between 15 and 21 days-worth of vacation on average.

China is also among the stingiest nations in terms of providing holiday benefits as its workers are likewise not entitled to any paid leave, at least during their first year of employment.

Numerous options 

But there are anomalies in the different types of leave offered by different countries too. For example, Germany routinely offers study leave, while Arab countries such as the United Arab Emirates provide time off for religious ceremonies. This equates to 30 days of unpaid leave so their employees can go on a pilgrimage. Other countries permit their workers to take paid leave when moving house, or even when giving blood.

If sick pay is added to the equation though, the study reveals even more global variations. For instance, the US is one of the few developed, industrial nations that does not legally guarantee paid sick leave. By way of contrast, an employee in the Netherlands is entitled to a minimum of 70% of their wages for their first 104 weeks of sickness/disability. 

In Europe, meanwhile, it is again the UK that offers the least generous sick leave. Here workers are paid a flat rate of £92.05 (US$120.76) per week for 28 weeks. Under Australia’s National Employment Standards, however, all full-time employees are entitled to a minimum of 10 days paid personal leave each year, which includes sick and carer’s leave. 

Whether statutory benefits are generous or rather less lavish though, the report highlights that most employees value paid time off highly - something that it also of benefit to the business, not least in terms of staff engagement and retention.

Another factor worth considering is that employees who do not take enough leave are also more likely to become unwell, stressed and, therefore, less productive. In fact, according to the Framingham Heart Study, men who fail to take holidays are 30% more likely to have a heart attack, while the figure rises to 50% for women. 

Interestingly though, some global employers have over recent years started doing away with paid time off altogether in favour of enabling staff to manage their own time at, and away from, work in order to suit their individual lifestyles. 

No one-size-fits-all approach

Netflix, for example, switched to unlimited paid time off for its Silicon Valley workers a number of years ago now. The company revealed the decision was taken after employees pointed out that the activities they undertook on behalf of the company at evenings and weekends were not counted as work, which made it unfair to track their vacation time.

Richard Branson later followed suit in relation to his UK and US-based Virgin staff, allowing them to take leave whenever it suited them. The only condition was that if someone took time out, it would have no negative effect on the running of the business.

While this approach certainly would not work for all companies, it highlights how many employees are no longer working traditional ‘9 to 5’ hours. This means it is important that employee benefits adapt and evolve to cope.

Although harmonisation at a global level will never be easy, it make sense to ensure that the right strategy is in place for both the business and its employees. One option is to introduce a common approach across the world, bearing in mind that doing so can prove challenging as some countries routinely provide more generous paid time off allowances than others.

Another possibility is to create a ‘locally-appropriate’ policy based on your sector’s norms, employee benefit benchmarks and any minimum leave entitlements you believe are appropriate to apply. While this kind of approach can prove more cost-effective than the former, it is likely you will need to take on trusted local benefits advisers in each country to make it work.

But whatever route you decide to take, it is clear that, when it comes to paid time off, there is simply no ‘one-size-fits-all’ solution.

John Dean

John Dean is chief commercial officer at Punter Southall Health & Protection. Prior to launching the consultancy in 2007, he held roles at both leading insurance suppliers and other advisory firms. John speaks at many wellbeing and insurance events in both the UK and overseas.