Laura Chapman (left) is a counsel at Freshfields and leads the employment, pensions and benefits practice in Hong Kong. She has a broad range of experience advising employers throughout the Asia-Pacific region.
Stephanie Chiu (right) is an associate in Freshfields’ employment, pensions and benefits practice based in Hong Kong. She regularly advises on all aspects of the employment relationship and has experience with cross-border work.
Time for a rethink on holiday entitlement for overworked employees?
With the 24/7 demands on many businesses across Asia and the world, the concept of “holiday” is one that is becoming increasingly rare for employees in some quarters. If you’ve just come back from a relaxing, refreshing break, then great. But if you spent most of your last holiday hanging out of hotel windows to get decent phone signal so you can dial into work calls, or if you spent your break indoors hunched over your laptop while your loved ones holidayed without you, then your employer might need to rethink their approach to “holiday”.
The dictionary definition of holiday is “an extended period of leisure or recreation, especially one spent away from home or travelling”. There is no mention of being “on-call”, needing to check emails or phone messages or logging on as soon as the Wi-fi signal allows. Yet that is the increasing reality of holidays for office workers. Some employers will grant employees holidays in lieu if they have to work for “substantial” periods of time during their holiday, but this is far from commonplace. Even if employees do not have to do substantial work over their holidays, it is rare in this day and age that they would not have to interrupt their holidays at some point to, at the very least, check email on their phones.
So does the definition of holiday need updating? Or do employers need to rethink their approach to employees’ holiday entitlement? Could there be liability for those employers who don’t take steps to ensure that a holiday stays, in fact, a holiday? This pertains especially to younger members of the workforce, for whom holiday entitlement may already be limited due to shorter length of service.
Most countries in Asia have adopted laws that require employers to ensure that their employees have a legal right to holiday, but as a region, Asia has traditionally had a lower holiday entitlement than other regions. A number of countries in Asia also have a minimum service requirement before paid holiday can be taken. For example, in China, employees technically have no legal entitlement to any holiday until after they complete the first year of employment (unless holiday is granted at the discretion of the employer). After completion of one year’s service, entitlement to holidays rises and the amount of holiday time increases with length of service.
Employees in Hong Kong are also only entitled to paid statutory annual leave under the Employment Ordinance after they have completed a period of 12 months under a continuous contract. The Employment Ordinance prescribes certain minimum holiday entitlements and, again, provides that holiday entitlement increases with length of service. This contrasts with the legal position in other parts of the world, such as Europe, where in some countries, employees’ statutory holiday entitlement is fixed at a higher amount and does not vary with length of service. The Employment Ordinance provides that, if employees are compelled to work on rest days then they must be granted another rest day, but there is no equivalent provision for annual leave.
In a number of Asian countries, the law that regulates employees’ holidays carries with it a penalty on the employer if they do not permit employees to take their legal holiday entitlement. For example, in Hong Kong the penalty is a fine of up to HK$50,000. There is a question as to whether such a fine might be levied per employee, or if the Labour Tribunal would interpret the Employment Ordinance as contemplating a “per employer” fine, in which case the maximum fine would not likely to be a worry for anyone other than the smallest of employers.
As yet, there have been no recent reported cases brought against employers in Hong Kong for failure to ensure that holiday is holiday. But the issue is high on the agenda of some global employers. Virgin and Netflix are two examples of companies that have adopted the approach of having no fixed holiday policy. In other words, no limit on holiday entitlement – “we trust you”. In explaining its approach, Netflix stated its belief that “rules and policies are innovation killers” and that “people do their best work when they’re unencumbered”.
Critics of this approach, however, think this is more good PR than good HR. They say statistics show that employees take fewer holidays when they have unlimited entitlement because, in the absence of a policy or a strong cultural guidance, employees second-guess how much time off is acceptable.
It’s an interesting debate, but for those of us in Hong Kong, it remains, for now, just a debate. This sort of policy is a long way off from becoming mainstream in Asia. But as we all return to work, counting the days to the next “holiday”, that approach does sound rather appealing.
This article appeared in the Classified Post print edition as Holiday? What holiday?