What is unpaid leave? (with a free unpaid leave policy)
Life is unpredictable — people get poorly, living situations change, stuff happens — and from time to time members of your team are going to have to take time off outside of their standard holidays. This is known as unpaid leave.
The idea of accruing leave to take a break from work is pretty much universally understood, but the concept of unpaid leave is a bit more complicated. Which is why you need an unpaid leave policy.
A good unpaid leave policy will help your employees navigate all sorts of life events and help you keep the wheels of your small business turning.
In this blog, we’ll look at different unpaid leave entitlements and unpaid leave rights (UK), so that you’re better placed to handle the unexpected.
Plus, I’ve included our unpaid leave policy at Charlie as a template that you can download and adapt to more easily create your own.
What is unpaid leave?
Unpaid leave is when someone takes time away from work without pay.
Unpaid leave can happen for all sorts of reasons, and is in addition to an employee’s usual holiday allowance (which is why it’s not paid).
The length of unpaid leave varies from situation to situation and from company to company, but must be deemed a ‘reasonable amount of time’ and long enough to deal with something urgent.
So that’s the unpaid leave meaning, let’s look at why people might need to take it.
Reasons for taking unpaid leave
There are more leave without pay reasons than you probably realise:
- Becoming a parent
- The loss of a relative or friend
- Going on sabbatical leave
- Public duties such as jury service
- Additional holiday (on top of paid annual leave)
- An emergency or to care for a loved one.
Unpaid leave reasons like these should be referenced in your unpaid leave policy.
Unpaid leave UK: what does the law say?
Unpaid leave is a difficult concept because there are no hard and fast rules and every type of unpaid leave is slightly different.
Here are at some unpaid leave examples in a little more detail:
1- Unpaid parental leave
Every member of your team is entitled to a certain amount of unpaid leave after becoming a parent (on top of any paid leave covered by your parental leave policy).
Unpaid leave rights UK are that all employees have a statutory right to 18 weeks of leave without pay after becoming parents (which includes adoption). These 18 weeks can be taken right up until the child’s 18th birthday, with a maximum of four weeks permitted in a single calendar year.
Unpaid parental leave applies to each child, not to each job. So if a new employee asks to take unpaid parental leave, you’ll need to check how much of their allowance they have left.
2 - Unpaid bereavement leave
Unlike unpaid parental leave, there is no UK legislation around unpaid bereavement or compassionate leave. But the Employment Rights Act 1996 does give employees the right to take time off for emergency situations, and that includes the death of a dependant.
Addressing unpaid bereavement leave in your unpaid leave policy will help you know how to respond and support members of your team at a really emotional time.
3 - Unpaid sabbatical leave
A relatively new concept in the UK, sabbatical leave is when someone takes an extended period of time off with the understanding that they’ll return to their job afterwards.
There is no unpaid leave entitlement for a work sabbatical or career break, so you’ll need to decide whether it’s something you want to offer.
At Charlie, we decided on a combination of paid and unpaid sabbatical leave. You can download our sabbatical policy, and use it as an example to create your own.
4 - Unpaid holiday leave
You may want to offer your team the possibility of requesting additional unpaid holiday on top of their paid holiday allowance.
This solution is ideal if you wish to give your team plenty of flexibility, without going as far as giving them unlimited holiday. (There is nothing in UK law about unpaid holiday leave, so it’s entirely up to you whether you offer it or not.)
We spoke to Maria Campbell, former Head of People at Monzo and now VP of People at Permutive, about putting in place an unpaid leave policy that benefits both your team and your business.
You can download our unpaid leave policy, which is based on Monzo's, and use it as a template to create your own.
5 - Other types of unpaid leave
Unpaid leave rights UK state that every employee can take time off to care for dependents (for example, taking your child to the doctor).
There is no legal limit to how much of this unpaid leave an employee can take, but they do have to give you as much warning as is possible and reasonable.
You’ll need to think about the best way to manage this sort of unpaid leave, and communicate it clearly in your unpaid leave policy.
6 – Going beyond the law when it comes to unpaid leave
Unpaid leave rights (UK) are difficult to keep track of because they vary from situation to situation.
But regardless of the unpaid leave rules, there are benefits for employers who are accommodating around unpaid leave.
You see, employees are unlikely to ask for unpaid leave unless they really need it, so your flexibility and understanding will go a long way. The goodwill that this engenders will likely pay you back twice over.
Sabbaticals are a great example of this in practice. Career breaks are not protected by any UK legislation, but before you dismiss a request out of hand, ask yourself whether there’s any reason not to offer them?
Of course, in some industries unpaid sabbatical leave isn’t an option, but if it is possible then it could give you a competitive advantage when it comes to recruitment. What’s more, adopting a more flexible approach to unpaid leave entitlement can have a big effect on team morale.
Why is unpaid leave important for small businesses and startups?
If you’re running a startup or small business, time is a precious resource. But being flexible around unpaid leave can bring about a lot of positives.
Supporting your team to take unpaid leave can help you:
- Retain good people (they can choose to take a break rather than walk away)
- Better manage time off in general (as you’ll have clear policies on every type of leave)
- Make informed business decisions (you can iterate your policies as you go along, in response to your real data from your own team)
- Avoid situations of unauthorised absence.
We’re a small business just like you, so we understand how nuanced the subject of unpaid leave can be. So we’ve made a Guide to Time Off to help you better understand unpaid leave and answer those inevitable questions (“How much unpaid leave can I take?, “What are the accepted reasons for taking unpaid leave?” etc. etc.)
3 top tips for your unpaid leave policy
At the end of the day, it's not just about your unpaid leave policy, but the support you offer your team when they’re faced with unexpected opportunities or challenges. So:
- Consider offering flexible working hours so your team can more easily deal with unexpected or sudden events (such as medical appointments or a sick child) — this works really well for us at Charlie
- Run decisions past your team before updating your unpaid leave policy (or any policy for that matter) and show that you value their feedback
- Train your managers to meet with their line reports regularly and identify potential issues before they escalate.
Hopefully, you’re now feeling better placed to deal with questions and requests around unpaid leave. And remember that our guide to time off is free to download and has further information to help and support you.
