A handful of employers let workers take as much time off as they want, as long as the work gets done. While most of those companies view unlimited vacation as a great perk that helps reward and retain talented and hard-working employees, there’s another reason to offer it.
They don’t have to carry accrued but unused vacation leave on their balance sheets.
According to a recent study by the travel consortium Project: Time Off, U.S. employers carry $224 billion in accumulated vacation time on their balance sheets. It’s a liability that accrues annually when employees roll over unused paid time off and does not include sick or personal leave.
The study, conducted by Oxford Economics, found that U.S. companies carried forward $65.6 billion in accrued time off costs from 2014 into 2015. The average cost of accrued time per employee was $1,898. For companies with more than 500 employees, the cost per employee is markedly higher at $2,609.
“Businesses need to pay attention to this significant and growing liability on their balance sheets,” said study author Adam Sacks of Oxford Economics. “Unused vacation time is a burden for American companies as well as the economy. Our previous research shows that if Americans took just one more day of vacation, it would amount to a $73 billion boon to the U.S. economy.”
The Society for Human Resource’s 2015 benefits survey found that about 2% of employers offer unlimited vacation.
In addition to unlimited vacation, the report—titled The Hidden Costs of Unused Leave: Balancing Employee Needs with Business Liabilities—urges employers to impose minimum vacation requirements. Oxford Economics found that only 26% of employers have use-it-or-lose-it policies in which employees forfeit accrued, unused vacation at the end of the year.
Read the study at www.projecttimeoff.com/research/hidden-costs-unused-leave.