Tech giant Apple is among a number of large companies in Australia to offer employees an extra week of annual leave in a new workplace trend said to improve worker wellbeing and boost the economy.

Under the National Employment Standards, Australian workers are mandated to receive four weeks of leave per year.

But a number of new enterprise bargaining agreements are enshrining an extra week of leave for employees.

It comes alongside growing adoption of the four-day working week, spurred by the COVID-19 pandemic and an accompanying rethink of work’s position in our lives.

The five-week annual leave trend is being led by the retail sector, with the likes of IKEA, Bunnings and Apple having recently enshrined the extra time off in union agreements.

The Shop, Distributive and Allied Employees’ Association union has been driving these negotiations, and its NSW secretary Bernie Smith said there were no trade-offs in terms of lower wages in the agreements.

“We know the importance of a healthy work-life balance for workers and the benefits this creates for customers and businesses,” Smith told the Sydney Morning Herald.

Australia’s annual leave entitlements have remained unchanged since the 1970s, and years of productivity improvements have not been met with wage growth.

Handing workers extra annual leave is hoped to improve their wellbeing and happiness at work, boost their productivity while they are working, and boost the general economy with corresponding spending on tourism and hospitality.

The current four weeks of annual leave is now “outdated”, according to University of Sydney Business School associate professor Chris Wright.

“These entitlements reflect outdated social norms, originating in a time when family structures were very different from today, and there is a strong case for updating them,” Wright told the Sydney Morning Herald.

In October last year global tech giant Apple agreed to a deal with most of its 400 store employees in Australia for an extra five days of paid leave annually on a non-cumulative basis.

IKEA has also increased its employees’ leave from 20 to 25 days for its 4,000 Australian employees, and to six weeks if they regularly work overnight shifts.

Bunnings workers will see their annual leave increase to five weeks across the life of the new enterprise agreement, which was launched in November last year.

While mandated annual leave has remained unchanged in Australia for five decades, other countries around the world have continued to increase it.

Many European countries, including Austria, Denmark, France and Germany provide workers with 24 or more days of leave annually.

The downside

There are some concerns around this advent, however, with Business NSW chief executive Daniel Hunter warning that if it was adopted more widely it could lead to inflation increases.

“While big corporates may have the flexibility to offer five weeks of annual leave, this prospect is challenging and potentially damaging to small and medium businesses,” Hunter told the Sydney Morning Herald.

“If widely adopted, it could add billions of dollars in cost to the books of already struggling businesses, limiting their growth and ability to borrow.”

The concept of extra leave is also taking hold among big law firms in Australia, with the likes of Lander and Rogers embracing the extra time off for workers.

Workplace alterations focusing on improving mental and physical wellbeing for employees have been gathering steam since the COVID-19 pandemic, which caused a rethink of many traditional work practices.

The concept of workers receiving their normal amounts of pay for working one less day per week, if they maintain the same productivity, has been embraced widely across the Australian economy, including by many tech companies.

The four-day working week has been enshrined in several union agreements, signalling that larger companies are now getting on board.

The public sector is also likely to get a chance to try the scheme too, with the ACT government looking to set up a trial early this year amongst its public service, and a government-led Senate committee last year calling for a trial in the Australian Public Service.