How encouraging employees to take their annual leave can benefit your workplace

Nov 28, 2018

Employees need to be encouraged to take time off work as it can not only benefit their mental and physical health but their organisation as a whole. However, workplaces need to do more if their employees are to stay mentally healthy.

Finding the perfect time to take annual leave can be tricky and easily fall off the radar. If a business is going through a busy period or is understaffed, employees might fear falling behind in their work, or have a lack of trust in their team to do their work while they’re away. Taking holiday time might also not be the ‘done thing’ in the organisation and employees might fear appearing slack.

More than a third of full-time employees in Australia have four or more weeks’ worth of annual leave accrued and a whopping 257,000 employees have more than 10 weeks, reports Roy Morgan (2016).

However, breaking an employee’s work cycle has been proven to have enormous benefits for both employees and their organisation.

On an individual level it can help:

  • reduce stress – which in turn lowers the risk of anxiety and depression
  • improve mood – helping to ease social relationships
  • boost immunity – people who take more holiday time are known to not get sick as often and it can lower the risk of a heart attack in the long run.

On an organisational level it can help:

  • improve morale – happier staff equals happier teams
  • increase productivity – having a well-rested and motivated staff helps work flow
  • increase employee retention – less turnover of staff
  • decrease unplanned absences – less people taking sick leave.


In an effort to encourage employees to take annual leave, some organisations (e.g. Netflix and Virgin) have introduced unlimited paid leave – not allowing staff to save up leave, but instead encouraging them to take what they want, when they want.

One such company, Inventium, a Melbourne-based innovation consulting firm, thinks that in certain industries, like theirs, employees often end up working more than the average 38 hours per week so therefore should be entitled to more than the average amount of leave to ‘rebalance’.

We called it Rebalance Leave, because it wasn’t about more leave for leaves’ sake, it was intended to help staff lead more balanced lives,” – Amantha Imber, Founder and CEO of Inventium.

Inventium already had a high leave rate of an average of 19 days but with the introduction of this system it increased to an average of 27 days by the two-year mark.

“As a business owner, I see this as a huge success. It means staff are taking what they need (which was clearly more than four weeks) but by the same token, the policy is not being abused.”


Lead people scientist Chloe Hamman believes that while this unlimited paid leave system has been working for some organisations, there also needs to be a positive cultural environment.

"If your employees are feeling overworked and under pressure, then this certainly isn't going to fix that," she said.

Hamman also stressed the importance of support from the top.

"Unlimited leave policy has appeared to work, or more so, not backfired, when the policy is supported by leaders and managers who role model the desired behaviours."

A survey by the American Psychological Association revealed that nearly a quarter of working adults in the US felt the positive effects of vacation time disappear almost immediately upon returning to work.

While the US is known for not giving employees as much leave as in other parts of the world, like Australia, the experience isn’t uncommon back home.

Workplace stresses, inadequate resources and a lack of organisational support all contribute to a negative working environment that no amount of holiday time will change. While it’s important for employees to take annual leave – the standard four weeks (or more) – other aspects of an employee’s work life need to support their wellbeing too. 


So, what makes a mentally healthy workplace?

  • Positive workplace culture – put simply, places where people feel good about coming to work.
  • Risks to mental health are managed – stress, heavy workloads, unrealistic deadlines, poor communication, uncertainty are controlled.
  • People with mental health conditions are supported – employees are helped to stay at or return to work.
  • Zero-tolerance approach to discrimination – a diverse workforce is aspired to and everyone gets a fair go.

Find more information on what a mentally healthy workplace looks like here.

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Tips for managers to create a mentally healthy work environment

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