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14 Oct 2014
Sir Richard Branson announced that he plans to remove restrictions for his staff as to how much annual leave they can take and when. Daniel Wilde, partner and head of employment law for HardingEvans has a closer look at some of the issues that a policy like this could raise for employers.
If a contractual change is made affording this right to employees, rather than a discretionary policy, an employer will find themselves bound to continue to offer the right and caution must be exercised in committing to such a position. Nothing in such a policy removes the legal obligation to allow a minimal level of holidays each year under the Working Time Directive.
The main issue will be customer/client service. Although Virgin presume that staff will only exercise their right to additional time off when they are up to date or hitting targets, if a large percentage of a workforce was off simultaneously and a large new contract comes in, something goes awry or there is sickness absence in other parts of the team for instance, a business could be left in serious difficulties.
Offering flexibility to staff where they would ordinarily work varying hours is also likely to meet difficulty as staff will be more keen to take time off during less favourable periods i.e. night shifts, leaving businesses strapped for cover.
The “policy” which Virgin proposes will essentially have no restrictions- it does not propose to limit duration or frequency of time off or to keep track of time off. Staff would only therefore run into difficulty with the policy if they took too much time off so as to affect their work rate, targets or output. In such an event, any business would have to address such issues under their performance management/disciplinary procedure in the usual way.
The scheme presumably will lead to such an imbalance as staff will find themselves with differing opportunities to take leave. What Virgin is suggesting is that in a modern world of smart phones, 4G and the like, employees are perpetually connected to the office like never before. As a result, hourly time recording becomes misleading and output is a better way of measuring performance. In a perfect world, those who are performing more efficiently will have the ability to take more leave however, employers will still need to ensure that the method of measuring performance is fair otherwise this is bound to cause resentment.
An employer must ensure that staff receive their minimum periods of annual leave. Other than that, there are certain other situations where an employer must allow additional time off; for instance to attend antenatal classes or for emergencies and also where it is good practice to do so, for instance bereavements or other medical appointments. Save for the few statutory exceptions however, an employer can dictate when staff holidays are taken and also refuse requests for unpaid leave.
During statutory holidays, staff should be allowed to remain free from the hassles of the office. Most staff would forgive contact in an emergency although you cannot compel a member of staff back to work or demand that they complete work whilst on leave. Where a company is offering unlimited extended leave, whether they were legitimately able to contact staff would really depend on the terms of the policy implemented. If a truly laissez faire attitude is adopted then it is difficult to see how employers could take exception to staff remaining off the grid during time away. There are of course practical implications to contacting staff who are on holiday especially abroad. Again, such issues hark back to the main point of allowing such unrestricted holiday; it presumes that staff will still be looking to further their careers or impress their employer and so are likely to try and remain contactable.
On the model proposed by Virgin it would seem not. They have suggested that staff could take leave without notice and without records being kept. It is then difficult to see how you could demand staff return early. It would likely be deemed quite unreasonable to expect staff who may be abroad to return to their offices at short notice and what could be considerable expense.
The most important aspect of any disciplinary or redundancy process should be reasonableness. It would not be reasonable to address either process in the absence of an employee and where sufficient notice was given. Where an employer could be said to be deliberately exploiting the unrestricted leave to ensure that they remained unavailable for such meetings then eventually an employer would need to press ahead regardless. The attempts made to arrange the meeting would need to be document in case the issue was challenged by the employer further down the line. An employer should expect to have to rearrange its meetings more regularly under such a regime and the main failsafe behind such a policy i.e. that staff will protect their own careers may not apply to an individual facing a serious disciplinary investigation.
It remains to be seen if this type of relaxed approach to holidays will work. The rationale behind it is logical to some extent; that staff will not abuse the freedom because to do so will reduce their output and jeopardise their career progression, bonuses etc. That said, it will be a potentially difficult system to manage in respect of staff cover and ensuring the correct amount of expertise is in place at any one time. Certain industry would likely find such polices impossible to work in practice. If the anecdotal evidence is correct, Netflix have been operating such a system with success for a while now and one thing which can be said for Sir Richard Branson, he knows how to run a business.
Contact Daniel Wilde for more information on 01633244233