Workplace Law & Strategy

Unlimited annual leave policy, you’re kidding right?

Posted in Diversity & equal rights, Employment & Holidays, Workplace policy and process

Recently, Virgin Group announced through its CEO Richard Branson, that it would be removing its workplace policy that limits holidays for employees. The ‘no policy’ approach to annual leave is to be implemented as a flexible working policy measure that allows all salaried staff to take off as much time as they want, whenever they want with no managerial monitoring of time away from work. The announcement was made during school holidays in Australia.

Wait, what? Unlimited holidays? What’s the catch?

The “catch” is that the employee must meet the expectations of their role and must ensure that their absence from work will not affect their team in a negative way.

So why would Virgin Group change its leave policy in this way?

Virgin expects the no policy on leave will improve ‘morale, productivity and creativity’ by moving away from an ‘old-fashioned’ time off policy. The expectations align well with an article that Scott Behson wrote for the HBR blog network titled ‘Increase Workplace Flexibility and Boost Performance’.  Our experience in Australia also correlates well, where the benefits of a flexible leave policy can include:

  • Higher productivity: there is a shift in focus on what employees actually achieve rather than how many hours or days they work. The no policy on leave places greater emphasis on employees using their own judgment to only take leave during quiet periods;
  • Boost morale and motivation: unlimited annual leave demonstrates the business’ commitment to work-life balance and employees are trusted to use holidays as needed;
  • Employer-of-choice: flexibility is an attractive draw-card for attracting and retaining high performing employees; and
  • Reduce ‘flexibility stigma’: equal access to workplace flexibility reduces the negative stigma for employees who access flexible working practices for specifically protected reasons like illness and carer responsibilities.

Additional Australian considerations

A ‘no policy’ on leave is not a guarantee that an Australian national system employer would meet its obligations under the Fair Work Act. For example, the National Employment Standards require a minimum of four weeks of annual leave per year of service (pro rata) with any accrued but untaken annual leave payable on termination. Australian employers also have strict record-keeping obligations about leave entitlements. Accordingly, Australian employers will still need to record the taking of annual (or other statutory) leave and ensure every employee has received their statutory minimum (or any required payment of accrued, but untaken annual leave on termination).

Final thoughts

Of course, not all businesses or roles can offer “Virgin-like” workplace flexibility. Before embarking on a ‘no policy on leave’ in your business, it will be necessary to assess the business to ensure that line managers are engaged, have set appropriate performance goals and targets and are willing to have ‘tough’ discussions with underperforming employees. Additionally, HR departments must be adequately resourced to address employee performance concerns, particularly to respond to misuse of the policy.

Only time will tell whether Virgin Group’s ‘no policy’ on leave approach will be the next evolutionary step to flexible working practices or a step too far.