All You Need to Know About Unpaid Time Off

Time off is an important part of an employee’s professional life. If managed properly, it can reap numerous benefits for both the employer and employees. 

Companies can choose to give paid or unpaid time off depending on their values, culture, and legal requirements.  

In this piece, we will discuss all aspects of unpaid time off. You will learn how to create an unpaid time off policy, its benefits and how to manage it successfully. 

Let’s begin with finding out what unpaid time off is. 

What Is Unpaid Time Off?

Unpaid time off is one of the two types of leaves that is not compensated by the employer and is taken for a short period of time. Employees take unpaid time off for several reasons such as:

• A short break from work
• Recover from an illness 
• Tend to the needs of their dependants 
• For voluntary work
• To carry out jury duties 
• To participate in a professional development course or event 
• Attend a funeral 
• Medical appointments 
• When relocating or moving houses 

Some companies have unpaid time off instead of or in addition to paid time off. In the former case, companies are not legally bound to pay for the leave taken. For the latter, an employee can only take unpaid time off when their paid time off balance has been completely exhausted.  

In the United States, paid time off is a benefit linked to tenure while unpaid time off in certain cases needs to be provided due to federal laws. 

Before offering unpaid time off to employees it is important to understand the legal obligations surrounding it. 

Rules for Unpaid Leave

• The FMLA requires employers with a staff of 50 or above to give unpaid time off. 
• The federal law requires employers to give unpaid time off on designated holidays such as Memorial Day or New Year’s. 
• Employees who attend jury duty have to be given unpaid time off. Some states such as Massachusetts, Nebraska, and New York require employers to give a paid time off in this case. 

How to Apply for Unpaid Time Off?

Once you decide to include unpaid time off in your company, you need to define the process that employees must follow. You should develop a policy to help employees on how to apply for time off, how far in advance they should apply, the duration of the leave, and whether two people in the same department can request time off at once. 

Employees should follow the process below:

• Employees’ requests for unpaid time off in a written form within the specified notice period. The request is either made directly to the manager or the supervisor. Employees must follow the procedure defined in the policy to avoid any delays. 
• Once the request is submitted, the supervisor discusses it with the HR or department head. The discussion is based on whether the reason for taking a leave is reasonable enough and its impact on the business. 
• Now, it is up to the manager to approve or deny the request.
• In the case when leave is approved, the employee has to ensure that all the duties will be covered in their absence. 

Unpaid time off leaves is only approved when accrued time has been completely used up. However, exceptions exist in the following cases:

• Disability leave 
• Parental leave 
• Leave under FMLA 
• Paid Family and Medical Leave of absence 
• Leave related to sexual assault or domestic violence 

To avoid confusion, you must include all these aspects in the policy. Let’s move on to discuss what all should be included in an unpaid time off policy. 

How To Apply For Leaves Using AttendanceBot 

It’s a simple process to apply for leaves using AttendanceBot. As an employee, you just have to type ‘Apply’ and the bot will give you certain leave options to choose from such as a vacation or sickness. The bot will also ask you for other details like the date and duration of the leave. Once you are done filling in the details, you just have to confirm it and your manager will get notified instantly. 

As a manager, you will get a notification once an employee applies for leave. Without having to deal with long email threads, you can approve leave in just a click. 

What Does Unpaid Time off Policy Include?

It is important to have an unpaid time off policy that employers and employees can refer to as and when needed. Having a policy in place prevents the business from decreased productivity and saves costs that result from increased absenteeism. It also speeds up the process of handling leave requests. 

The policy should cover the following points:

• If your business offers both paid and unpaid time off, then there has to be a separate policy for each.
• Which employees, full time or part-time or both, can avail the leave
• The number of days for which an employee can be on leave
• A proper procedure that employees must follow when requesting time off
• Specify if there is any cap for unpaid time off
• If employees can take unpaid time off whether or not they have exhausted all their paid time off days
• How employees’ day of absence will be tracked 

Tip: Keep track of your employees’ days of absence, hours worked and schedules using AttendanceBot. It provides a hassle-free way of knowing who all are on leave in one particular and in a given week. 

Unpaid Leave Benefits

Unpaid time off is a tricky policy to navigate. Companies that do not follow a 9 to 5 schedule such as hospitals and restaurants, offer some flexibility to employees. Employees can take up or drop shifts as per the need, securing some time off for themselves. However, in an office setting, employees have to be present on the same work schedule. Thus, employers make it a point to include paid time off in their internal policies. 

But what happens when employees run out of paid time off leaves? Well, in that case, managers have to make some room for unpaid time off. And there is no harm in doing so because it comes with its own set of benefits. Let’s find out more about them. 

• Saves the company’s money that can be allocated to other resources or projects.
• Helps build strong, long-lasting relationships with employees.
• Employees, when allowed flexibility, feel they are taken care of resulting in lower absenteeism and increased retention. 
• Employees return to work with increased morale and a fresh mindset. 

However, there are certain disadvantages to unpaid time off as well such as: 

• Employees may take undue advantage of the policy 
• If the policy is abused, it can reduce productivity and cause financial harm to the business.

So, to prevent unpaid time off abuse, we have come up with a simple solution for you. 

Specify the following points to your employees:

• The reason for taking unpaid leave has to be serious
• It is up to the manager’s discretion to approve the leave or not
• No employee will be favored over another

How to Successfully Manage Unpaid Time off in Your Company?

The four main components of managing unpaid time off are processing leave requests, time off accrual, tacking absence, and detailed analysis. Follow the key rules below for better results:

• Use a simple straightforward calendar to keep track of employee schedules and absences. It is even better to use digital calendars as it allows one to edit as and when required. 
• Try making the process of creating and approving leaves as seamless as possible. Consider using software like AttendanceBot that simplifies the process of creating and approving leaves. It rids you off a long thread of emails and literally takes seconds for a manager to approve requests. Moreover, AttendanceBot keeps a track of employees on leave which comes in handy when you want to schedule shifts. 
• Try to automate the process of approving leave requests. Avoid getting into manual calculations as it consumes time and resources. Use software like AttendanceBot to streamline the process. 
• Finally, you may want to keep track of the number of absences and reasons for the leave. You can analyze all of the above using AttendanceBot. The software extracts detailed information in the form of CSV reports. Isn’t it much simpler than managing things manually? AttendanceBot will save you time that you can use in analyzing and predicting workforce capacity, absenteeism and come up with ways to improve time off management. 

Sign up for a free trial and manage unpaid time off hassle-free. 

What Is a Leave of Absence?

A leave of absence is the permission for employees to take a short break from work. It could either be paid, unpaid, mandatory, or voluntary. 

Unpaid vs Paid Leave of Absence

There are two types of leave of absence: paid and unpaid. When on a paid leave, employees continue to receive their normal pay whereas, on unpaid leave, employees receive no compensation from their employers. 

According to the FMLA, employers have to give some time off to the employees so that they can take care of their personal issues. However, federal law doesn’t mandate them to pay. 

Some employers chose to grant paid time off for a set number of hours while others allow employees to accrue the paid leave based on how many hours and days they work. 

In case of unpaid leave, if the reason for taking a leave comes under FMLA then the employer must guarantee that the employee’s job will be protected. 

When Is a Leave of Absence Legally Protected?

A leave of absence is legally protected in the following instances:

Jury Duty 

The law in the USA mandates time off for jury duties. However, it is up to the employer if they want to pay the employee during this period. In case they do, the employer must specify the duration for which the employee will get the money. 

Military Duty 

According to USERRA, the employer must provide employees with unpaid leave to perform military duties. It also ensures that employees can maintain their health insurance coverage while they are off from work. 

Voting 

Some jurisdictions mandate employers grant time off when employees have to cast a vote. However, whether it will be paid or unpaid depends on federal or state regulations. You will have to do the research for your state. 

How Does a Leave of Absence Work?

When applying for a leave of absence, employees must notify their employer well in advance. So as soon as an employee discovers the need to take unpaid time off, they should inform their employer right away. This is because it will give the manager some time to make arrangements for employees who can cover.  

It is a good idea to approach the manager face to face but communicating in writing is also doable. In either case, employees must provide an explanation about why they need time off and when they plan to return to work. 

As a basic courtesy, employees should inform their co-workers before going on leave if they are picking up their slack. It is even better to inform customers or vendors who they can contact in their absence. 

Examples of Paid Leave of Absence 

Some leaves of absence are mandatory and must be granted and paid by the employers: Examples include;

• Military duty 
• Jury duty 
• Medical 
• ADA leave 

Personal Leave of Absence Policy

An unpaid personal leave of absence policy is granted to full-time and part-time employees for personal reasons. Is it at the discretion of the employer to grant it or not. 

Provisions 

• Unpaid personal leave can only be requested once all other leave balances have been fully used up. 
• The company should keep the employee’s position open for the duration of unpaid leave. If the employee decides to extend the duration more than what was initially decided, they will be entitled to apply for reemployment for the same position. 
• The employee will continue to receive health benefits for a period of unpaid leave. 

What Is the Procedure for Returning From Unpaid Leave of Absence 

• An employee on personal unpaid leave has to notify the employer at least two weeks before returning to work. 
• Once the employee receives this notification, they have to make arrangements for the employee to resume their role, if available. 
• If the previous position is not available, then the employer may consider the employee for other positions but only when and as they are available.
• If no positions come up, the employee will remain on unpaid leave until a new position opens up. However, if no opening shows up within 60 days, the employee will no longer be on unpaid leave. Instead, the status will change to voluntary termination.