What 5 weeks of annual leave could mean for employee wellbeing

The SDA union, which represents employees across the retail, fast food and warehousing industries, has been calling for employers to introduce five weeks of annual leave for employees.

It’s an increase from the four weeks of paid leave a year for employees (other than casual workers) under Australia’s National Employment Standards.

The union stated that while retail working hours and work expectations have changed over the past 10 years, annual leave entitlements have not, “with the minimum standard not increasing nationally since unions won four weeks as the standard in the 1970s.”

“We know that time off from work is important,” the union said in a statement. “Over the past 15 years, all the productivity gains have gone to profits, it’s about time we got something back.

“Whether it’s for caring responsibilities, study or just to take time off – it’s time for this to reflect workers’ needs and that means receiving 5 weeks of annual leave each year.”

But what could be the implications of introduction more annual leave?

More annual leave for various sectors

In 2023, the SDA union won five weeks of annual leave in new enterprise bargaining agreements with Bunnings and Ikea. And at Apple, it secured five days of special leave.

And while SDA advocates for retail employees, Carol Kulik, Bradley Distinguished Professor at the University of South Australia, believes five weeks of annual leave could work for employees in other sectors as well.

“I don't think it's industry specific, I think we need to be thinking about it across the board,” she told HRD Australia.

“Some researchers are suggesting that having more time off might be especially important for people who are working remotely; so people who are working from home or they're not going into the office. Because it's in most situations that the boundaries between work and non-work are so flimsy or so permeable, and so people often don't take the opportunity to turn off.”

Implications of more annual leave

Kulik explained three key implications that additional annual leave could have on employee wellbeing. The first is around autonomy.

“We know that one of the strongest factors in determining employee wellbeing is a sense of control or autonomy,” she said.

“Offering employees a larger amount of paid leave is one way of giving them that sense of control or autonomy. And so it's likely to be much more potent than giving employees access to a wellbeing app or offering meditation training where that sense of control is in the employer’s hands rather than in the employee.”

The second principle relates to timing, Kulik said. She explained that when it comes to worker wellbeing, it's much better to make an intervention early – before employees become too stressed or burned out – than to have it happen later.

“What's really interesting in relation to leave is that when employees have small amounts of leave, they tend to hoard it, they hold on to it, they don't use it,” Kulik said. “Because they keep thinking there's going to come a time where they're going to really need it.”

Providing more leave could encourage employees to actually take their leave, Kulik explained.

“The more vacation you're offered, the more you take because you're less fearful that you might need it and have used it all up,” she said. “So it’s much better to offer employees more because they're more likely to take it and avoid that stress, avoid getting burned out.”

The third principle is around the length of time someone is likely to take off. While there is variability on what researchers think is the optimal length of a holiday, there is some agreement, Kulik said.

“Where they do tend to agree is that one work week is probably a little too short,” Kulik said. “That probably the ideal time is more like eight days or 10 days. So it has to span two work weeks. And it usually takes people several days before they really experience that sense of letting go or really being able to turn off.

“So giving employees more access to more time off will actually encourage them to take longer leave at one time and that's probably going to have a beneficial effect on wellbeing.”

Workplace flexibility with annual leaves

Various organisations have been considering other work arrangements for employees, such as four-day work weeks or a nine-day fortnight. But Kulik argues that they lack flexibility compared to providing more annual leave.

“A lot of the plans that organisations are looking at are, in fact, not very flexible,” she said. “If your organisation was going to offer a four-day workweek, everybody has to work those four days and not the fifth day. So it's really not very customised.

And one of the things that's really nice about annual leave, is that it does allow for a greater range of employee needs, Kulik said.

“You’re going to have some employees who choose to take that time in very small packages, maybe they just really do want to have a shorter work week. And then there are going to be others, like the older workers… that say, ‘No, what I really want to do is to be able to take three weeks at a time’.”

But Kulik cautioned employers against using benefits such as longer annual leave as a way to attract potential employees.

“It's a very risky proposition to draw employees just because of your benefits,” she said. “You really want employees to be attracted to you because you've got a great work environment, because you're doing important, meaningful things. So the benefits really should be the icing on the cake.”

Tips for HR leaders on annual leaves

For HR leaders who are considering introducing five weeks of annual leave, the first thing Kulik suggested is to see if there are any patterns of annual leave already.

“You may find, for example, that everybody takes the time off as they approach the summer holidays,” she said. “If you're giving people more time off, you may run the risk that you'll get short staffed at times. And so you're going to need to be managing that.”

Another key factor to consider is the demographics of your employees, Kulik said. This means talking to different groups of employees to determine what kind of leave would be beneficial to them.

As part of her research, Kulik has conducted interviews with hundreds of older workers and one of the things they often talk about is the need take bigger chunks of time off in one go.

“If you're an older worker who has children and grandchildren living in another part of the world, you'd like to be able to take off enough time to spend time with them,” she said. “Or let's suppose you're an older worker, and you're very healthy, you're doing great, but your spouse has some medical issues that they need treatment. So you might want to take off a block of time just to be more available to them.”

Further, Kulik added that annual leave can also be valuable when it comes to retaining workers.

“It really highlights this idea that annual leave could be an important factor in retention, particularly in high-stress environments or when you have an older workforce,” she said.

“This could be a way of helping them to relieve stress or it also could be a way for them to generate more balance in their work and non-work lives.”