An employer’s guide to unpaid leave

With annual leave, there are clear guidelines for employers to follow. Unpaid leave isn’t as straightforward and employers should be consistent in how they approach these absences.

There isn’t a one-size-fits-all approach and it’s important for employers to understand the regulations. Read on to find out how to approach unpaid leave as an employer.

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What is unpaid leave?

Under UK law, employees are entitled to a minimum of 5.6 weeks of paid leave a year (which can include public holidays) but sometimes employees may need to take time off outside of this period.

Time off that takes place outside of statutory leave can be unpaid or paid at the company’s discretion. There are many reasons for an employee to take unpaid leave, such as caring for unwell dependants or tending to an emergency.

Making it clear in your employee handbook whether or not you pay for this time off is important so they know their rights. Deciding to make discretionary payments for leave may help to engage your employees but has to be balanced with cost and fairness.

When can an employee take unpaid leave?

Even though there are fewer regulations for unpaid leave and it’s largely up to an employer's discretion, there are occasions when employees are entitled to take unpaid time off.

The Employment Rights Act 1996 covers when an employee can take time off to deal with particular duties.

Parental leave

Employees will sometimes need to take unpaid leave to care for their children. Whether it’s arranging childcare or taking them to medical appointments, employment rights are protected during unpaid leave.

This also applies to leave related to adoption appointments and meetings, and there are additional rights for parents of children with disabilities.

Dependant leave

Time off for dependants is similar to parental leave – the difference is that a dependant can be a partner, parent, or any person who depends on the employee for care.

In an emergency where an employee needs to support their dependant, it’s their right to take unpaid leave to deal with the emergency.

Compassionate leave

Compassionate (or bereavement) leave is when an employee needs time off after someone close to them passes away.

Employees have a legal right to ‘reasonable’ time off if a dependant passes away. It’s up to the employer to decide what’s deemed ‘reasonable’ but bear in mind that it will be a sensitive time for your employee.

There are additional rights if an employee’s child passes away (from 24 weeks gestation in pregnancy up to the age of eighteen), where they’re entitled to two weeks of Statutory Parental Bereavement Pay.

Current rates are £156.66 a week or 90 per cent of their average weekly wage, depending on which is lower. This rate is generally reviewed every April, alongside all other statutory pay rates.

As the circumstances around compassionate leave are sensitive, having a clear bereavement policy in your employee handbook may help relieve some stress for you and your employee.

Medical appointments

Some employers prefer their employees to book medical appointments outside of working hours but there are times when this isn’t practically possible.

For most of your employees, there won’t be a legal right for them to take unpaid leave for a medical appointment and you can request that the time is made up or the appointment booked at a different time.

However, if the employee is pregnant or has a disability, any requests for time off for a medical appointment must be approved.

Public duties

An employee is entitled to take ‘reasonable’ time off to fulfil public duties, such as their role as a magistrate, local councillor, or school governor. This doesn't have to be paid (although some employers choose to do so) and it can be refused if the request is unreasonable.

An employer can't decline leave for jury service, but you can request that the employee asks the court for a delay if there is a business need. Jury service doesn't need to be paid, and the employee can claim expenses for days on jury service directly from the courts.

Other reasons for unpaid leave

There are many other reasons employees may wish to take unpaid leave and as an employer, it’s important to know how you’d approach these scenarios.

There isn’t any regulation that means you have to approve these types of leave but being flexible with these requests could lead to a more positive working environment.

Some reasons for employees to take unpaid leave are:

• to improve their work-life balance – some employees may request temporary time off if they’re feeling burnt out and would like some time to recharge
• time off to study – an employee may request time away from work for their development, to do a part-time university course for example
• a sabbatical or career break – some employers offer a longer period of leave where requested, which is usually connected to the length of service with the business. Employees may be unpaid, but would usually retain the benefits relating to being an employee of the company, which generally means career breaks aren't used to work for alternative employers
• volunteering – it’s difficult to find time to volunteer for a good cause when in full-time employment so employees may request unpaid leave to do this. Employers sometimes add ‘volunteering days’ in addition to normal annual leave to accommodate for this

Other forms of unpaid leave could be where employees have exhausted their statutory entitlements (such as sick pay) but aren't yet ready to return to work. You may want to categorise these separately in your employee records, to show that they're connected to the previous period of leave.

How to approach unpaid leave

It can be difficult to know what to do when faced with a request for leave, particularly where this falls outside of statutory regulations. Usually, this means that you have to look to other factors when making decisions, such as:

• the reason for the request
• the employee’s absence and performance record
• the cost to your business of the leave (both financial and meeting business needs)
• fairness amongst all employees
• the positive impact requesting the leave (and possibly pay) could have on flexibility, engagement, and healthy employee wellbeing

Assessing whether a request is ‘reasonable’ is generally down to the employer's judgement. Denying a reasonable request can be challenged by the employee through grievance procedures. It’s important to be consistent about the types of unpaid leave that are accepted and denied, to ensure that your approach can't be considered discriminatory.

As many of these scenarios aren’t governed by law, having your unpaid leave policy outlined clearly in your employee handbook or company policies is important to avoid any conflict when the leave is requested. It helps your employees to understand what they are or aren't entitled to and allows you to build an approach that best serves your business.

Some questions to consider when making your unpaid leave policy are:

• how do employees request unpaid leave?
• how much notice do employees need to give?
• how much unpaid leave can employees take each year?
• do they need to do anything to minimise disruption in their absence?

What's your business's approach to unpaid leave? Let us know in the comments below.