How to Manage Unpaid Leave in Your Company

Your staff may require some time away from work for a variety of reasons. This might be their statutory right, or agreed to by yourself and the employee.

You don't always have to accept an employee's request for unpaid leave, but there are some circumstances where you’re legally required to.

In this guide, we'll discuss what unpaid leave is, the different types, and how to manage it successfully in your company.

What is unpaid leave?

Unpaid leave is when an employee takes time away from work, without receiving their statutory right for pay. This is what they receive during paid leave.

This leave isn’t a part of their statutory holiday entitlement, which is a minimum of 5.6 weeks paid holiday a year for full-time employees. Part-time employees may receive less, but it all depends on your employment contracts.

Unpaid leave is usually taken for personal reasons or family emergencies. For example, if your employee’s child has an accident at school. During this period of leave, staff still retain their employment status.

What are the different types of unpaid leave?

Typically, unpaid leave is split into three separate areas. Becoming familiar with them can help you manage situations where these types of requests are made. For instance, there are certain circumstances when you must accept an unpaid leave request.

Let's discuss them in more detail:

Unpaid leave that's granted by law

Under UK law, you must grant unpaid leave for the following circumstances:

• To attend jury service. There's no legal obligation for this to be paid, however, most employers tend to pay staff during this period. Employees can claim pay through the courts for attending jury service.
• To spend time with a child under 18, known as parental leave.
• If they're a magistrate and are needed to carry out their magistrate duties.
• To deal with an emergency that involves a dependent.

Unpaid leave that must be considered under law

Under The Employment Rights Act 1996, you must consider unpaid time off requests for the following:

• A request for training or study.

When considering a request for the above, you should carefully consider whether either activity will aid the business and the employee's skills in the long run.

Unpaid leave that's completely discretionary

There are certain circumstances where it's the employer's discretion as to whether an unpaid leave request is granted.

For example, when staff want to:

• Take a career break or sabbatical leave.
• Attend medical appointments, unless the employee is pregnant in which case you must grant them paid time off for antenatal appointments.
• Take compassionate leave, or bereavement leave. However, parental bereavement leave and pay is a statutory right.

Benefits of unpaid leave

Many benefits come with offering unpaid leave to your employees. For example, it can increase employee wellbeing, as staff are given time to manage their personal problems when needed.

Other benefits include:

• Helps work-life balance: Unpaid leave can help an employee to balance their personal life with their work responsibilities. If their work-life balance is improved, they'll likely maintain a healthier well-being and manage their workload better.
• Increase employee retention: If you provide unpaid leave for staff during times of personal struggle, it’ll give them a better sense of control over their personal lives. Consequently, they'll feel supported by you, and will likely be discouraged from looking for a role elsewhere.
• Increases the personal development of your employees: Unpaid leave can aid personal development, as it allows employees to attend further education or training. And the more skilled your staff are, the better the quality of their output.

How many days of unpaid leave is an employee entitled to?

Under employment law, there's no minimum requirement for how many days UK employees can take as unpaid leave. Except for time off for public duties, such as jury service.

Some employers may limit the amount of unpaid leave to a few days or weeks, however you can allow longer periods. For career breaks or sabbaticals, you could offer an employee months, or even years away from the company.

How can an employee request unpaid leave?

Any employees wanting to take unpaid leave should ideally submit their request in writing. This must include all the reasons behind the request, and how long the leave will be.

You must respond to the request as soon as possible, and explain the reasons behind your decision to the employee clearly.

Can you refuse a request for unpaid leave?

Yes, you can refuse an employee's request for unpaid leave. The leave request can be refused in the following situations:

• A career break or sabbatical leave. For example, if your employee plans to travel the world for six months.
• Medical appointments. However, you need to be mindful of any disabled employees you have, as it might be a reasonable adjustment to allow them to attend appointments.
• Study and training purposes. But only if the training won't benefit the business and you won't be able to meet customer demands during their absence.

To make an unpaid leave request for study or training, the employee must have at least 26 weeks of service, and work for a company with over 250 employees. You can choose to pay the employee for the training or pay for the training itself.

Can an employer refuse a request for unpaid leave in a family emergency?

You can refuse an unpaid leave request for a family emergency - or to carry out public duties. But this is only if you consider the employee to be requesting an unreasonable amount of time away from work.

But, you need to be careful surrounding this, as employees have the right to reasonable time off for dependent leave in case of an emergency.

Does taking unpaid leave affect employee rights and benefits?

No, taking unpaid leave doesn't usually affect an employee's rights and benefits. Employment rights, such as maternity and paternity leave, statutory sick pay, and pensions are protected during a period of unpaid leave.

You must ensure both your employment contracts and policies in your employee handbook are aligned. Ensure all staff read this when joining your company.

What is unpaid parental leave?

Unpaid parental leave is time away from work to allow parents to care for their child, or make decisions for their child's welfare. For example, if they need to look at new schools or new childcare arrangements.

This is a legal requirement and allows parents to successfully balance their responsibilities at work, with their role as caregivers. Unpaid shared parental leave is an option for both biological and adoptive parents, and can be taken until the child reaches the age of 18.

Are all parents entitled to unpaid parental leave?

No, not all parents are entitled to take unpaid parental leave. To qualify, they must:

• Have one year of continuous service at a workplace.
• Be the child's parents or have full parental responsibility.
• Not be an agency worker or contractor.
• Not be a foster parent.
• Have provided the employer with at least 21 days notice before the intended start date of the leave.

To take parental leave, eligible employees must submit a written request. You may also request proof of any of the above criteria.

How long is unpaid parental leave?

Employees can take a maximum of 18 weeks of unpaid parental leave per child. However this is subject to a four-week per year limit, unless agreed otherwise.

Employees aren’t entitled to take parental leave for less than one week, or in anything other than multiples of a week. It's important you make this clear to the employee before they start this period of leave, avoiding possible conflict in the future.

Can employers postpone unpaid parental leave?

Yes, even though employees have a legal right to take unpaid parental leave, you have the right to postpone the leave in certain circumstances.

An example of this is if the absence would severely disrupt the business. The leave can be postponed, but a new date must be proposed within six months.

Can you dismiss an employee on unpaid parental leave?

Any employees who are on unpaid parental leave are protected from both unfair dismissal or unfair treatment. You also cannot dismiss an employee or cause them detriment because they've asked to take unpaid parental leave. This means allowing them to:

• Be treated worse than before.
• Have their situation made worse.

An example of this can be the employees working hours being reduced, or experiencing bullying.

Get expert advice on unpaid leave from Peninsula UK

As an employer, your staff may require some time away from work. During these situations, their leave may be unpaid.

Under UK employment law, there are certain times when a request for unpaid leave must be accepted, but this isn't always the case. Which is why you must ensure you’re familiar with the regulations surrounding unpaid leave, in case an employee submits a request.

Peninsula offers you expert 24/7 HR advice and support, to help you manage unpaid leave in your company. Contact us today on 0800 0282 420.