Under-Utilisation of Holiday Entitlements as a Career Investment

Abstract

The existing literature has provided evidence for the hypothesis that employees work unpaid overtime, because they regard it as an investment in their career. I show that the determinants of the under-utilisation of holiday entitlements in the United Kingdom and Germany are widely similar to those of unpaid overtime work. The main finding of the study is that the investment hypothesis determines this form of unpaid work as well. Hence, employees work an amount of days in addition to what is contractually specified and paid for to signal a higher productivity. Envisaged future rewards may take the form of promotions, higher salaries and job security.