Metlife research: Private sector employers consider cutting holiday to reduce benefits costs

A quarter (25%) of private sector employers are considering cutting holiday entitlement for staff in order to reduce the costs of employee benefits, according to research by MetLife.

The Metlife 2011 International Employee Benefits Trends Survey, which surveyed 403 small and medium enterprises (SMEs), revealed that 27% of organisations believe they are too generous with holidays.

Respondents said, on average, they would aim to cut around four days paid holiday in order to contain costs with 36% of employers saying they are considering offering additional unpaid leave to staff.

The research showed that more than a third of employees would be willing to work longer but only if they receive a pay rise. Nearly six out of 10 employees believe they are unlikely to receive an annual pay increase in the next 12 months, and 28% last had a pay rise more than two years ago.

One in 10 employees have been offered an enhancement to their employee benefit package in lieu of a pay rise. Of those, 48% have been offered more paid holiday in return for not receiving an increase in pay, while 42% have been offered more flexible hours, and 25% have been offered increased employer pension contributions. Just 8% of employees believe they will definitely receive a pay rise in the next 12 months.

Dominic Grinstead, managing director at MetLife UK, said: “Employers are starting to question the overall value of their employee benefits package and paid holidays are clearly an expensive part of the package.

“The ongoing UK economic recovery will rely heavily on SMEs and they need to contain costs. 

“Employees are willing to be flexible to support their employer but will want something in return.

“Employers should recognise that commitment and take a wider look at employee benefits in order to gain the maximum value for their business and their workforce, as a strategic approach to employee benefits can add real value.”

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