How to deal with leftover leave

THE YEAR 2020 put worker morale to the test. It did not help that many employees were unable to enjoy a normal holiday, or had to change their plans. For Bartleby, two sun-drenched weeks in Spain were converted into a wet week in Cornwall, marked by an attempt to eat a pasty on the beach in the face of a sudden hailstorm. Finding a restaurant was virtually impossible because of the high demand created by the British government’s “eat out to help out” scheme.

Like many people, Bartleby is left with unused annual leave. But he is lucky that The Economist is a benign employer, willing to let him carry over a couple of weeks. Not every company can afford to be so kind. The occasional loss of a business columnist is not much of a handicap. Things are rather different when the employee is the client manager for the firm’s largest customer or the production manager at a microprocessor plant.

The more vital the worker, the more likely they will have been to be asked to postpone their annual leave in the pandemic. This may leave employers with headaches in the coming year as workers catch up before their unused holiday is lost. Brian Kropp of Gartner, a consultancy, expects to see the lion’s share of staff shortages to land in the first half of 2021.

For multinational firms, the different rules and customs that apply across the world further complicate things. America lacks federal laws that guarantee workers vacation time; rules are down to individual states. Even when Americans do get a holiday allowance, 55% of them do not use all of it, according to a survey from 2018. In Japan only 52% of workers took all their paid leave that year.

Unlike their European peers, American and Japanese workers seem to succumb to social pressure: the fear that taking vacation reflects a lack of commitment to their job (or reveals their dispensability). Many American states also allow companies to impose a “use it or lose it” policy, under which they can insist employees cannot carry over unused leave into the following year. That may have prompted a lot of workers to take an extended Christmas break to avoid the loss of their precious allowance.

Still, wise employers may want to allow a little flexibility after what has been an extraordinarily difficult year. It is no good forcing people to turn up for work if, in the process, you inflict permanent damage on their well-being. Indeed, the evidence seems to suggest that workers put in extra effort in 2020, with those working from home adding an extra hour to their work day. They avoided the agonies of commuting but also lost the clear separation of work from home life, which probably added to stress. Some will have spent a “staycation” at home—which does not offer an invigorating change of scenery or routine for those who have been confined within the same four walls since March.

So there is a balance to be struck by employers between the need for adequate staffing and the need to keep on good terms with hard-working employees. In some countries, governments have intervened on workers’ behalf. Under Britain’s working-time regulations, employees were already entitled to carry eight days of leave over to the following year, if the employer agreed in advance. The rules were amended in 2020 to take account of covid-19, so a further four weeks could be carried over into 2021 and even 2022. The Chartered Institute of Personnel and Development, an association of HR managers, says this means that, in theory, workers can roll over all five weeks of leave from 2020. In Denmark the rules were changed to allow workers to roll over their unused holiday entitlements into 2021.

In Belgium companies often allow employees to carry over five days of leave but they have to be used by the end of March. Doug Gerke of Willis Towers Watson, a benefits consultant, says that many employers are willing to give workers even more flexibility. Likewise, he says, many European companies may have an official “use it or lose it” policy, but in practice they are reluctant to confront workers over the issue.

Mr Kropp says that some firms are asking employees to commit to the amount of leave they are planning to take in the first quarter of 2021, the better to forecast the staffing challenges they face. Others are extending “use it or lose it” deadlines to parcel out any absences over a longer period. Once the vaccines are distributed and travel is possible again airports could see a Gadarene rush. In 2021 managing people when they are not working will be just as important as managing them when they are.

Editor’s note: Some of our covid-19 coverage is free for readers of The Economist Today, our daily newsletter. For more stories and our pandemic tracker, see our hub

This article appeared in the Business section of the print edition under the headline “Tough breaks”