The companies doling out thousands for workers' holidays

The newest work perk? Companies are paying employees' vacations so they can take a proper break.

Lazing on the beach, drink in hand. Hiking with friends, a spectacular view at the summit. Exploring a foreign city, eating the most incredible food you've ever tasted. But the best part? You've barely spent a dime of your own money for these experiences.

Perks have changed in the pandemic era. One emerging incentive stands out: handing out four-figure budgets for employees to see the world.

These programmes largely originated at travel-related companies. Airbnb employees receive $2,000 (£1,600) in travel credit each year, and Expedia reimburses staffers between $1,250 to $1,750 annually for travel expenses. Now, more firms across industries are following suit. Scheduling app Calendly offers an annual $1,000 vacation stipend for hotels, flights or rental cars; software company Bamboo HR offers what they call "paid paid vacations" via a $2,000 annual stipend to use towards travel.

Michael König, senior lecturer at the department of strategy and innovation, Vienna University of Economics and Business, attributes this rising trend to the state of labour, which is largely still "a seller's market" across the world, even amid an uncertain economy.

Firms that go the extra mile with these unusual perks can attract and retain the talent their companies need, often counteracting decreasing employee loyalty. "Employers can use this intelligently in their employer-branding strategy," says König. "The message is that employers really care for the wellbeing of their workforce, beyond superficial measures. That certainly pays off in the long run."

This is especially true for companies trying to recruit and retain workers, says Cary Cooper, professor of organisational psychology and health at UK-based Alliance Manchester Business School. "In the UK, for example, with the loss of so many people to Eastern Europe as a result of Brexit, employers are finding it difficult to recruit unskilled and skilled staff in some sectors, and they may look at a variety of incentives like this or other approaches to attract staff."

And while this is a global trend, travel perks may be particularly attractive to workers in the US, where paid holiday isn't a legal requirement, and 46% of workers who receive paid time off do not take all of it. "Many organisations have very limited allowable holiday time in the first place, so they could attract and retain staff by lengthening their paid holiday time. In the context of the US, these expenses are likely to be aimed at 'needed' professional staff, as one perk among others,” says Cooper.

Plus, in the current economic climate, this travel-budget incentive is more valuable than ever.

"The steep increase in the cost of living and rising inflation rates worldwide make holidays a true luxury. Companies that offer paid holiday expenses are addressing this directly," says König. For employers, it also makes smart financial sense. "In many countries, these costs are also tax deductible, and the net benefit might then be even bigger than a pay rise, for both, the employee and the employer."

These incentives may seem like a win-win for both employers and employees, yet Paula Allen, global leader and senior vice president of research and total wellbeing at TELUS Health, a Toronto-based wellbeing benefits provider, says these perks may be more valuable to some workers than others.

"For employees such as working parents or caregivers, travelling might not be feasible. In that case, organisations should consider alternatives, so employees don't feel they're getting preferential perks over another," she says. As the sustainability concerns of air travel also become more pertinent, Allen says companies will also have to think about how they balance offering free travel perks while also considering their climate footprints.

Allen also says financial incentives shouldn't be used as a bandage to address larger issue. "These perks don't replace the need for health and wellbeing support and a strong and effective workplace culture. If a workplace is not psychologically safe, then added financial support does not erase this negative impact," she says.

However, moving forward, Allen thinks we'll continue to see companies jump on this trend in some form. "With the rise in nomad workers and work-away policies within companies that enable employees to work from different parts of the world, there's clearly an appetite among the workforce to travel," she says. Broadly, she adds, "employers will increasingly focus on support for financial wellbeing, and will increasingly connect financial and mental wellbeing". 

König agrees. "The whole idea of the contents of a pay package is set to change," he says. "Paid vacation expenses, healthcare support, lifelong upskilling, etc., will become much more important."
