Author Profile Picture

Craig Unsworth

Read more about Craig Unsworth

Employee benefits: why annual leave is an untapped rewards opportunity


Annual leave is seen as a ‘given’, and yet increasing numbers of employees are not making the best use of it. By taking a fresh look at standard leave, employers can help turn it into a benefit that will inspire and motivate employees. 

Recently Ernst & Young Australia announced it was offering its employees six to 12 weeks of paid ‘life leave’ a year to travel, work part-time, or simply take time off. The company said millennial demand for a different way of working was a key driver, alongside a desire to continuously attract the best people adding, “flexible work policies like this are necessary because of increased competition for talent.”

The opportunity for more paid time off to embrace pursuits outside of work is great for the employees of Ernst & Young Australia, but few employers can come anywhere close to matching such a headline-grabbing benefit.

Having said that, employers could and should be making better use of what they are already giving employees – their annual leave. 

While rewards diversity is important, unused holiday presents a real risk to businesses.

Investing in experiences

Before we consider any other benefits, the truth is that many employees are struggling to take their standard (paid) leave as it is. 

In 2018, a survey by BrightHR revealed that 83.3% of UK workers would not have taken their full leave entitlement for that year. 

Furthermore, British Airways found that a third of UK employees were losing up to four days a year, and that nearly three quarters (69%) were not taking a two-week holiday.

Despite this, work/life-balance and wellbeing are rising priorities for modern employers, both in terms of retaining their own talent and attracting new quality applicants – so, what can they do?

Many employers of course already embrace compensation and rewards that cater to increasingly individual needs and preferences, from flexible working and customised discounting/voucher schemes, to wellbeing-led services and financial education. 

Such rewards are likely to derive much of their value based of their frequency of use. Also, people are increasingly investing in experiences, rather than just buying stuff. 

As such, is there an opportunity to create a benefit that leverages something that employers already provide, in the form of annual leave entitlement?

Holiday as an incumbent solution

While rewards diversity is important, unused holiday presents a real risk to businesses, with employee fatigue, disengagement or burnout all potential bi-products of untaken leave.

In fact, a study by Nuffield Health and Kuoni showed the positive health impacts of taking holiday and its mitigating impact on stress.

While travel often features within employee reward programmes, it’s often useful but arguably more benign products like travel insurance that are offered. Is that going to encourage someone take a holiday?

Looking forward, next generation talent cares about different things and will actively search for innovation at work. 

How can employers optimise the existing benefit of annual leave to enhance their benefits programmes and promote employee wellbeing? 

  • Engage: communicate with your employees about leave. Remind people about the importance of holiday, possibly with a call to action to check their remaining holiday balance.
  • Make it cultural: cultivate a culture where employees feel that it’s frowned upon not to take their holiday, rather than potentially the other way around. 
  • Offer an incentive: a tangible incentive for employees to book their holiday, such as upgrades on their travel bookings, is a great way to not only encourage but also enhance your employees’ time spent outside of the office. Travel is universal and will mean something different to every employee; building relevance across individuals.

Looking forward, next generation talent cares about different things and will actively search for innovation at work. 

While we can’t all emulate Ernst & Young’s offer, by taking a fresh look at holiday as a rewards opportunity, employers can more actively mitigate issues around unused leave, deliver benefits innovation, show they care about the time their people spend away from the office and provide a financial reward aligned with their annual leave policy.

Interested in this topic? Read Work/life balance: why checking emails on holiday is bad for business.

Author Profile Picture

Get the latest from HRZone.

Subscribe to expert insights on how to create a better workplace for both your business and its people.


Thank you.

Thank you! Your subscription has been confirmed. You'll hear from us soon.
Subscribe to HRZone's newsletter