Why we often push vacation days into the next year – and how companies can cleverly solve the problem

Australian dollars in Sydney, Friday, Jan. 15, 2016. (AAP Image/Joel Carrett) NO ARCHIVING
  • Taking a break from the job is important. Especially in difficult times, we need the opportunity to do so.
  • Many employees take their residual vacation with them into the following year, although this leads to disadvantages in companies – for example, in the event of staff shortages.
  • A working time expert recommends multi-stage vacation planning and equating the calendar year with the vacation year. That reduces stress for everyone involved.
  • See more stories on Insider’s business page.

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Spring is here. But traveling on a larger scale remains a dream for now. Whenever it will be, Corona makes the topic temporarily joyless. To take the risk of contracting a variant of the coronavirus? Rather not, most people think. Only if the announced vaccination turbo comes, there would be more mobility in the second half of the year.

Until then, recovery will take place differently. The summer of 2020 already caused many failed travel plans and restrictions. And in the future? There could be more nature, more regionalism, more flexibility in travel – and, as trend researcher Andreas Reiter predicts, adventure, togetherness, “adrenaline and fun.

The importance of vacation is shown by its legal status: it is part of working life but has a completely independent legal basis in the form of the Federal Vacation Act.

Vacation as an island in working life: its significance is becoming more important

In our working lives, vacation is an island, a zone that we can organize ourselves. We discuss the planning of our absences with managers and colleagues. By law, we are entitled to 20 days a year with a five-day week; on average, most employees in Germany receive 30 days of vacation per calendar year.

70 to 80 percent of this should be planned for the longer term, says working time expert Andreas Hoff. This is precisely what is increasingly challenging for companies, he says. “In recent years, there has been increasing pressure for them to plan their vacation for the long term,” says Hoff, who has been advising companies on their working time arrangements for decades. “Companies are short-staffed almost everywhere. That makes it necessary for their vacation to flow more evenly.”

If that doesn’t happen, for example, residual vacation accumulates. In 2020, for example, the pandemic led to an accumulation of leftover vacation days wherever the regulations did not strictly equate the vacation year with the calendar year. These days were carried over into the following year. Companies don’t take too kindly to this – in most cases, the remaining vacation must then be taken within a set period of time. This is often March 31 of the following year.

But employees at Babbel, the company behind the world’s top-selling language learning app, are now allowed to take their remaining vacation from 2020 until the end of May 2021. “The reason for this is the pandemic,” says Jenny Ziligen, people operations manager. “Otherwise, it’s actually rare for remaining vacation days to be taken into the new year – if they are, then only isolated days.”

Why residual leave is a problem and how it can be avoided

Even at cloud services provider Salesforce, employees should take their annual leave in the year in question. “We all need the rest, especially in these difficult times,” says Robert Frank, Senior Director Employee Success Central Europe at Salesforce. “The health of our people is our number one priority. Therefore, we only advocate transferring vacation for important personal and company reasons.”

What counts as such a reason is defined by law. “Urgent operational reasons exist if the operational need for work is obviously particularly great and it is precisely the work of employees entitled to leave that is required to cope with the need for work,” explains labor lawyer Christina Gehrig of the Hasselbach law firm in Cologne. Illness or other personal reasons could also justify carrying over vacation to the following year.

A problem remains: Residual leave often arises precisely where staff is scarce. It exacerbates existing problems. Employees need rest but do not take it. Unused vacation days are carried over into the following year and usually have to be used up by the aforementioned March 31 deadline – even if it doesn’t fit at all.

Some remaining vacation is in order, says work time expert Hoff. Two-thirds of German employees now have a working time account that accumulates working time and overtime. Employees can thus always take a day off via the working time account.” Avoiding residual leave would also have a positive impact on a company’s balance sheet because residual leave has a negative effect on the balance sheet due to the provisions that have to be made for it.

Instead of residual leave: working time and vacation planning in several stages

From an executive’s point of view, Andreas Hoff also thinks nothing of carrying over vacation days forever. “Lax vacation regulations only lead to people who are overworked not taking the vacation they need,” he says. At the same time, he says, employees generally take their vacation as scheduled. Recreation is simply too important. In addition, companies now have to inform their employees that they have forfeited any remaining vacation time – which also increases the pressure.

That’s why, according to Hoff, more and more companies today are making sure that the vacation year and the calendar year correspond. This is especially important to large companies, he says. “BMW, for example, has a so-called double-zero strategy, in which working time accounts and vacation accounts are supposed to be balanced by the end of the year,” says the expert. “The larger the company, the more important it is that vacation flows out in a regulated manner.”

He advises companies to take a multi-step approach to vacation planning. “By mid-December of the previous year, we first plan 70 to 80 percent of all vacations with the employees. That’s then coordinated and approved that way. In a second loop, managers have to check the status of the remaining vacation in the teams again on September 1 of a year. Each employee must then plan and request it by Oct. 1 for the period ending Dec. 31.”

With a little routine, rest comes more evenly – even in teams with a heavy workload.

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