Calls are increasing for the government to extend Australia’s annual leave entitlement to six weeks. What advantages could this policy offer, and is it a practical possibility?

The idea of increasing annual leave entitlements in Australia is gaining momentum, fuelled by growing awareness of the benefits of a healthier work-life balance. The proposed change aims to align workplace conditions with the evolving needs of the modern workforce.

The extent of Australia’s paid leave entitlements has remained unchanged since the mid-1970s, when annual leave was boosted from three weeks to four. With modern factors such as the rise of remote work, increasing focus on work-life balance and the potential for AI and automation to streamline work, many are advocating for the government to reevaluate paid leave allocations.

“On top of the clear increasing importance of wellbeing in the workplace – which is challenging – and the increasing need for workplace flexibility, [it’s] the perfect time to look at improving this important condition of employment across all workplaces,” says Jonathon Woolfrey, Managing Partner at talenting.

What’s behind calls for extended leave?

When it comes to paid annual leave, Australia is lagging behind some of its global counterparts. Employees in countries such as Sweden, Norway, France and Denmark are entitled to five weeks’ paid annual leave per year, according to analysis by Resume.io. Meanwhile, countries including Andorra, Monaco and Peru offer six weeks’ paid leave to staff, in addition to public holidays.

Data from a survey conducted by Budget Direct Travel Insurance reveals that a significant portion of Australian workers find four weeks of annual leave insufficient. More than half (58 per cent) of surveyed Australians believed that four weeks was not enough to take all their intended trips or time off in a year. 

The survey also highlighted an age-related trend, with younger workers (18-24 years old) being less likely to find four weeks of leave adequate. Only 36 per cent of respondents in this age group felt that four weeks was sufficient. Researchers put this down to greater travel and work-life balance aspirations associated with this age bracket.

Woolfrey points to the shift towards remote and hybrid work as another important factor behind employees’ desire for more annual leave.

“Given that 96 per cent of knowledge workers do a portion of their work from home, there is decreasing separation [between work and home lives] and increased pressure on these and all workers,” says Woolfrey.

“An increase in annual leave starts to address the balance of work that people now take home with them, both physically and psychologically.”

Potential benefits of extended annual leave

While an extra two weeks’ leave is a tantalising prospect for most, some sceptics have expressed concern that increased leave may result in job losses, higher consumer prices and additional costs for employers. Conversely, Woolfrey predicts that the positive knock-on effects of an extended leave period would more than offset these challenges.

“We know that the number of hours at work does not directly equate to better outcomes, so a reduction in time in the office of no more than 4.5 per cent would not essentially equate to higher wage costs if work was more flexible, efficient and centred around improved wellbeing.”

“It’s significantly more universal as it can apply to all kinds of workers, including those who work part-time, on weekends or in roles with peaks and troughs in workloads.” – Jonathon Woolfrey, Managing Partner at talenting.

The risk of talent and resource shortages can be mitigated through a well-managed system allowing employees to arrange leave periods at times that minimise disruption to workplaces, he says. Employees taking longer periods of leave could even provide more opportunity for junior staff to take on more responsibilities.

“We would also likely see the reduction in use of personal leave, as people are able to manage their health and wellbeing better, as well as manage other personal situations with increased flexibility. This would particularly benefit people such as primary caregivers.”

He also points to evidence that real wages have gone backwards over the last decade, as well as the fact that employee productivity and engagement has hit a concerning low, as signs that there are significant gains to be made through changing the way we work.

“Providing a tangible and direct benefit to employees in an area where employers have the opportunity to mitigate much of, or all of, the cost with good management may in fact improve conditions and decrease wage inflation pressure at the same time.”

Could six weeks of annual leave be a better alternative to the four-day work week?

On top of growing discussions around extending leave entitlements, the past few years have seen the concept of a compressed work week gain significant traction in Australia and around the world. The four-day work week has been touted as a boon to work-life balance, job satisfaction and productivity, and trials of the model have backed this up.

After a recent trial of the four-day work week by 10 Australian and 16 international organisations across a range of sectors, only one participating company chose not to continue with the compressed week. Rates of absenteeism fell by an average of 44 per cent, and over half of employees reported an increase in the quality of their work. Almost two thirds (64 per cent) of employees experienced reductions in burnout, while 38 per cent felt less stressed.

However, critics of the idea argue that condensing the week into fewer days could lead to disruptions in production, teamwork and collaboration due to mismatched schedules. 

According to Woolfrey, extended annual leave and the four-day week do not necessarily need to be mutually exclusive, given that most compressed week models prescribe 100 per cent productivity in 80 per cent of the time. 

However, he predicts that granting an extra two weeks’ leave as an alternative would achieve many of the same benefits of the compressed week without inviting the same concerns.

“It’s significantly more universal as it can apply to all kinds of workers, including those who work part-time, on weekends or in roles with peaks and troughs in workloads,” he says.

“And it provides extra flexibility when work has more challenges, such as [during] school holidays.”

While challenges and concerns exist with both models, these conversations are an invitation to reimagine our relationship with work. By considering how to leverage streamlined schedules for maximum benefit, employers can demonstrate that they value not only the quantity of work, but the quality of life it supports.

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