Sometimes personal life responsibilities can affect your employees. It might be kids, a poorly pet, or elderly parents requiring assistance—so, they may have to take time off work.
And if there’s no offer of paid time off for these purposes in their employment contract? Then they’ll have to take unpaid time off work. That’s also if they can’t take annual leave.
So, what should your business policy be towards this?
Before we take a look, here’s a quick update that we’ve added a section to this guide about COVID-19 and how it affects unpaid leave.
We have a coronavirus resource hub, too, if you’re in need of help during this stressful time. You can call us on 0800 470 2432—we provide expert support.
What is unpaid leave in the UK?
It’s where your employees have no statutory right to pay during time away from work.
Normally, you’ll provide staff with a set amount of annual leave. It’s a legal requirement. It’s a minimum of 5.6 weeks a year—statutory holiday entitlement.
Unpaid leave rights laws are set out in the Employment Rights Act 1996—there, you’ll find plenty of general guidance.
But the best choice you have is to make it clear what your unpaid leave policy is in your company handbook and contracts of employment.
This is ultimately down to your choice as an employer. Keep in mind the Employment Rights Act 1996 does allow eligible employees to take a “reasonable” time off. Such as with parental leave.
You can refer to our employment law advice for further assistance with this.
Who can be on unpaid leave?
Any employee within your business can take unpaid leave.
The reasons for taking unpaid leave
Employees may need a random day off. And they have some entitlement to unpaid leave—so long as it’s a “reasonable” request.
There are lots of developments in anyone’s life that can lead to it. For example:
- Unpaid parental leave: Eligible staff can take this to look after a child—there’s a 21 day notice period they have to provide you with. They should also confirm the start and end date for that period. However, do note unpaid paternity leave isn’t the same—paternity leave shouldn’t be unpaid (the same for maternity). You should keep the following in mind, too:
- Parents have a maximum of four weeks' leave per child. They can take that during a year.
- And they can only take parental leave in blocks of a week—or multiples of a week. That’s unless it’s required to care for a child who qualifies as disabled, in which case you can let staff take time off in blocks of days—but you don’t have to only do so.
- Public duties: This may be an individual who’s a magistrate, member of a local authority, or a board of prison visitors.
- Jury duty: If you don’t allow for this, it can result in a fine—or even contempt of court.
- Time off for dependants: This is time to take off to deal with emergency situations involving a dependant. UK law is specific about what a dependant is. These are a:
- An individual regarded as part of the family (but not tenants, boarders, lodgers, or employees).
- An individual who relies on an employee if there’s an emergency.
- Healthcare appointments for childbirth: Certain appointments relating to pregnancy and childbirth are a statutory right for staff. However, it’s unpaid leave for fathers or partners—but, mothers receive pay for this.
- General healthcare appointments: Check ups and dentist trips aren’t statutory rights, however, so the employee will have to make personal time to attend these. Your business can provide certain time allocations to help with this, allowing them opportunity to attend during the working week.
Some businesses may look to offer it as it develops a positive company culture. As it’s a flexible working option, it’s popular with employees looking to improve their work-life balance.
There’s also compassionate leave. That’s in the event of a death in the family, you may want to offer time off to an employee to grieve.
That’s a statutory right for employees who lose a child under the age of 18. Or suffer a stillbirth after 24 weeks. They can, by law, take parental bereavement leave—and they’ll receive pay from you for that.
You can either pay for this or not—it’s your business’ decision.
Finally, we have an unpaid sabbatical. If it’s a business policy you have, an employee can request extended time off. You can view this as a “career break”.
This is up to you as an employer as there’s no employee rights to make this compulsory.
Unpaid leave due to coronavirus—employee rights
Following the outbreak of coronavirus, many employers are now dealing with difficult situations.
But it’s important to remember your employees still have the same rights as they did before the pandemic.
However, certain situations can come up where you need clarification.
For example, if your employee doesn’t want to come into work. That may be because of concerns about coronavirus.
If that happens, you can try to arrange with your employee to take unpaid leave—or holiday time off. You’ll need to provide suitable notice to the member of staff if you decide to do this.
Adequate notice is twice the normal amount as the leave they’ll take. So, if it’s one week of leave, you must provide two weeks of notice.
If an employee requests voluntary unpaid leave, you don’t have to accept. But it’s an option worth considering in these complex times.
Can an employer force an employee to take an unpaid leave?
Forced unpaid leave isn’t possible. As an employer, you must provide your member of staff with adequate notice.
You can enforce paid annual leave. But you can’t enforce unpaid leave, that’s unless you want to lay off staff.
So, forced unpaid leave isn’t possible—employees don’t have to agree with your request. And they may make a claim for unlawful wage deduction if you go ahead with your plans.
Obviously, during coronavirus, you may want to force employees into leave with no pay.
If that’s the case, keep in mind the UK government’s Job Retention Scheme is there to provide a financial helping hand.
You can furlough staff, who’ll receive 80% of their monthly income. So, consider this over forcing them into leave with no pay.
Does annual leave accrue on unpaid leave?
Yes, employees on unpaid leave will continue to “accrue” (the business term) statutory annual leave.
That’s 28 days annually, which includes the standard bank holidays.
Unpaid parental leave
If you have an eligible employee, they can take this. It allows them to look after their children.
Younger children in particular can require a lot of support, so parents may need to take unexpected time off to look after them.
Common examples for unpaid parental leave include:
- To improve their work-life balance.
- Consider new primary or high schools.
- Look for new childcare.
During this, their employment rights are still in place. That includes the:
- Right to pay.
- Right to return to their job.
About unpaid sick leave—with coronavirus advice
Statutory sick pay (SSP) has a qualifying period of four days—these must be in a row, otherwise the employee won’t be able to claim SSP.
So, for the first three days of sickness an employee won’t receive pay.
That’s, unless you offer pay as part of your business for a sick day. Employees don’t qualify for it if they’ve had the total amount of SSP—that’s 28 weeks.
Or if they’re already on statutory maternity pay.
Also keep in mind that, if employees are self-isolating because of coronavirus symptoms (or they’re living in a house where someone has coronavirus), then they can claim SSP from day one.
Clarifying unpaid holiday
There’s no such thing as unpaid holiday leave. If an employee has used all of their paid holidays, they can request unpaid leave from you.
It’s up to you as a business whether you allow them to take the time off. You have no legal obligation to agree.
Buying annual leave VS unpaid leave
You can set up a scheme to allow holidays to buy more holiday days, if you want.
The Work Time Regulations 1998 allow 5.6 weeks’ annual leave—with pay. That includes bank holidays.
To be clear, you can’t let staff sell holiday days to go under that 28 day minimum limit.
However, you can offer a policy where they buy more. This is, of course, at the cost of the employee’s wage. But you can’t allow a situation where an employee’s income is below the National Minimum Wage.
You’ll need to establish your policy and make it very clear to staff how to go about buying holiday days.
Normally, you’ll have a request system so you can review each “order” as it comes in. If you expect staff to make a request a month before the intended day off, then this provides you with enough time to process it. As in, accept or decline.
You can then make a salary adjustment during payroll to receive the money back. A deduction from the employee’s wage of the working day(s).
Another option is to have a flexitime system, where employees accrue additional hours inside their working day.
And then, when they have the equivalent of a full working day, the can take a full day off—with pay.
If you permit this once a month, it could provide employees with the work-life balance improvements they require.