People were already working long hours before the pandemic, but Covid-19 further extended workdays. It’s taking a toll. According to recent data, nearly three-fifths of employees reported experiencing negative impacts of work-related stress in 2021. Yet despite their elevated stress levels, more than 50% of American workers end up leaving paid vacation days unused.
To counteract this trend, some companies are experimenting with mandatory vacation policies, under which workers are required to take a minimum amount of time off every quarter, half-year or year. These policies can even include financial incentives that reward staff for taking full holiday allocations.
This concept, which is fairly new, began gaining ground amid the Covid-19 pandemic, and is being pioneered largely by knowledge-work companies of various sizes (the most high-profile example is finance firm Goldman Sachs, which is combining unlimited holiday for executives with a policy requiring staffers to take at least 15 days leave each year). These firms say their goal is to foster a working culture that encourages rest, removing barriers – both perceived and overt – that prevent workers from leaving the office. In this way, companies hope they can mitigate burnout and improve worker satisfaction.
As more companies look for ways to ensure a healthy, productive workforce, could mandatory vacation be an important part of the puzzle?
Busting through barriers?
In the corporate world, barriers to taking time off are well-known.
For example, even though US workers want to take more vacation days, many feel they can’t because of their workload, the fact that their colleagues aren’t taking much time off or as a result of long-hours’ cultures that stigmatise holidaying workers. In response, some companies have introduced unlimited paid time off (PTO) policies, a seemingly attractive perk that, in theory, allows staff as much paid leave as they want. But these policies depend on positive working cultures that make it absolutely clear that taking time off is encouraged – or the same barriers remain, and in many cases workers end up taking less time off than before.
“You might have people simply not taking time off, and that might be because of the culture. Or you might have people who do want to take the time off, but they’re not able to take at a time that is agreeable for the organisation as well,” says Ayana Horton, a lecturer in occupational therapy at Brunel University London, who has also studied industrial and organisational psychology.
The switch ‘removed guilt, uncertainty or second guessing if [taking holiday] was really OK’ – Natalie Gould
Making taking vacation time mandatory, says Horton, makes it easier for workers to ask for leave, because the move gives both workers and their managers clearer expectations around holidays. Workers can feel happier about asking for time off, rather than worrying about seeming under-committed, and managers know they shouldn’t stand in the way of workers taking a break (and that they should be taking one themselves, too).
This has been the aim at We Are Rosie. The Atlanta, Georgia-based marketing firm initially offered unlimited vacation, but flipped to mandatory time off early in the pandemic, says Talya Esserman, the firm’s head of people. “We did an analysis and realised that people weren’t taking enough time off, because they felt guilty about leaving their team short-handed.”
Now, We Are Rosie requires all its employees to take at least five days of leave every quarter. Employees get an additional five days of PTO to use throughout the year as well as fixed national holidays. There’s an incentive for employees to comply with the policy; using the allocated five days every quarter “contributes to the performance goals for each employee to unlock a yearly bonus”, says Esserman.
Balsamiq, a software firm with employees in Italy, France, Germany and the US, also switched to mandatory time off when managers realised workers, especially in the US, weren’t taking enough time off, despite the unlimited vacation policy. “US employees, particularly certain personality types, found it hard to set aside time for vacations because there is never a ‘good’ time to do it – there is always work to be done,” says Natalie Gould, Balsamiq’s head of people.
Now, the company expects workers to take a minimum of 20 days leave each year. Balsamiq does not incentivise employees to take leave, and there are no consequences for not meeting the minimum. But vacation time is tracked, and the policy is “enforced by nudging people into taking their time off when they aren’t seen to be doing so”. This switch, says Gould, has had an effect on workers; it has “removed guilt, uncertainty or second guessing if [taking holiday] was really OK”. 
Formalising expectations around holiday can make it easier for workers to ask for time off, experts suggest (Credit: Getty)
Changing the ‘psychological contract’
Despite this endorsement at worker level, experts warn mandatory vacation time isn’t a complete solution – because its ultimate success still depends on building the kind of company culture that allows workers to take time off.
“If you have a boss that you know will hold it against you if take leave, even if you have, say, 18 days of mandatory time allowed, you won’t be able to take it off,” points out Anat Lechner, a clinical associate professor of management and organisations at NYU Stern School of Business.
This raises the question of how effective mandatory leave policies can be if there are no mechanisms for enforcing them in some organisations. Lechner points out that employees generally aren’t the ones standing in the way of their own vacations, suggesting enforcement measures aimed at them miss the point. But she acknowledges that without some kind of enforcement, the kind of change that companies want to achieve may not occur. One option, she suggests, could be to incentivise workers to take holiday and penalise their managers if they don’t, saying: “If the incentive goes to the employee and the punishment goes to the manager, perhaps we’ll begin to see something happen.”
More broadly, however, she believes creating an environment that favours taking time off is more meaningful than enforcing mandatory vacation policies through penalties and incentives. Workplaces need to have “a culture that is appreciative of people’s need to take time off, and is flexible and logistically smart, so that when people are off, work can still continue, and they can be brought up to speed quickly when they’re back”, she says.
Horton agrees, saying the success of policies depends on how committed an organisation is to tackling overwork and unhealthy vacation culture. If firms truly want employees to rest, they need to allow them consecutive days off – for example, Goldman Sachs requires employees to take one set of five consecutive days off each year – and also need to ensure staff don’t work while they’re on vacation. They will “respect that time off and appreciate that this person is on leave and cannot be contacted”, she says. “The organisation, at the highest levels, has got to fully subscribe to [the policy].”
As companies work towards creating the kinder working cultures that employees are seeking, Lechner believes that – regardless of how effective mandatory vacation policies prove to be – the fact that they are being trialled represents progress.
“Whether or not we will succeed with this iteration of mandatory vacation days… we will see. If we don’t succeed, we will learn what the problems are and how to solve them,” she says. In a year or two, she believes, businesses will be better able to assess challenges around mandatory vacation – like what kinds of roles or tasks fit best with the model, or whether certain times in the business cycle lend themselves better to people taking holiday.
Yet overall, she believes, moves to help workers take more leave are part of an attempt “to change the psychological contract ever so slightly and create workplaces that are more humane for people. And this triggers the mandatory vacation conversation. This will now create policies that will get deployed, and some will fail royally. But with failure comes learning… We are progressing towards a better understanding.”
