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Is annual leave the key to employee productivity and wellbeing?

A staggering 69 % of workers do not take all their annual leave, according to data from RotaCloud. The Censuswide State of Annual Leave Survey 2023 indicates that over 18 million of the UK’s 29.7 million workers didn’t take their leave entitlement in 2022.

Employers with holiday allowances running from January often face last-minute requests to use untaken leave in December or to carry it over into 2024. As many employers wind up their holiday allowances for 2023, what message does your organisation give out on taking leave?

Company culture

Offering a generous holiday policy is not enough. Even when leave is a requirement, not everyone takes holiday for various reasons. From toxic cultures where

success is determined by the hours employees are visible rather than results, or expectations instilled from the top. Many high-profile CEOs are guilty of not taking their annual leave. Companies need to create a positive culture around taking holiday and make it a part of the company's DNA.

Changing times

Since the dawn of the labour force, those working the longest hours have been recognised by their managers, congratulated, and made out to be corporate heroes. This is still the case in some industries. Thankfully, a shift is taking place. HR teams are beginning to focus on employee wellbeing. More companies are seeing data that shows how much more productive employees can be when they're not overworked.

Detrimental effects of overwork include:

  • decreased job satisfaction
  • higher staff turnover
  • burnout

What is burnout?

The World Health Organisation (WHO) recognises the word 'burnout' as an 'occupational phenomenon. It costs businesses money with high staff turnover, absenteeism, and lower productivity. According to a Flexijob report, 75% of workers have experienced burnout.  In a global survey of workers by US think-tank The Future Forum, 42% of workers reported burnout. Common signs of employee burnout include:

  • Tiredness and/or overwhelm
  • Feeling cynical about work
  • Self-doubt/low self-esteem
  • Procrastinating
  • Taking longer on tasks

Strategies to tackle overwork

To counteract overwork, some companies implement strategies such as:

  • Rewarding results, not hours

Companies are shifting their focus from hours worked to achievements. They set realistic goals and reward employees who finish tasks well and on time. They discourage overtime.

  • Leading by example

Some leaders model work-life balance and behaviours for their employees. They communicate priorities outside of work and encourage staff to take time off.

  • Increasing or encouraging taking time off

Google added additional holidays to their calendar in 2020.

Benefits of Taking Time Out

Statistically, taking leave creates happiness at work and home. Studies show that time away from work has physical and mental health benefits. Employees who take holidays have

  • lower stress levels
  • lower risk of heart disease
  • a positive outlook on life
  • increased motivation

Health and career benefits

Improved sleep and motivation are some of the health benefits of taking time off. A New York State University study found that annual holidays reduced the risk of death by 20% and death from heart disease by 30%. Findings from America’s International Foundation of Employee Benefit Plans found employees who take leave are 40% more productive and less fatigued compared to employees who don’t.

Work-life balance benefits

Taking time away from work helps employees disconnect and spend time with loved ones, improving their work-life balance. Being away from the office and time pressures enables parents to reconnect with their children. A Telegraph article cites that 65% of parents say they only play with their children occasionally.

Employee retention

Companies that prioritise employee wellbeing attract and retain talent. Employees are more likely to stay with a company that recognises and values their need for time away from work.

Preventing absenteeism

When staff don't take regular breaks, they may experience burnout or health issues that could lead to absenteeism.

Employee trends

Line managers notice that staff fall into two categories. Some meticulously plan their time off and submit leave requests in January. Others have weeks left at the end of November.

Employees aged 55 plus are the most likely to use their total leave allowance. More than half (58%) of workers in this category say they used all of their days in 2022.

Six tips to encourage leave take-up

More than one in ten workers in the UK say they didn't take all of their annual leave because they felt pressured by management. Yet, whether it’s taking a long weekend or escaping to Bali for two weeks, holidays are an important part of preventing workplace burnout.

HR teams and line managers both have roles to play. Communication, which encourages employees to take time off, is key.

  1. Be interested in your employees when they apply for leave.
  2. Talk about the benefits of taking holiday.
  3. Have a conversation with employees about their unused leave.
  4. While employees are on leave, remind them of the importance of switching off.
  5. Try to avoid lining up new projects or meetings for their first week back.
  6. Remind staff to book leave in advance and ensure there is appropriate cover.

Contacting staff while they are on holiday might seem harmless or make the manager’s life easier, but it has knock-on effects for employees who then can’t switch off and relax.

Why late December is a time of rest  

December not only marks Christmas, but it is a good time for employees to spend time away from the office. It’s easier to take time off this month as

  • emails are quieter
  • client meetings are minimal
  • conferences are usually on hold until spring


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