Benefits plans tackle everything from retirement to rheumatoid arthritis, but should they help employees cross items off their bucket lists, too?
In her research, Erica Pearson, co-founder and chief executive officer of Vacation Fund Inc., says usually about 50 per cent of people indicated they don’t have the budget to take vacation and 50 per cent said they’re hesitant to ask for time off. But employers noted they want their employees to get out of the workplace and refresh, she adds.
An employer-matched vacation fund solves both those problems at once, according to Pearson, noting her interactions with employers when she was launching Vacation Fund showed her it was difficult to convey to staff that they genuinely wanted employees to use their vacation time.
“So the forward-thinking companies realized that burnout and depression and other mental-health issues were becoming a problem,” she says. “And if you live your life on repeat without ever doing anything out of the routine, then you can end up in some pretty dark loops that are not helpful . . . for creativity or innovation.”
Vacation Fund offers a platform that integrates with an employer’s existing payroll system to take contributions after taxes from employees. They then allocate matching contributions, typically at 50 per cent, from the employer, from $10 to $120 per paycheque. When a new employer starts using the service, Vacation Fund hosts a presentation to explain the process to employees.
“Typically with our clients, over 80 per cent [of employees] opt in, because regardless of age, gender, income bracket or marital status, you are expected to take some time off during the year. And if you’re going to take time off, it’s nice that your employer has put some money towards helping you do something special with that time off.”
While there are many attractive benefits plan sponsors can offer, help saving for vacation can appeal to practically everyone, says Pearson.”There were some companies that said, ‘We offer employees all of these great perks, like free food, but half of the employees can’t eat the food.’ So some companies have said [they’re] trying to reward people or compensate people in other ways. Let’s see what the response rate or the impact rate of doing this is instead.”
One company Pearson worked with offered a $1,000-a-year education benefit, but hardly any employees were using it. “So they gave us the option to reallocate that money towards their vacation fund and almost every single person did that. So I felt a little bit conflicted, because I didn’t want to say you shouldn’t be advancing your own career or your education. We’re not trying to replace things like that. But I think a lot of employers are noticing their employees want flexibility, they want choice.”
Further, companies that have been around for longer, as opposed to the startups that have found the vacation fund benefit appealing, have an accumulated balance sheet liability from unused vacation days.
“There are some companies that have said, ‘What if we just calculate the amount that we would have to pay out if people are not using at least their minimum 10 days in Canada, and let’s just put that towards their vacation fund to make sure they’re taking the days.’ And we’re working on that calculation because every company has a different rollover policy.”