Sachs’ load of holiday

13th June 2022

Of particular interest in the realm of employment law is global investment bank Goldman Sachs’ recent announcement of its plans to introduce a “flexible vacation” policy for its senior staff, giving them unlimited paid leave. Under the new policy, staff can decide how much holiday they want to take. Goldman Sachs’ stated aims are to encourage rest and prevent burnout in a culture where long hours can be the norm.

However, Goldman Sachs is not the first firm to introduce a flexible, or unlimited, vacation policy, and are following the likes of LinkedIn and Netflix. Will the approach gain momentum and become the norm for UK employers? We look at some of the legal and HR issues that could arise.

Why offer staff unlimited holiday – will they ever be there?

Perhaps a clever policy to adopt, it shows greater trust in your employees and is a clear commitment to offering flexibility for the workforce. In turn, it is hoped this will drive up staff retention rates and, with a conscious effort to improve mental wellbeing, may well promote greater productivity when staff are in the office. The policy will also drive recruitment as the prospect of greater holiday is undoubtedly attractive to many.

There may be an element of reverse psychology in there too, in the same way as “pay what you consider it was worth” restaurants hope diners feel embarrassed at paying too little and so end up paying over and above what they would have paid elsewhere. Employers offering unlimited holiday may hope that staff do not want to be the one who is seen as taking too much time off and so they end up taking relatively low amounts of leave.

What are the risks and how can they be minimised?

Commentators have suggested there is the possibility of senior staff taking less holiday, and so in fact increasing the risk of burn out. It is important to remember that the Working Time Regulations minimum holiday levels continue to apply and so staff should be encouraged to ensure they at least take the statutory 28 days minimum holiday.

However, there is also the concern of the policy being abused.

As with so many news headlines, the concept may appear radical, but the devil is in the detail. It is likely that the policy will include some broad parameters if only to avoid someone deciding to take say 6 months off on full pay, causing the employer great operational difficulties by their absence.

Any such, unlimited holiday policy should make clear that performance targets must still be met. By doing this, an employer is helping to create a culture that focusses on task/target achievement and rewards this with very flexible holiday provisions. This can help an organisation move away from a purely monetary basis of recognising achievement.

Another risk that should not be overlooked is that if the unlimited holiday policy only applies to ‘senior’ staff, this could create resentment among those not entitled to this benefit, particularly if they feel that the employer is saying they cannot be trusted in the same way as the senior staff.

This could create a two-tier workforce. In addition, it is important to check that ‘senior’ is not simply a euphemism for older workers as this could lead to age discrimination complaints from younger staff who are not entitled to benefit from the unlimited holiday policy.

It may also be that it is the less senior employees who are renowned for working long hours and so they will continue to run the risk of experiencing burnout and a lack of rest.

Will it become the norm?

There is much to think about before jumping on the bandwagon and introducing a similar policy. It is very unlikely that this approach will become the default for all employers. For some employers, the ability to reward performance achievements with flexible holiday provision will work really well but for others it is likely that, at least for now, keeping to the tried and tested set entitlement to annual leave will work best.