Understanding the Pros and Cons of Open and Structured Leave Policies

During the COVID-19 pandemic, the switch to remote work for many businesses led employees to work extended hours, particularly on weekends. As a result, workers also took fewer allotted vacation days, which led to a great deal of stress for workers.

In the post-pandemic era, that trend is starting to change. This change is a positive development for workers, particularly when their employers encourage workers to take the leave time allotted to them. Some businesses have structured leave time policies, with a specific number of vacation or leave days allotted to each employee within a certain timeframe. Other businesses maintain an open-ended leave policy, which allows workers to take leave so long as they complete their work responsibilities and obtain the approval of their supervisor. Both types of leave policies have advantages and disadvantages.

Structured Leave Policies

A structured leave policy that allows employees to accrue paid time off (PTO), keep track of how much PTO they have accrued, and monitor their time off can be highly beneficial. At some companies, workers can also roll over PTO to the next calendar year or take a payout at the end of the year. In this way, a structured PTO policy is arguably more advantageous to the employees than to the business. 

Open Leave Policies

Open or flexible leave policies often seem highly beneficial for workers, but policies such as these can be detrimental to workers. Workers tend to take less time off than they would in a workplace with a structured or set leave policy. In that respect, open leave policies are more beneficial to businesses than employees, defeating the purpose of leave time as an employee benefit. 

According to the Society for Human Resource Management’s (SHRM) 2022 Employee Benefits Survey, only about six percent of companies provide open leave. An open leave policy is highly attractive for younger generations of workers who demand greater flexibility and work/life balance. Without an open leave policy, some Millennials and Generation Z employees have left the workforce altogether in pursuit of a work environment and lifestyle over which they have more control. Companies with open leave policies also indicate that these policies attract workers, maintain engagement, and avoid burnout. 

If a business eschews a structured leave policy in favor of a more flexible policy, human resources managers should communicate the terms of the policy and expectations surrounding that policy. For instance, some companies with open leave policies advise that leave is flexible but limited; failing to show up for work for months is unacceptable. Likewise, companies should advise employees about the average amount of PTO that employees take per year and encourage them to take at least one full week of vacation during which they completely “unplug” from work. 

Instituting a leave policy that fits your workplace or company culture is also key. For example, an open leave policy may be more beneficial if your employees value flexibility and autonomy. On the other hand, if workers are paid hourly and work standard schedules, a structured leave policy may be more appropriate. 

HBL has experience in all areas of benefits and employment law, offering a comprehensive solution to all your business benefits and HR/employment needs. We help ensure you are in compliance with the complex requirements of ERISA and the IRS code, as well as those laws that impact you and your employees. Together, we reduce your exposure to potential legal or financial penalties. Learn more by calling 470-571-1007.

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Hall Benefits Law, LLC

HBL offers employers comprehensive legal guidance on benefits in mergers and acquisitions, Employee Stock Ownership Plans (ESOPs), executive compensation, health and welfare benefits, healthcare reform, and retirement plans. We counsel a wide spectrum of clients including small, mid-sized, and large companies, 401(k) investment advisors, health insurance brokers, accountants, attorneys, and HR consultants, just to name a few. HBL is passionate about advising clients, and we are dedicated to our mission: to provide comprehensive, personalized, and practical ERISA and benefits legal solutions that exceed client expectations.

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