Counting the days: Designing a flexible holiday policy

In the autumn of 2014 there was a brief flurry of news surrounding holiday policies. This was spurred on by an announcement by Richard Branson that Virgin staff would be allowed to take as much holiday as they wanted.

One headline read: “Unlimited holiday leave? You decide, says Richard Branson”. This was followed by the sub-heading: “Virgin staff will be allowed to take as much holiday as they want, when they want, Sir Richard Branson announces.”

At the time, Ashtons Legal – then Ashton KCJ – was looking to adopt more employee-friendly policies as part of the strategic drive towards being an employer of choice. We had already contemplated looking at a Netflix-type arrangement but had not carried out any detailed investigation.

The press coverage that autumn, however, prompted some of our employees to encourage us to look in more detail at the options. Our starting point was to look at the Virgin model. We quickly found that this did not suit our business. The Virgin Group worldwide employs approximately 50,000 employees but the policy was only made available to a total of 170 of those 50,000 staff.

While it was easy to see why Virgin had not made the policy universally applicable, we had already openly stated we had a “no us and them culture” in our business. We wanted to treat everyone equally and thus our policy had to be applicable to all. Furthermore, the Virgin model approach to employees determining whether they could take the leave would not have worked for us. The policy stated: “Only to do it when you feel 100% comfortable that you and your team are up to date on every project and that your absence will not in any way damage the business - or, for that matter, your career.”

I have no doubt that this worked within the Virgin business for the employees to whom it was made available. However, had we adopted that wording in applying a policy to all our staff then I am sure many would have misinterpreted the sentiment as really meaning “take the time off if you dare!”. As such we determined we should not follow Mr Branson’s lead.

However, the Virgin approach was not entirely new. Paid Time Off policies (PTOs) had been around for some time. At the time, Netflix had operated a PTO for at least five years. The Netflix ideology was that they should focus on what people get done, not how many hours or days are worked. It is often said that the Netflix holiday policy is that there is no policy; this is not strictly true. At the time we looked at it, the Netflix policy indicated staff could take vacation any time they desired, for as long as they wanted, as long as their managers knew where they were and that their work was covered.

These two stipulations – 1) “so long as their managers knew where they were” and 2) “that their work was covered” – were seen as key to ensuring proper control is in place and there was no abuse. Was this appropriate to a law firm? If the leave had been agreed (I will cover further in the description of our policy) then it was of no relevance to us if the employee was on a beach or up a mountain. Again, this is not intended to be a criticism of the Netflix approach; I have no idea as to their culture or how their policy operates in practice.

Creating our own approach

We decided that we needed to create a policy that fitted our culture, would be capable of universal application and would be seen as a benefit and not perceived as a threat. We also wanted a policy that would address a number of issues presented by the traditional annual leave policy:

1. the large volume of absences in December as people rushed to take the holiday they may otherwise lose;
2. a variety of policies across teams as to study leave;
3. the number of ‘sick days’ that appeared to be disguised holidays;
4. staff reporting being stressed at having to keep some days ‘in reserve’ just in case an unforeseen eventuality occurred.

We had also grappled with the creation of a bereavement policy that catered for the individual. While in some ways it may seem fair to say all could have two days’ leave for the loss of a close relative, this ignored that some people are closer to their relatives than others and that we all handle grief differently.

Our PTO policy allows staff to take as much time off as they feel they may need without counting the days they take. In essence the only requirements we have are that client work will not suffer and that work can be covered.

Our policy differs from that which was reported in September 2014 as being implemented at Virgin on a couple of grounds:

1. We have implemented the policy across the whole firm and made it available to all;
2. We do not see any reason why time off should in any way damage a career, in fact the opposite, ensuring you are refreshed and had quality time away from work could enhance a career.

We decided to keep our policy (see detail below) as simple as possible, wanting to acknowledge our staff as adults and not misbehaving children.

Nervousness

As the management team broadened the discussions and consultation with partners and other stakeholders in the business there were, understandably, some nervous objections, some of which were:

1. If we gave staff as much time as they like they will never be here – we were confident (although admittedly it was a risk) that this would not be the case because :- a) It costs money to take a holiday; even a staycation, unless you are intending to sit at home all day watching TV, will cost money; b) Staff may not want holiday if their partners could not be off with them at the same time and most employers still operate more traditional models; c) While, from time to time we all moan about work it is a social environment and we are social animals. The office environment assists with the mental wellbeing that comes from socialising.
2. It would cost us a fortune. Why? We pay our staff salaries, and not by the hour, so as such, our wage bill would remain the same. Clients still had to be looked after and work covered - as such, where was the cost? Incidentally we have seen no drop in productivity and for some teams a marked increase in productivity.
3. We would attract the wrong type of recruit. At the time we countered this one with the recognition our recruitment processes would need to be robust. However, we have found the opposite is true – we have attracted recruits who are keen to work, like being given the autonomy to decide what time off they have (subject to taking the statutory minimum) and deliver high-level performances, giving more to the firm in the knowledge that when they need a break they can take it.
4. It was unfair to those who had earned, through years of service, an entitlement to additional days’ holiday. To be honest I struggled with this one. I failed to see why long service as opposed to productive output should be a reward. Moreover, this appeared to me to be a case of trying to lord it over others or “being one better than the Joneses”. If you could take all the holiday you desired what did it matter if your colleague had more or less than you? In the end we answered this by suggesting holiday was not the best way to reward performance and being somewhere for many years did not equate to good performance.

Publicity and reality

Inevitably, there followed a great deal of publicity both commending and condemning the new arrangement. Some criticised the policy for demanding to know exactly where our employees are when they are not with us. In fact, the policy does not ask for any such detail.

Equally erroneously, critics suggested the policy meant we would not keep records of time taken off. We do of course, primarily because by law we are required to ensure all employees take the statutory minimum. In addition, our policy actually states we will keep a record but that the number of days taken already will not be used as grounds for refusing a request for time off. Ultimately all the contributions made interesting reading but they were not so important to the firm.

The only views the management team were really interested in were those of our employees. So the policy was launched as a trial culminating in an anonymous survey of all staff seeking their feedback, positive or negative, on the PTO arrangements. It was therefore the staff of Ashtons Legal and not the armchair commentators who determined that the policy should be made permanent.

Trial and little error

In February 2015, after a period of consultation, the trial was launched. Understandably, while some staff were eager to proceed with the policy others had anxieties. The trial period allowed these anxieties and concerns to be expressed, addressed and alleviated.

At the end of our trial period we asked a number of questions of our staff. Here are some of the questions, with staff answers:

1. Have you taken as much holiday this year as you wanted? 84% yes / 16% no
2. Have you had any difficulties when requesting holiday? 97% no / 3% yes
3. Has having the policy in place been of benefit to you? 69% yes / 31% no

Of more interest around these numbers were the comments that accompanied them. Those who had not taken as much holiday as they would have liked either failed to do so because they wanted time off at the same time as colleagues who had already booked time off or because they perceived the team to be under resourced (an issue we needed to deal with but not one created by, or peculiar to, the new policy).

As to the small number who had difficulty when requesting holidays, this was down to different interpretations as to what the policy meant and further training was provided.

Finally, with regard to whether the policy had been of benefit or not the overwhelming majority who stated no did so because they had taken as much holiday as they wanted which was in line with the number of days they were used to taking in a year and thus the policy had not made any difference. We also had two free text questions asking for comments as to the positives about the policy and the negatives.

The greatest response we had as to the negatives was “None”. In November 2015 the policy was adopted on a permanent basis with the support of an overwhelming majority of staff.

Taking stock

While, due to a myriad of other initiatives that have been rolled out, it is hard to determine causation as opposed to mere correlation on some metrics, we believe our PTO policy is proving a real success.

Other initiatives have included enhancing pension contributions, changes to flexible working policies, access to stress counsellors, massage therapists, free fruit, improved maternity leave provisions and an overhaul of our office working environments.

However, the policy has:

1. been a key recruitment draw;
2. been a factor in our being awarded Gold status Investors in People award;
3. enabled us to dispense with some policies that caused more frustration than satisfaction; and
4. opened up the minds of all our staff to thinking more creatively around how we work.

From an employee perspective, I believe we have also seen numerous benefits leading to reduced levels of stress and sick days. There has also been an increased level of loyalty: our employee turnover rate is now below – that is, better than – benchmark standards.

Change is always daunting and once change is implemented there will always be a period when it feels uncomfortable, unfamiliar and unnatural. The fear of change itself may put many off. It may also be that fear that led to some commentators writing off our policy without asking to see it. Our trial period allowed us to move through this ‘pain period’ in a safe way. Our employees now regularly cite our PTO policy as one of the real advantages of working at Ashtons Legal. 

Ashtons’ holiday policy. 

Policy

1) We will not limit (subject to observation of the procedures below) an employee’s time off.

Planned Absences 

2) You will request planned absences with as much notice as is reasonably possible and ordinarily with at least two weeks’ notice in advance of the start of the planned absence.

3) Any planned absence has to be approved by your people manager who will have regard to the needs of the business and other scheduled absences of your team members but no regard shall be given to the amount of time off already taken.

4) You will have regard to your work responsibilities and shall ensure you have made arrangements for these to be covered during your absence.

5) In considering how much time you are taking in any one holiday, both you and your people manager need to consider the planned absence requirements of others and the business’ needs to deliver a first class service to our clients.

Unplanned Absences 

6) If you are unexpectedly unable to work you will report in as soon as reasonably practical. If sick leave is required, the current sick leave policy will apply.

General provisions 

7) We will monitor absences purely for record purposes including, but not limited to, ensuring we comply with our obligations to safeguard employee welfare. For instance, ensuring all employees take the minimum level of holiday statutorily required or ensuring where absence arises as a result of a disability that we take measures to put in place any reasonable work place adjustments.

8) It is your responsibility to ensure the HR system correctly reflects all absences taken and the reason for those absences.

9) There is no set number of holiday days in any period and as such it is no longer possible to accrue holiday, carry holiday over from one year to the next or to be paid in lieu of holiday not taken (save in respect of the statutory minimum).

10) Holiday should not be used as a means of reducing core hours i.e. someone paid to work five days per week will not be allowed to take one day’s holiday every week as a means of reducing core hours to a four-day week.

11) This policy does not replace the leave provisions for maternity, paternity, adoption or pa- rental leave. In these circumstances, holiday will accrue at the statutory minimum.

12) You must make a distinction between holiday and sick days and ensure we are informed as to which category your absence fits.

13) If you wish to cancel any time booked off you must do so as soon as possible so as to allow your colleagues to book the time off should they wish. For example, ordinarily, a people manager will not want all their employees off at the same time and therefore may refuse a request if others have already booked the same time off. It is unfair to your team not to give them notice if you no longer intend to take the time off.

Could this be for you?

For those thinking about implementing a flexible PTO policy, the starting point is ensuring that your business is ready. As alluded to earlier we had moved away from an ‘us and them’ culture, we had worked hard to introduce core values that reflected our desire to recognise that we all had equally important roles to play in growing our business and that we trusted our employees as adults as opposed to policing them like children. Had we tried to introduce the policy with a culture that was the antithesis of this we would almost certainly have run the risk of employees abusing the new freedom.

Next, be prepared to be surprised. You may think that all would welcome the ability to take as much holiday as they like but for some this is uncomfortable. Some people like to have, and follow, rules. Moving from a rules-based HR policy to a more principle-based one caused some disquiet in the early days - “I know you say we can take as many days as we like but how many days is that?” was one of many questions that arose. Offering training and support may be required to move away from the traditional framework. Some managers find it difficult to move from the mind-set of “they have already had x days this year”. It is also important to deal with any potential abuse early on. 

We have had only one instance of behaviour we were uncomfortable with and this occurred as soon as we launched the trial period of the policy. This was a support staff working in a team of four. She was the only person in the team who did not have school-aged children but, as soon as the policy was announced, submitted a request for six consecutive weeks off in the summer. We spoke to the team and established that others in the team, understandably, wanted time off over the summer holidays to spend with their children.

Our assessment was that in order to maintain an appropriate level of service, and fit in with the requirements of other members of the team, while being fair to all, we could only accommodate an absence of four weeks and three days consecutive leave. We were informed this was not good enough and unless we relented the member of staff would leave – we said goodbye.

Finally, consider running a trial period as this allows time for the policy to be understood and questions to be raised. We originally planned to deduct from salaries any days above the statutory minimum taken by someone who decided to leave. This caused more upset than we wanted and we removed the idea following feedback and instead added additional training for those approving holiday requests.

Edward O’Rourke is a partner and CEO at Ashtons Legal www.ashtonslegal.co.uk @AshtonsLegal