Your ultimate guide to unpaid leave

All good things must come to an end. It’s a sad fact of life that applies in almost every sphere, annual leave included. Aside from a handful of unicorn companies, unlimited paid time off is not the norm – and for most of us, likely never will be. Unless of course the AI fairy godmother comes swooping in with her magic wand. But the jury’s out on that one.

So what do you do when the clock on paid time off runs out, but Glastonbury is calling?

Table of contents

• Embracing unpaid leave
• Reasons for unpaid leave
• What’s good for the employee is good for the employer
• Tips for implementation
• Key takeaways

Embracing unpaid leave

Unpaid leave is pretty self-explanatory. An employee takes time off work and, unlike paid leave, they aren’t paid for the time they’re away. Often this is because they’ve used up their paid leave allowance or haven’t yet accrued any. They’re not sick, so they don’t get sick leave. They haven’t had a baby, so maternity or parental leave doesn’t apply. They just want some time off work to do… whatever. As employers and managers, it’s none of our business.

In the UK, under the Employment Rights Act 1996, long-term contracted workers have a statutory right to ‘reasonable’ unpaid leave. In the case of extended unpaid leave, they also have the right to return to the same or an equivalent job when they return.

There is no legal limit on how much time someone can take. Unless it’s to deal with an emergency, employers are not required to grant unpaid leave requests. But there are very good reasons to do so, if and where you can.

Let’s take a look at why people might ask for, and employers might want to grant, unpaid leave.

Reasons for unpaid leave

There are a whole host of reasons why someone might want to take unpaid leave, including but not limited to:

• Spending time with or looking after family members – perhaps unwell, or visiting from another country
• Volunteering or to do charity work
• Moving house or getting married
• Pursuing a personal project or passion
• To carry out public duties, such as jury service
• Travel
• Learning – taking a course, going back to school, undertake training
• A sabbatical or career break
• Unpaid parental leave
• An extension of bereavement or compassionate leave
• Attending medical appointments

It’s important to note that, while they can request it, an employer cannot force an employee to take unpaid leave if a form of paid leave is applicable and available. It is a legal requirement to provide a minimum amount of paid annual, parental and sick leave. Unpaid leave, for the most part, is to be used in cases that fall outside of these basic entitlements.

What’s good for the employee is good for the employer

The above are all good reasons to take time off. They all benefit the person taking the leave, allowing them to be or express themselves in some way, or attend to something or someone that they care about. If it’s good for the worker – if it makes them healthier, happier, more fulfilled – then it’s good for their employer. In fact, some of them – education and training – directly benefit the employer if that person is coming back to work with new skills. But even a new perspective gained from a couple of months of travelling can be valuable in the workplace.

Remember, they’re not quitting. (In fact, unpaid leave is a great way to reduce turnover.) They will be coming back, having done something that is important to them. Had they not been given this time, they might have felt stressed, worried, guilty, bored, or resentful—in other words, not very productive.

Unpaid leave is a cost-efficient way to support your staff in achieving a good work–life balance, which we all know boosts morale and makes for happier and more productive employees. An employer who offers this and who clearly values their staff’s well-being will find it easier to attract and retain top talent. Make yourself an employer of choice by showing how much you value your staff and respect their wide-ranging interests and responsibilities.

Flexibility is the golden goose for the modern workforce – frequently ranked amongst the most important things people are looking for in an employer. Unpaid leave is the low-hanging fruit of workplace flexibility – it literally costs you nothing and has huge and wide-ranging benefits. If you’ve got great leave management software, then you’ll easily find cover and plug any gaps to keep things ticking over. It’s a no-brainer.

Tips for implementation

Anyone taking unpaid leave should be fully aware of the implications. Obviously, the main one is that they’re not getting paid – but they should know which pay packet will be smaller and by how much. Unpaid leave will alter their gross total income, which can affect access to various state benefits – tax-free and funded childcare, child benefit.

Have a super clear policy. The process of requesting/approving unpaid leave should be simple and easy, and any restrictions made clear. Obviously, you can’t have everyone off at once. Not if you still want to function as a business. As well as a visual calendar, absence management software should have a request/approval function that can take care of all that for you, to ensure requests are dealt with quickly and there is minimum impact of unpaid leave on the business.

Once you have a policy and process in place, make sure you’re fair and consistent in applying it. All employees should be treated equally, with role or seniority having no bearing, but individual circumstances can be taken into account. It makes sense that, if you have two conflicting leave requests, a dying relative will take priority over a holiday.

While it’s essential to be fair, you should also aim to be flexible. This might require discussion and compromise to make something work – maybe that means working from home, or for leave to be spread out over a longer period. If you’re open-minded, there is always a solution.

Communication is key. If a request is denied, explain your reasons. Always answer questions and provide updates on outstanding requests – whatever you’ve got going on, this is important to the employee so don’t leave them hanging. You’ve got to balance the needs of the business and of staff, and good comms is crucial to reaching a compromise that works for all.

Key takeaways

Far from a headache, something to be managed and minimised, unpaid leave is a valuable – even essential – part of the leave landscape for most UK companies. And for good reason:

• It provides flexibility and support for the diverse needs of employees
• It supports a healthy work-life balance
• Allowing unpaid leave above minimum paid leave entitlements can increase productivity, engagement, morale and loyalty
• Offering unpaid leave can improve recruitment and retention
• It shows respect for employees and their lives and interests outside of work

While you have a legal obligation to grant annual leave, sick leave and parental leave, when you grant unpaid leave, you are going above and beyond. You don’t have to do it, but you are choosing to invest in your staff’s well-being and job satisfaction. This won’t go unnoticed or unappreciated.

By embracing flexibility, businesses can create a culture of trust, respect and resilience that will drive long-term success. If you haven’t already, why not take the leap and explore the possibilities of unpaid leave?

Your staff are your people. People have lives, and life can be unexpected. Unpaid leave is not just the right thing to do from a business perspective, it’s the right thing to do full stop.