Unpaid Leave Requests: Guidance for employers

What are your obligations when you receive a request for unpaid leave?

In the course of employment, situations may arise where an employee requests time off without pay. Consistent with people seeking more flexibility from work, we are seeing that unpaid leave requests are becoming increasingly common, whether for family reasons, travel, further study or personal wellbeing.

What is unpaid leave?

Unpaid leave refers to a period when an employee is away from work without pay but remains employed. It can be statutory (i.e. required by law) or discretionary (i.e. agreed upon between employer and employee).

If a request for unpaid leave is a statutory entitlement the employee’s right to take this leave is protected by law meaning, provided eligibility conditions are met, you cannot unreasonably refuse it or penalise employees for taking it. Examples of statutory unpaid leave include parental leave, time off for dependants, carer’s leave, and leave for public duties.

Alternatively, if a request for unpaid leave is not a statutory entitlement, you have a choice whether or not to grant unpaid leave at all, and if so, how much. You must, however, still consider all requests fairly and consistently. Not doing so could lead to poor employee relations and morale, internal grievances, potentially constructive dismissal claims, if refusal is handled poorly and subsequently the employee resigns, or even allegations of discrimination if decisions appear to treat people unfairly based on protected characteristics.

Non-Statutory Unpaid Leave

Outlined below are some common examples of non-statutory unpaid leave requests. 

1. Medical appointments

There is no legal right for an employee to take time off for routine medical or dental appointments, unless they are unfit for work. Any time off for such appointments (whether paid or unpaid) is at your discretion, unless the employee’s contract contains specific rights.

The exception to this is that pregnant employees are entitled to paid time off for antenatal appointments. Furthermore, where a medical appointment is required due to a disability, the obligation to make reasonable adjustments may be triggered.

2. Career Break (aka Sabbatical)

A career break can either be a form of unpaid leave (during which the employment relationship continues) or a temporary break in the employment relationship altogether with the expectation of resuming employment on the same terms (so far as practicable).

There is no legal right to a career break.

Where an employee requests a career break to deal with a family issue, depending on the circumstances and amount of time they anticipate being away, parental leave or annual leave may be more appropriate than a career break. This is something you should be aware of and discuss with the employee where appropriate.

Given the number of factors that arise for consideration in relation to a career breaks, if you wish to offer your employees this opportunity it is strongly advisable to have a policy in place and to set out any agreed arrangements in writing.

3. Training / Study

Employees in companies with 250+ employees have a limited statutory right to request time off work to undertake study or training, but it does not have to be granted or paid. For smaller employers it is entirely discretionary.

When considering a request for time off from training or study, a factor in your decision making will likely be whether the training adds value to your company, alongside whether the time off can be balanced with operational needs.

The process to follow after receiving an unpaid leave request

When you receive an unpaid leave request, whether statutory or discretionary, it is important to adopt a fair approach and follow a process.

1. Check eligibility – Check whether the request falls under a statutory right and if so, refer to your associated internal HR policy, or if in doubt contact us at RELA.
   
   Alternatively, if the request is for discretionary unpaid leave, check if your Staff Handbook includes relevant rules or guidance and if so, familiarise yourself with this before proceeding.

2. Meaningful consideration –If the request is for discretionary unpaid leave, don’t automatically dismiss it. It will likely be important to the employee for them to be willing to receive less pay. Assess whether you can reasonably accommodate the request without significantly impacting business operations. Avoid unjustifiably refusing a request. 
   
   
3. Respond promptly – Preferably you should meet with the employee to explain your decision and if agreeing to the request, discuss arrangements for the leave period. Additionally, it is advisable to follow-up in writing, particularly if you are denying or postponing a request.
   
   
4. Document decisions – Keep a record of the request and your response, including your rationale.
   
   
5. Be mindful of consistency – Follow your internal HR policies and consider any precedents set by similar decisions you have in the past. Taking these steps will reduce the likelihood of employees becoming aggrieved should you refuse a request. 

Unpaid leave tips

How you respond to unpaid leave requests speaks volumes about your company’s culture. Below are our main takeaway tips in relation to unpaid leave.

• Include the details of statutory unpaid leave entitlements and conditions clearly in your Staff Handbook.

• Develop a clear unpaid leave policy outlining procedures for requesting time off and how decisions are made.

• Train line managers to handle requests sensitively and in line with your company policies and statutory legal obligations.
  
• Seek to balance business needs with a supportive workplace culture. Accommodating unpaid leave requests where you can help maintain good employee relations.
  
• When denying discretionary unpaid leave, offer alternative solutions or compromise where possible.
  
  

Unpaid leave can be a valuable tool for employees, but it requires careful handling by employers. It is important to understand your obligations in relation to unpaid leave, both statutory and discretionary, and to keep in mind that adopting a fair and people focused approach demonstrates that you truly value your employees, beyond their immediate output. By creating clear policies and communicating openly, you can manage unpaid leave in a way that supports both employee wellbeing and business continuity.

For further guidance on responding to unpaid leave requests, a template to follow, or implementing an unpaid leave policy please do not hesitate to contact a member of our team.