Unpaid Leave: Guide for Employers

Unpaid leave is where an employee takes time off from their job without receiving their usual pay.

Unlike statutory leave entitlements, such as annual leave or sick leave, unpaid leave is generally agreed between the employer and employee. Common reasons for unpaid leave include emergencies, caring responsibilities, extended travel, or personal commitments.

For UK employers, offering unpaid leave requires careful management to avoid potential legal and operational risks. While there is no automatic legal right to unpaid leave, exceptions exist for specific situations, such as parental leave, time off for dependants or sabbaticals.

This guide summarises the rules on unpaid leave and the employment law risks employers need to be aware of.

 

Can an employer require an employee to take unpaid leave?

 

In some circumstances, an employer can require an employee to take unpaid leave, but only where there is a section in the employee’s contract of employment expressly providing for this. It is called ‘laying off’ and occurs where the employer does not have enough work for the employee to do, so asks them to stay at home.

If an employee is laid off for more than four weeks in a row, or six weeks in a thirteen week period where no more than six weeks are consecutive, they will be entitled to consider their employment contract to be terminated and to apply for a redundancy payment. In order to be eligible for a redundancy payment, the employee will have to have two or more years of continuous service with the employer.

An employer can also suspend an employee from work on medical grounds, i.e. require them to stay at home for a medical reason, under section 64 of the Employment Rights Act 1996. However, if you do this, you have to pay the employee for a period not exceeding twenty six weeks. If you provide the employee with work to do at home, then they will no longer be considered to be on medical suspension.

 

When can an employee take unpaid leave?

 

There are, broadly, three categories of unpaid leave:

 

• Unpaid leave that you have to grant by law
• Unpaid leave that you have to consider by law
• Unpaid leave that is entirely discretionary

 

An employee must be allowed to take unpaid leave in the following circumstances:

 

• Selection for jury service
• Where they are a magistrate, reasonable time off to carry out their duties
• To deal with an emergency involving a dependent
• To spend time with a child under 18 (known as parental leave), subject to certain conditions being met
• Following the death of a child or stillbirth, eligible parents can take to weeks of statutory bereavement leave, paid at either £184.03 a week or 90% of the individual’s average weekly earnings (whichever is lower).
• Under the Carer’s Leave Act 2023, employees are entitled to one week (five working days) of unpaid leave per year to provide or arrange care for a dependant with a long-term care need. This right is available from the first day of employment.

 

Unpaid leave that you have to consider by law:

 

• A request for training or study under section 63D of the Employment Rights Act 1996.

 

Unpaid leave that is at the employer’s discretion:

 

• A career break or sabbatical
• Appointments with the doctor or dentist (unless the employee is pregnant in which case you have to allow paid time off for ante natal appointments)
• Bereavement leave (except for statutory bereavement leave for parents)

 

In some cases, usually as a goodwill gesture, the employer may opt to allow the employee the time off work and still pay them, even when they are not legally obligated to. For example, some employers still pay individuals on jury service, notwithstanding that the law requires only that they be given time off work and it does not have to be paid.

 

How many days unpaid leave is an employee entitled to?

 

The number of days of unpaid leave to which an employee is entitled depends on whether or not you are obliged to give the time off in the first place.

 

When the employee is not entitled to take unpaid leave

 

In the case of unpaid leave that is entirely discretionary, you can decide whether to give this leave at all and if you do, how much.
It is strongly recommended to have a policy in place clearly setting out your employee’s rights, because it is not set out in law.

For example, your organisation might have a policy on unpaid leave that includes a right for an employee with over ten years of service to apply for a career break of up to twelve months in length. This can be a real incentive to retain good people.

You can choose whether an employee on a career break retains any rights under their employment contract, for example to a pay increase. However, a year is a long time, so the policy needs to make clear that there could be no job for the employee at the end of their career break, and that they have no rights to sue you in this scenario.

The same policy should also cover an employee’s right to time off for doctors’ and dentists’ appointments. You may decide to allow one of each per year, for example. It is up to you, based on the needs of your organisation.

In the case of compassionate leave, this can be set out in a policy, but could also be left to managerial discretion. It is possible that if you do not allow paid time off for compassionate reasons, an employee may visit their GP to be signed off sick, if your company’s sick pay is more generous.

 

When the employee has the right to take unpaid leave

 

In the case of time off that you have to grant by law, again, the reason for it will be the key.

For jury duty, you will have to allow the employee to be off work for as long as they are required to serve as jurors. Employees who are also magistrates will need to be off work for at least 13 full days or 26 half days per year. It is not obligatory to pay your employees during this time, but many employers do.

In the case of other public duties, such as being a local councillor, a member of a prison visiting board, or a school governor, you are required to allow a ‘reasonable’ amount of time off. It should be agreed with your employee in advance. If you feel that the amount of time off that the employee has requested is unreasonable, in light of its affect on your business, you can refuse the employee’s request. Again, it is not obligatory to pay your employees when they are carrying out their public duties, but most employers do. It is important to note that some categories of workers, such as the police and agency workers, cannot take time off for public duties.

Employees who need time off to care for a dependent in an emergency are allowed a reasonable amount of time for this purpose.

Examples of a family emergency include a child’s accident at school and disruption to care arrangements. It is generally considered that 1-2 days will be adequate for this.

 

Can an employer refuse a request for unpaid leave?

 

There are situations in which the employer has the right to refuse to allow the employee to take unpaid leave. These are:

 

• Career break or sabbatical: Employers are not legally obligated to grant requests for career breaks or sabbaticals. Such leave is typically discretionary and should be addressed within the company’s internal policies.
• Medical appointments: Employers are not required to provide paid or unpaid leave for routine medical or dental appointments, employers may choose to accommodate such requests, but it is not mandated by law, except for pregnant employees, who are entitled to paid time off for antenatal appointments.
• Bereavement Leave: While there is no statutory entitlement to bereavement leave for most employees, employers are encouraged to have compassionate leave policies in place. However, parents who suffer the loss of a child under 18 are entitled to statutory parental bereavement leave, which provides up to two weeks of leave.

 

An employer can also refuse a request for unpaid leave in the case of family emergency or to carry out public duties if they consider that the employee would then be taking an unreasonable amount of time off.

An employer can also refuse unpaid leave for study and training purposes where it does not consider that the training would benefit the business and where it would not be able to meet customer demands if the training were granted. To be eligible to make the request in the first place, the person must be an employee with at least 26 weeks of service and work for an organisation with over 250 employees. If you do decide to grant time off for study or training it can be paid or unpaid, and you can choose to pay for the training itself, to contribute to it, or to pay nothing at all.

 

Unpaid parental leave

 

Unpaid parental leave is Under the Employment Rights Bill introduced on 10 October 2024, unpaid parental leave has become a ‘day one’ entitlement. This means employees are now eligible for unpaid parental leave from the first day of employment, removing the previous requirement of one year’s continuous service.

In order to apply for unpaid parental leave, the employee must be the child’s parent or have parental responsibility. Agency workers and contractors do not have the right to apply for parental leave.

The employee’s right is to 18 weeks of unpaid leave for each child up to the age of 18. The right is connected to the child and does not restart when an employee starts a new job. For example, if an employee took eight weeks of parental leave in their previous job, they have ten weeks remaining to take in their current or future role.

A parent can take a maximum of four weeks of leave per year, in one or two week blocks, although the employer may agree to vary these amounts if it wishes.

The employee must give you 21 days’ notice of the intended start date of their parental leave, and also tell you when the date that the parental leave will end.

It is possible for you to delay the start date of the parental leave, but you cannot change the length of the leave requested by your employee. If you do wish to delay the start date, you must suggest a new start date which must be within six months of the original start date, and reply to your employee within seven days of receiving the request.

You cannot postpone the employee’s parental leave if it would take them beyond their child’s eighteenth birthday and result in them losing their entitlement. Nor can an employer postpone the parental leave if they do not have a ‘significant reason’ for doing so, and if the request is made by a father or partner immediately after the birth of their child.

In the case of all applications for unpaid leave, the process can be complicated. Therefore, it is highly recommended to have a policy in place setting out the employees’ rights in your organisation. This should prevent employees from misunderstanding their entitlements, whilst appreciating the flexibility that you show as an employer.

 

Need assistance?

 

If you are concerned about the use of unpaid leave, whether asking your workers to take time off work unpaid or if an employee has submitted a request, we can help if you need guidance on the rules and implications for your business. Our team of employment lawyers are on hand to answer your questions.

 

Unpaid leave FAQs

 

What is unpaid leave?

Unpaid leave refers to time off work where an employee does not receive their usual salary. It is usually agreed upon between the employer and employee.

 

Do employees have a legal right to unpaid leave in the UK?

Employees do not have a general legal right to unpaid leave unless it falls under specific situations like parental leave, time off for dependants, or statutory leave entitlements.

 

When can unpaid leave be taken?

Unpaid leave is typically taken for personal reasons such as caring for dependants, emergencies, extended travel, or other commitments that don’t qualify for paid leave.

 

How long can unpaid leave last?

The duration of unpaid leave depends on the agreement between the employer and employee or the terms set out in company policies.

 

Do employees accrue holiday during unpaid leave?

Holiday entitlement usually continues to accrue during unpaid leave, but employers should clarify this in their policies and agreements.

 

Can an employer refuse a request for unpaid leave?

Employers can refuse requests for unpaid leave if it disrupts business operations or does not meet the company’s policy requirements.

 

Does unpaid leave affect employee benefits?

Unpaid leave may impact benefits such as pensions, sick pay, and bonuses, depending on company policy and the length of the leave.

 

Can unpaid leave be used for emergencies?

Unpaid leave can be used in emergencies under the right to time off for dependants, but the duration must be reasonable and agreed upon with the employer.

 

Is unpaid leave the same as parental leave?

Unpaid parental leave is a statutory right for eligible employees to take time off to care for their child, while other unpaid leave is agreed at the employer’s discretion.

 

Should unpaid leave agreements be documented?

It is best practice for employers to document unpaid leave agreements to avoid misunderstandings and ensure clarity for both parties.