Should you offer employees length of service holiday increases?

Length of service holiday increases can be an attractive benefit for staff, but could there be any downsides for businesses? HR consultant Gemma Williams looks at the pros and cons.

There has been a lot of debate in recent years regarding length of service holiday increases and whether or not they discriminate against other employees. Many employers have scrapped length of service bonuses and instead opt for regular leave entitlement for all of their staff, while other employers have kept it.

As a business owner, you are probably wondering what the best - and fairest - solution is for your employees. In this article, we will be sharing all about length of service holiday increases and the pros and cons these offer both to your business and your staff.

What are length of service holiday increases?

Length of service holiday increases are exactly what they sound like: holiday increases offered to employees who have been with a company for a set period of time. Typically, length of service holiday entitlement begins after an employee has been with a company for five years. However, employers can set their preferred timeline to be however long they see fit.

Not every business offers length of service holiday increases to their employees and this is because there has been much debate in recent years about how fair this reward scheme really is. Let’s take a look at the pros and cons.

The pros of offering length of service holiday increases

The pros of offering length of service holiday increases

There are many benefits to offering holiday increases to valued, long-stay employees. Let’s take a look at what these benefits are:

Reward staff loyalty

Securing loyal employees who stay committed to your company for the long-term is proving increasingly difficult. Since the pandemic, employers have been battling against The Great Resignation and are doing everything they can to retain their most valued members of staff.

Length of service holiday entitlement is a great way to retain your best people as it rewards loyalty. The longer an employee stays with your company, the more leave they are entitled to. It’s that simple. Working in this way encourages employees to stay loyal to a company for the long-term.

Celebrate value

According to CNBC, “Over half of workers (56%) said pay is a top reason they’d look for a job with a different employer [...] forty-one percent would leave for a 5% increase.” What this tells us is that employees want to feel valued for the work they do.

Offering length of service holiday increases is a great way to show employees how much you value the time and effort they put into their work. It celebrates the value employees offer to your company and it helps them feel valued in return.

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Allow for rest

Employees who have been loyal to your company for many years have likely been working hard for many years, often at the expense of their own mental health and wellbeing - it could be argued that they deserve a break. Extensive research proves the importance of wellbeing at work and offering your employees rest is a great way to support their wellbeing.

Offering the benefit of extra holiday leave with each year that passes can be a great way to reward your employees with more time off to rest, spend with family, go on holiday, or commit to self care.

The cons of length of holiday service increases

The cons of length of holiday service increases

As with most things, alongside the pros are the cons and this subject is no different. As we have already mentioned, many employers are battling with the decision of whether or not to offer length of service entitlement to long-stay employees and this is because they are aware of the cons. Let’s take a look at what these are:

Creating separation

Many people believe that length of service holiday increases cause separation among colleagues. This is because some employees can feel disgruntled that:

  • They are not being treated fairly
  • There is favouritism within the workplace
  • Their hard work and effort is not being rewarded

As such, dissatisfaction can start brewing under the surface, causing dangerous ripples within your company that could lead to high rates of resignation, broken relationships, and lack of respect felt or shown towards management.

Ageism

There are also many people who argue that length of service holiday increases promotes ageism within the workplace. This is a very serious allegation and one worth being aware of. The reason why length of service holiday increases are thought to promote ageism is because, typically, most employees being granted this entitlement tend to be older.

As such, new or young employees fresh out of university can feel they are being treated unfairly due to their inexperience and age. This can cause feelings of resentment to grow towards management and can ultimately result in high turnover rates.

Sex discrimination

Length of service benefits can also cause issues relating to sex discrimination within the workplace. This is because length of service perks are less likely to be granted to women as they are statistically more likely to take time off work for maternity leave or to care for a sick relative. As a result, the more time employees are required to work at a company before being entitled a holiday increase, the less likely women are to receive it. It is therefore important for companies to ensure they aren't indirectly discriminating against women in these scenarios.

Final words

As you can see, there are numerous pros and cons as to whether or not you should reward employees with length of service holiday increases. While there is no set law against this, it is important to be aware of the cons and ensure the extra holiday benefits you are offering to long-stay employees do not discriminate against the rest of your team.

We hope this article has highlighted some of the complications that can arise from long-stay holiday entitlement so that you can make an informed decision.

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Written by Gemma Hart

Gemma Hart is an independent HR professional working remotely from as many coffee shops as she can find. Gemma has gained experience in a number of HR roles but now turns her focus towards connecting with a wider community and sharing her thoughts and advice on workplace wellness and engagement within companies.

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