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Unpaid Time Off

Why It’s Worth Offering Unpaid Time Off

#worklifebalance #hrbestpractices #goodhrpolicies June 9, 2023

Why It’s Worth Offering Unpaid Time Off

Unpaid time off may not sound like much of an offer. After all, who wants the opportunity to not get paid? However, don’t underestimate its value to potential and current employees – and, subsequently, its importance to your company. 

Especially in the wake of the pandemic, flexibility is key for many workers. And their choices about where to work and how long to stay hinge on offers of flexibility.

We’ll go through the benefits of unpaid time off, how to field the challenges, and how dealing with it proactively rather than reactively can really benefit your business. 

Unpaid Time Off Basics

Unpaid time off has a fairly straightforward definition: it is any amount of time taken by an employee when they would normally be doing something other than work. 

To be less abstract about it, here are some common examples:

  • Sick days – if a company doesn’t offer paid sick days

  • Parental leave – in many states, the best or only option for new parents is to take off a few months without pay (which merits a whole other discussion in another blog post)

  • Medical leave – similar to parental leave above

  • Bereavement leave – again, taking time to attend to an important life transition

  • Furlough – this stipulates that an employee is taking unpaid time off, but they retain their benefits with the company

  • Sabbatical – much longer breaks from work, spanning months or years, which are not necessarily unpaid, but they can be

Keep in mind that, legally, FMLA requires employers of a certain size to give employees 12 weeks of unpaid leave. If your company grows enough, you may be compelled to create a UTO policy.

How Could This Be Advantageous to Employees and Employers?

From a short-sighted perspective, unpaid time off can look like a loss. The employee loses wages, and the employer loses productivity. 

It’s mainly from the vantage point of the bigger picture that unpaid time off starts to shine. What it provides is a sort of “release valve” for an employee who wants to stay at a company in the long-term – but they need a break, for whatever reason. 

For instance, let’s say an employee has long dreamed to visit another country to delve into their family tree, and they want to do so while certain relatives are still alive. Such an endeavor might need 3-4 weeks (or more) of their time. 

If their company is inflexible and replies to their request with “No, you only have two weeks of PTO, and that’s it,” the employee may find themselves in the position of having to choose between an important aspect of their life and work. The employee may choose their life goal and quit the job in order to take off several weeks – planning to figure out new employment later. 

Now, that company has lost more than a few weeks of this employee’s contributions. They have to go through the hiring and training process for a whole new person, with the hope that this person won’t quit when they need more than two weeks off.

Lacking an unpaid time off policy can also create untenable situations when ill health strikes. If an employee tests positive for COVID for 10 days, and they’ve already used all their PTO for the year, are you going to require them to come into work? Are you going to write them up for absences? 

Neither seems fair, humane, or healthy for the individual worker – or your workplace as a whole. Targeting an employee with rigid disciplinary actions for attendance when it’s better for them to stay home breeds resentment. Again, look at the big picture. Prioritize retainment over rehiring.

We’ve gone through scary examples. Now, let’s iterate the opposite. Let’s say an employee wants to work reduced hours (which is a form of unpaid time off) in order to take a coding course for a semester. Their company agrees to this arrangement for 3 ½ months. At the end of that time, the employee returns to working full-time hours – and they bring a new skill to their position! 

Not only has the company retained an employee and avoided costly rehiring  – they’ve grown the happiness and value of that employee’s productive contributions. This helps create a lasting work relationship.

To summarize, offering unpaid time off can help retain employees and grow your company with these benefits:

  • Time to attend to important life events, needs, and desires, increasing goodwill in the employer-employee relationship

  • Burnout prevention or recovery

  • Room for education and skillset growth in your workforce

  • Allowance for sick days – greater health and wellness/reduced company-wide sickness

  • Flexibility for major transitions, like parenthood and bereavement – employees feel like they can live their life and keep the same job

Proactively Structure Unpaid Time Off

It’s best to decide how your company wants to handle unpaid time off before employees ask for it. You can create a policy and include it in the employee handbook and orientation. You can even explain some of these benefits so that potential hires understand why they should choose your company over one that doesn’t offer unpaid time off.

Now, how to structure your UTO policy? Consider these factors:

  • How will you manage payroll during UTO for salaried vs. hourly employees?

  • Will you place a cap on UTO or offer unlimited UTO? 

  • How will the number of unworked hours affect your company’s output and bottom-line?

  • Will you limit the number of employees taking UTO concurrently?

  • What is your plan for covering employee tasks and responsibilities when they take UTO?

Addressing these questions ahead of time will help make transitions from regular work hours to UTO smooth for the employee taking the time and their team. 

Ready to Add Your Own UTO Policy?

Putting together a UTO policy that benefits both your employees and your business can feel daunting – but you don’t have to do it alone. If you are considering offering unpaid time off to your workforce and want some guidance on best practices, the Lynch Law can help.

Reach out today for a free consultation.