The holiday season is still going on and many employees are currently enjoying their holiday at the beach or in the mountains. They have usually submitted their requests for leave for the year to their employer early on and received approval from the employer. But this approach could soon give way to the leave model of the future: Leave based on trust. The trend that originated in the U.S., where it is known as "Unlimited PTO (paid time off)," has also reached not only start-ups but also some other companies in this country in the age of new ways of working. The concept is simple. Employees decide for themselves how long and when they want to take leave. Even though this type of leave - as the name suggests - is supposed to be based on trust, some general conditions must nevertheless be taken into account.
Overall, a clear trend can be observed in the context of new ways of working, especially among the younger generation: freedom, flexibility, trust, and appreciation are becoming more important. Especially in the battle for qualified and motivated skilled workers, trust-based leave is a subject that will increase the attractiveness of the employer for applicants. Employers clearly demonstrate to their employees that they trust them if the responsibility for organising their leave lies entirely with them. Trust-based leave is thus a clear signal of appreciation. The positive side effect is that this usually increases work motivation as well and enables employees to identify better with the company. Employees remain loyal to the company for longer and the employee turnover rate decreases.
The legal framework for minimum leave in Germany is set by the Federal Leave Act (Bundesurlaubsgesetz). Trust-based leave is not regulated by this Act. The minimum leave is 20 working days for a 5-day week. It is not permitted to grant less than this leave entitlement. Trust-based leave is therefore additional leave that exceeds the statutory minimum leave. Employers must therefore ensure that they grant the statutory minimum leave in any event.
The downside of flexible leave is the loss of control and the resulting risk of abuse. Regulations may be agreed upon in this regard to minimise the risk of abuse. Maximum limits may be set for the trust-based leave that may be taken in a calendar year. If the entire leave is not to be taken all at once, rules for the maximum duration of the trust-based leave may also be established. The same applies if the employer is concerned that employees will disappear shortly after their holiday by taking another holiday break. Contractual arrangements may also be made for this purpose. The disadvantage of these contractual arrangements is that this runs counter to the principle of trust-based leave, as this in turn places restrictions on the concept of the freedom to choose the timing of the leave. Another point that should be taken into account when drafting the contract is the calculation of the holiday pay that is paid for the duration of the trust-based leave. The same applies to the possibility of carrying over the trust-based leave to the following year. The issue of coordinating and communicating the trust-based leave within the team should also not be underestimated. It would make sense to set a minimum staffing level within the team to ensure workflows are not put at risk by too many staff on leave. It should also be agreed that the employees coordinate the trust-based leave within the team on an autonomous and independent basis.
In order for the positive effects described above to materialise, employees would actually have to feel as free and flexible as possible in making their holiday arrangements. However, how much leave is taken under such a model depends on many different factors. Flexible working models also carry the risk that employees may feel they have to work more to avoid giving the impression of laziness. Employees may be inhibited from taking the trust-based leave in order not to damage their own career opportunities.
Trust-based leave as a way of granting additional bonuses will play an increasingly important role in the future. Flexibility and autonomy are becoming increasingly important for employees when deciding for or against a company. Nevertheless, it is important to review carefully before introducing a trust-based leave system whether it fits in with the company's organisation and corporate culture. Trust-based leave will not be a practicable tool for every industry sector. It is also essential in each case that a contract be drawn up that minimises the risk factors in order to rule out any abuse and still provide the desired flexibility.