European Companies Offer Weeks Off for Vacation Every Year — Will U.S. Employers Follow Suit?

Vijay Tella, a 57-year-old serial tech entrepreneur, recently discovered a passion for cycling, a practice that leaves him as relaxed as if he’d taken a mini-vacation. But he also had another incentive to hit the trails: free time. His company requires employees to take at least 23 (paid) days off per year.

But Tella doesn’t live or work in Europe, a region often linked with mandated months of paid vacation days each year. He’s the founder and CEO of Workato, a Bay Area-based workflow automation software enterprise that's part of a growing cohort of U.S. startups and larger firms aiming to make ample vacation time into a new American pastime.

Increasing vacation days could help with recruitment and retention at U.S. businesses--and even shift the relationship between employer and employee.

“I think it's a more productive way to organize the labor market,” explained Frans Bevort, a longtime HR professor at Copenhagen Business School. “It's a matter of having a trust-based contract, wherein if I have proper working conditions, then you can also count on me to work honestly, and rather hard actually.”

America’s vacation day problem

When it comes to vacation days, countries like Denmark, France, Finland and Norway lead the way. Each has laws on the books entitling workers to at least five weeks (that’s 25 days) of paid vacation each year, plus roughly 11 paid public holidays. In fact, all European Union member countries must extend a minimum of 20 vacation days to workers. (Not to mention other common protections, including 35-hour workweeks and six or more months of parental leave.)

But in contrast to these countries, and every other industrialized country, the U.S. has zero federal or state requirements for paid vacation days or public holidays. It’s entirely up to American employers to set vacation policies for their workers. In 2021, the majority of workers at private U.S. companies received between 5 and 14 days annually, according to the Bureau of Labor Statistics.

Another difference: Even when American workers have vacation days available, they aren’t using them up. In 2020, the average U.S. worker left 33% of their paid time off on the table, per the U.S. Travel Association.

“People here in France will take all of their vacation days,” said Serge da Motta Veiga, an HR professor at France’s EDHEC business school who gets about 45 vacation days each year. “In August, France shuts down…people will be gone already starting on July 14, which is a national holiday.”

Unplugging simultaneously

Collective closures might be a solution to Americans' hesitancy to use vacation days (if they even have them in the first place). Workato first tried this model in mid-2020 as a break for parents, shutting down the entire company for Mother’s Day in May, and then Father’s Day the following month.

“There were team members that we were in meetings with who we could see were having to set their kids up for Zoom school sessions,” said CEO Tella. “You could literally see the struggles that they were going through.”

The company kept closing for a day each month, until it made the policy official at the start of 2022. Workato’s 900 employees now get at least 23 “global days” of vacation annually, in addition to unlimited paid time off. “It’s become a big part of what we do,” Tella emphasized.

Since the startup has offices spanning eight countries (including Ireland, Spain, Japan and Singapore), Tella explained that the collective closures also helped bridge differing cultural differences toward rest--especially during the height of the pandemic.

But there’s no “one size fits all” solution when it comes to individual versus collective time off. EDHEC's Da Motta Veiga suggests companies should assess their needs and ask employees directly.

“I believe that companies need to talk to their employees. They don't do that enough,” the professor said. “There will be companies that will be doing one or the other, and you will be attracting people that believe in one or the other.”

Europe’s August break reaches U.S. shores

A few larger U.S. corporations offer strong vacation policies. Pharmaceutical giant Amgen starts workers with five weeks of paid time off, including two weeks of holiday shutdowns. Google employees begin with three weeks and can work their way up to five weeks after spending a few years at the company. Bumble gives workers two weeks of vacation in addition to unlimited time off.

But smaller American businesses can also share a roadmap to improving employee wellbeing and retention. Utendahl Creative, a 10-person creative and design studio based in New York, offered unlimited paid time off since its founding in 2019. But in the summer of 2021, as business spiked and the pandemic persisted, the company began shutting down completely for five weeks spread throughout the year to stave off burnout. It enshrined the policy a few months later, and announced it publicly in April.

The agency’s clients (like GoPuff and athleisure brand Alala) have taken no issue with the closures, which are disclosed clearly in contracts. From a business perspective, the collective closures have also saved "time, money and work," explained founder Madison Utendahl. Employees retain unlimited days off in addition to the closures, but they tend to take vacations during group closures. This helps the company avoid hiring outside support or taking other measures to cover for individual vacations. The agency also saw an influx of job applicants after announcing the five-week closures publicly two months ago.

“There is a greater sense of community and group relaxation when you subconsciously know that everyone else is not working,” Utendahl said. “And for myself, it's given me immense relief and immense permission to acknowledge how hard it is to be a founder…it doesn't help anyone if the people in charge are absolutely exhausted.”

The policy includes two consecutive weeks off in late August, which Utendahl said was designed to mimic European standards. She was exposed to these norms early: Her mother grew up in Germany and always took “solid” time off each summer--typical for many European workers. “That's always something that I was influenced by,” she explained.

Are four-day work weeks the next frontier?

Looking forward, four-day work weeks might be the next European workplace initiative to cross the Atlantic. Between June and December this year, some 3,300 workers at more than 70 U.K. organizations will earn their full salary while working only four days each week, in the largest-ever experiment by advocacy group 4 Day Week Global. Stateside companies like Shake Shack and Kickstarter have both toyed with four-day work weeks, and online children’s clothes retailer Primary switched to the model in May 2020.

A rocky economy could also affect future workplace benefits. The tight labor market and ensuing “Great Resignation” that defined the last two years afforded employees unprecedented leverage in the workplace as companies battled for talent. Now, they may be losing some of their edge. Thousands of tech employees have been laid off since May, and dozens of other startups (including Workato) are slowing the pace of hiring--or freezing it altogether.

Whatever the future may hold, changemakers like Utendahl are hopeful that U.S. employers will catch up to European counterparts when it comes to vacation policies.

“Time off is not just about mind, body and soul … it’s about your literal health and the health of your team, and their survival and wellbeing in this world,” Utendahl said. “It really, to me, is not just a personal choice, but a true social responsibility.”

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