Corona Daily 226: Use it or Lose it – Unused Leave in 2020

The issue of Paid Leave for employees has occupied the minds of the HR policy-makers for decades. A country’s labour laws and an individual employer’s policies decide the length of the paid holidays, whether unused leave can be rolled over to the next year, encashed, or simply allowed to lapse.

In Europe, with strong labour laws and better life-work-balance, paid leave is taken for granted. America and Japan, where work is life, are the worst countries in this regard. A 2018 research found that 55% of Americans and 48% of Japanese didn’t use their holiday allowance, however meagre.

The 2020 pandemic has made the issue of paid leave far more complicated. Until yesterday, Americans becoming sick with Covid-19 were entitled to two weeks of paid leave. While the US cases are reaching new daily records, from today, 1 January, that USA federal mandate has been withdrawn. Some 87 million workers are likely to be affected.

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Even before the pandemic, the USA was the world’s only wealthy nation to not have a federal paid sick leave mandate. While countries like Norway or Luxembourg allow up to 50 days of paid sick leave, the USA mandates ZERO. An American worker missing five days due to the flu or one undergoing a 50-day cancer treatment is not entitled to any paid sick leave.

Since March 2020, most workers-from-home have put in at least one extra hour daily. Presenteeism has been a problem. New terms like staycation or holistay (where you become a tourist in your city or during a strict lockdown, in your backyard) are familiar to employees everywhere. Pandemic Year One is over, and the employers must decide what to do with the unused leave of their employees.

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The standard policy across USA has been “use it or lose it”. 42% of the American companies said they are reviewing the policy to make it flexible. Goldman Sachs will allow rollover of 10 days and Bank of America 5 days. General Motors and Ford will give cash compensation for unused leave. Citigroup will offer 1 extra day of holiday if all vacation was used in 2020. Reuters doesn’t allow any rollover.

Cash compensation is a philosophical debate. Why does an employee need a vacation? To recover from the hard work and long hours. Refreshed after the holiday, employees can work with improved productivity. I personally welcome companies forcing employees to take at least a month off from work each year. (That is why I never considered working in the USA). Marathon runners must rest and recover after the run. Should they accept cash and continue running?

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UK normally allows 8 days to be carried forward. Now four weeks of unused leave can be carried over into 2021 or 2022, in effect five weeks can be rolled over. Denmark will allow rollover. Belgium will allow it till the end of March.

I have earlier talked of the software company GitLab which operates remotely, without any offices, since 2011. To recognize the significant rise in working hours, it now organizes “family-and-friends days”. On specified days, the company shuts down all its operations, with none of its more than thousand workers allowed to log in. 15 January is their next mass holiday. Google, Slack and Cloudera are thinking of introducing similar policies.

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With work becoming partly or fully remote, the pandemic offers an excellent opportunity to rethink the paid holiday policy. USA has the most lopsided work-life balance. Even without all the data, I have seen my relatives and friends in the USA relying on strong medicines to suppress illnesses rather than allow natural recovery. This total commitment to work is likely to become worse if the employee is working from home all the time.

Joe Biden would do well to study the European labour laws. The American workers must have sufficient leave, in order to discuss unused leave.  

Ravi