FinnCap staff set for unlimited paid holidays: could other companies follow suit?

London stockbroker FinnCap recently announced that they will be giving their staff unlimited holiday from next year, with staff required to take at least four weeks off.

The move was made after a year where staff worked longer hours, so the firm changed its policy to allow workers to take as much leave as they need to stop them from burning out.

As part of the move, the company, who are the presenting sponsors of our Inside the Deal series, is asking its investment bankers, salespeople and back-office staff to take at least four weeks’ holiday a year and two or three days a quarter.

In an interview with the Guardian, FinnCap’s Chief Executive, Sam Smith said: “Everyone is really exhausted from the last two years, and it isn’t fixed with a quick holiday,” She also said the problem was people were not taking enough holiday because they felt guilty about taking time off.

“We will turn it on its head and we are not going to have a holiday maximum, we’re going to have a minimum you must take.”

Could other businesses follow in FinnCap’s footsteps?

FinnCap’s move is particularly significant because it is unusual amongst finance companies. However, the idea of unlimited holidays is nothing new, as pointed out by Dr. Johnathan Lord and Dr. Nadine Watson, two HR experts at the University of Salford Business School.

They commented: “In principle, FinnCap’s unlimited leave is sensible, particularly given that they are imposing a minimum leave requirement. Most organisations who offer unlimited annual leave find their employees actually take less leave overall, so imposing the minimum requirement shows FinnCap’s commitment to this initiative working in practice.

“‘Bottomless’ holidays have been around since the 1990’s with IBM being at the vanguard and a number of companies such as Netflix, LinkedIn and Roku have adopted this as a core principle more recently.”

According to the two HR experts, there has also been a rise in the companies offering unlimited leave in recent years.

They went on to say: “Reed saw a 20% increase in jobs offering unlimited paid leave between 2017 and 2018, while TotalJobs and Jobsite reported they had seen a 10% increase year on year, which is understandable as there is a clear link to increased productivity through the increase in trust and responsibility as well as a buy into the overall goals of the organisation. The organisation may also witness a reduction in sickness absence as employees may be less likely to experience burnout.”

“Usually adopted in the technology and professional service sectors (the technology sector accounts for 34% of all jobs offering the perk), it may not, however, be practicable for all industries or workplaces as many require a consistently high level of customer engagement, which would be affected by variable staffing levels.

“Other concerns evolve around the staff having anxiety about not knowing the limits of how much they can take, and conversely, high performers will always perform highly and not take as much leave as everyone else, which can open the door to unfairness across the workforce.”

There have been several companies who have already taken steps this year to prevent employee burnout. For example, dating app Bumble offered their employees a paid week off to help them recover back in June. Sportswear company Nike also did the same.

Such moves are indicative that companies are becoming more aware of employee wellbeing and may suggest that others will follow suit, especially as we continue to battle the pandemic.

However, Dr. Lord and Dr. Watson also pointed out the potential limitations of how unlimited leave policies work in practice, which could be making some companies reluctant to follow suit.

They said: “Organisations recognising the strain of the pandemic on their employees should be welcomed and perhaps other organisations with similar activities as FinnCap should take note.

“However, the extent to which this type of policy can work in practice is limited. There needs to be a culture of high trust and empowerment of employees for this to be practical. Telling your employees that you trust them to be sensible and ‘get the job done’ is an excellent example of a high trust culture, but to some extent this must be monitored for efficacy at least in the beginning.

“Therefore, there needs to be clear guidelines on the policy as well as a continuation of recording the number of holidays taken as well as its positive or negative impact on productivity.”

Dr Zahira Jaser, Lecturer in Organisational Behaviour and Human Resource Management at the University of Sussex Business School, also wonders whether giving employees maximum flexibility with holidays will mean maximum flexibility will be expected from the workers.

She comments: “At face value, unlimited holidays might seem an incredibly good proposition, but the devil is in the detail.

“In the news coverage of this announcement, it seems that some Finncap employees are asked to be flexibly present all the time to the point that sometimes they are asked to work during their holidays.

“In explaining the new protocol, FinnCap’s chief executive Sam Smith said if employees end up working while they are on holiday, they should be able to take an extra day to make up for it. This might lead us to wonder is giving maximum flexibility with holidays a step into requiring maximum flexibility from workers?”

“Employers and employees base their relationships on implicit ideas of social exchanges (what we give and what we receive), epitomised by the idea of psychological contract based on the idea of reciprocity. Reciprocity norms govern how we think about these exchanges. So, the more we are given, the more we feel compelled in giving.

“Based on this point, is it possible that by giving unlimited holiday the employer requires unlimited flexibility?”

“Secondly, this might be an indication of further blurring of private routines and work routines. Holidays so far have been devised as a prolonged period of detachment from work. In hybrid work, the lines between private life and work-life are more blurred than ever. So, a question that emerges is: is taking one or two days of holidays here and there a way to avoid a full absence and maximum detachment?

“It would be interesting to understand FinnCap’s policies on the maximum number of consecutive days of holiday one is allowed to take.”

Building on this last point, Dr Jaser also wonders how much holiday will actually be granted as she believes there must be a minimum number of days employees will have to work.

“Finally, this sounds like an ‘eat as much as you can offer’. But there is surely a number of days we need to work, in order to be paid, so we will never be able to take as many holidays as we want,” continues Dr Jaser. “Will a manager ever approve unlimited holidays? This could be so disruptive to work routines.

“Let’s remember that organisations are collective endeavours, where colleagues monitor each other’s work. When we work with others, we contribute collectively to projects. There are a number of ways in which we keep on (consciously and unconsciously) measuring our output compared to the others’ output (see Adam’s equity theory, for example).

“So, whilst on paper, it might look good to have unlimited holidays, realistically we cannot take unlimited holidays, as this would have huge implications on our relationships with colleagues, managers, and work routines.”

Whilst the idea of unlimited leave is nothing new and may be unsuitable for every company, many employers might feel the potential benefits, particularly during a time when calls for companies to take care of their employees are increasing, are enough for them to follow in FinnCap’s footsteps.