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.