Unpaid Leave | Meaning and Definition

What is Unpaid Leave?

Unpaid leave is defined as time off from work during which a worker keeps their employment but is not paid.

Unpaid leaves diminish an employee’s work time, days, weeks, or months and vary based on the employer’s demands. Companies frequently use a rotating furlough system, in which employees take their unpaid days at various points throughout the month. Another option is to implement unpaid leave all at once, spanning a few weeks or months.

In the event of a company failure, requiring employees to take an unpaid vacation can:

  •   Reduced costs
  •   Remove the need to hire new people.
  •   Keep existing employment safe.
  •   Maintain the business’s viability till the economy recovers. 

Unpaid leave has concerns that HR directors should be aware of:

  •   Employees who find work elsewhere
  •   Work progress and momentum are disrupted.
  •   Reduces the motivation, engagement, and productivity of the remaining workers.
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