Thankfully, here in the UK, we’ve got a pretty robust system for annual leave. The statutory amount of annual leave in the UK is 28 days per year (5.6 weeks).

This is just the government-mandated minimum, though. It’s pretty generous compared to some other countries, but you could argue it seems inflated as bank holidays are included.

Many companies that look to attract the brightest talents offer annual leave allowances above and beyond the legal minimum. Some even go for an unlimited allowance policy.

But how much is too much? Can you be too generous?

The benefits of a generous annual leave policy

The first thing to know is that we’re very much pro-holiday. So you can assume we’re a bit biased, but the science does back us up - well-rested employees are more productive.

Having a generous, fair absence policy that encourages people to take time off can reduce absence, improve productivity, and increase creativity and the likelihood of breakthrough ideas.

It can also help attract new talent into the business.

You might already know this if you’re in an established company, but you should be prepared to negotiate annual leave when interviewing staff - especially senior executives. When you really can’t budge on a salary negotiation, it makes sense to offer a higher holiday allowance instead, which has less of a direct impact on company performance.

Will performance suffer if staff have too much time off? It’s unlikely.

If you build a proper company culture that respects employees' time, you’ll find they respect the company and its rules more in turn. That means they get much more done when they're working.

Take the example of Microsoft Japan.

They ran an experimental 4-day working week program. For one month, employees were granted 3-day weekends, and it turned out a huge success. Taking Fridays off (paid as usual, without affecting their annual leave allowance) led to happier workers and a 25% reduction in unplanned absence through the month. Productivity went up by a massive 40%, too.

While you can’t always trust the methodology of these studies 100% (they might have omitted negative results for PR reasons, of course) it’s a good indicator of the benefits of thinking differently about time off.

A few extra days per year could do wonders for your workforce.

Should you provide unlimited holiday allowance?

No, you probably shouldn’t.

It’s still a rather trendy perk in the startup world, and has now spread to bigger corporates that want to keep up with the times. But unlimited annual leave allowance, as brilliant as it sounds, actually puts undue pressure on employees.

Essentially, it creates a competitive atmosphere around the usage of holidays, where nobody quite understands what the appropriate amount to take is.

Is it one week per year? Four weeks? Eight weeks? There’s too much ambiguity to be comfortable.

An unlimited policy is open to abuse, but the main risk of having one is that staff just won’t take enough leave, and are more likely to get burnt out.

Other types of leave you can offer

You could always offer some of the alternatives to annual leave instead. There’s a whole world of leave types out there:

  • Duvet days - ad-hoc days off for personal reasons
  • Workations - remote work in a holiday destination
  • Sabbaticals - career breaks to recharge or re-skill
  • Life leave - for non-sickness issues that require absence
  • Unsick days - preventative wellbeing: time off to focus on health before symptoms occur

These might not be like-for-like replacements for annual leave days, but if you include them in your annual leave policy and create a leave-encouraging company culture, you’ll have some rather happy - and productive - employees.