A new report from the ELMO Employee Sentiment Index (ESI) has revealed a staggering figure: Australian employees are sitting on an average of 160 million days of unused annual leave. This unused leave represents a significant impact on both workers' well-being and business productivity, with employees increasingly hoarding their leave, despite growing signs of burnout and workload stress.

The quarterly report, which covers the period of July to September 2024, surveyed over 1,000 Australian workers. The findings shed light on several pressing workforce challenges, including productivity issues, employee mobility, job security, and most notably, the growing trend of unused annual leave.

The report reveals that many Australian employees are not prioritising their leave. While the COVID-19 pandemic undoubtedly had a major impact on holiday plans, the trend of unused leave persists. Older employees, such as Baby Boomers and Gen X, tend to carry larger leave balances, with an average of 19.9 and 20.3 days of unused leave, respectively. In contrast, younger workers, including Millennials and Gen Z, are accumulating less unused leave, with 14.9 days and 8.8 days, respectively.

However, despite this apparent generational divide, a substantial number of employees across all age groups reported barriers to taking time off. According to the report, 61% of employees cited challenges in taking their annual leave. 

Of these, 21% said they were simply too busy at work to take time off, while 18% stated that they couldn’t afford to go on holiday. This points to an underlying issue of overwork and financial strain, further exacerbated by concerns about job security in the current economic climate.

The impact on employee well-being and workplace productivity

One of the most concerning findings of the report is the rise in employee burnout. Forty-three per cent of employees reported feeling burnt out, and a similar percentage (43%) stated that their workload had increased during this quarter. The pressure to keep up with growing demands at work is clearly taking its toll on Australian workers, with Gen Z feeling the strain the most. More than half (52%) of Gen Z employees reported feeling burnt out as the year draws to a close.

Joseph Lyons, CEO of ELMO Software, commented on the importance of employees taking leave, both for their well-being and for the productivity of businesses. He emphasized that while leave may not always be viewed as a productivity tool, it plays a crucial role in ensuring employees remain engaged and focused. "Taking planned time away from the demands of work allows employees to return feeling rested, energised, and more engaged, which helps improve focus and productivity," Lyons explained.

He also pointed out the financial burden of unused leave on businesses, as it accrues as a liability on company balance sheets, often with additional costs from leave loading. ELMO Software's customer base, for example, has accumulated over 13 million hours of unused leave, demonstrating the scale of the issue.

The report also highlights the broader economic concerns affecting workers' attitudes toward taking leave. Nearly 30% of employees anticipate potential redundancies in the next quarter, and 38% feel the need to work longer and harder to secure their jobs. These concerns, combined with the ongoing pressures of an uncertain economic environment, have created a culture where taking time off is seen as a luxury rather than a necessity.

Despite these challenges, there is an opportunity for companies to address the issue of unused leave and the burnout associated with it. According to Lyons, the end of the year presents an ideal opportunity for employees to take a well-earned break, particularly with the additional public holidays during the holiday season. "The holiday season is the perfect time of year to encourage staff to take an extended break, maximising their leave with the additional public holidays," he said.

With many businesses experiencing a quieter period towards the end of the year, now is the time for employers to encourage employees to take their leave, recharge, and return to work in the new year with renewed energy and focus.

As the report suggests, taking time off is not only beneficial for individual well-being but also for the overall productivity of the workforce. By encouraging staff to take their leave and avoid burnout, businesses can help ensure that employees return to work feeling refreshed and ready to tackle the challenges of the year ahead.