Leave Without Pay: Reasons & Considerations

Andrew Buck's avatar Andrew Buck May 14, 2024

Paid time off is one of the most important benefits you can offer to employees. But how about leave without pay?

Leave without pay (LWOP) is common in a few situations, and it’s important to understand what these are. In this article we’ll explain when someone is likely to take unpaid leave, and what you need to know about managing LWOP.

Key Takeaways:

  • Cases for leave without pay include long-term sick leave, vacation days outside the normal allowance, sabbatical leave or other extended leaves of absence.
  • Leave without pay generally means the employee returns to their regular job and seniority when their leave ends.
  • LWOP is different from AWOL, which is an unapproved absence or abandonment of one’s job.

What is Leave Without Pay?

Leave without pay (or LWOP) is a temporary nonpay status, where the employee requests time off from work, with the intention to return to duty.

Employees may request time off that is your sick leave or PTO policy does not cover, or that extends past their regular compensation benefits.

Leave without pay may also take into account time off required under the Family and Medical Leave Act (FMLA), which allows eligible employees to take up to 12 weeks unpaid leave in some situations, such as emergencies or to manage health issues for themselves or close family members.

In these situations, leave without pay means the worker should be able to return to work, and not risk losing their employment.

There still needs to be a request and approval process for LWOP like other leave types, as we will discuss further below.

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Situations When Employees Might Take Leave Without Pay

Depending on the circumstance, and how much regular leave your time off policy offers, there can be a range of different situations when an employee might need leave without pay.

That is why it’s a type of leave that allows more flexibility in your policy. 

But let’s look at a couple of typical situations for LWOP, and also explain how it is different from regular unpaid time off. 

Long-Term Sick Leave

The average number of paid sick days available to an employee in the private sector in the USA, after 1 year of service, is around 6-8 days. 

For a severe illness or injury, it can take a lot longer than a week for someone to recover. The same goes if the employee’s child or family member is sick, and the employee has to care for them. This situation would require, under the Family and Medical Leave Act, a period of leave without pay where the employee can later return to work.

PTO or Vacation Days Used Up

Sometimes an employee may want a longer vacation, which extends past your company’s paid annual leave allowance.

In this case, LWOP is a matter of policy for your business. Your human resources team can decide whether you want to let the employee take an extended leave of absence, some or all of which may be without pay.

Check out the average number of PTO days for workers in the US.

Military Leave

Military leave is a good example of leave without pay. The US (and many other countries), entitles military service members to time off from work to serve (including active service, and sometimes training exercises too).

During this time, the employer does not pay the employee. However, they remain an employee, and when they return from their service, they can return to their regular position, seniority, pay and benefits.

Sabbaticals

Sabbatical is an extended leave period when an employee pursues other interests or attends to personal commitments. The leave period can range anywhere from a month to a year.

Unless you offer paid sabbatical leaves to select members of your team, you can categorize this type of a long term leave as leave without pay. 

Further Reading: Everything you need to know to create your Employee Leave Policy.

Things to Consider About Leave Without Pay

Before you decide to approve leave without pay, there are a few things to consider to make sure that someone’s absence doesn’t disrupt workflow or impact the rest of the team’s productivity.

It Needs to be Approved Like Other Leave Types

Just because you’re not paying for the time away, it doesn’t mean your employees should be able to take off from work any time they want.

You still need to get things done, and that requires people to work with each other. And a team member’s absence can severely impact workflow unless you plan ahead.

And to plan ahead, you need notice. This is why employees need to submit a leave request to HR (or their department manager) for LWOP, just like other leave types.

Requests should include details (and maybe even documents) outlining the reason for the LWOP request. 

A leave management software is typically the simplest way for employees to request leave and include all relevant details. It also makes it easier for the HR manager to review the details of the request, and manage the leave calendar in a way that increases team productivity, morale, and efficiency.

Learn More about Flamingo’s Leave Tracker: the simplest way for your company to manage the team leave calendar.

The Maximum Leave Period Allowed

You might also consider capping the maximum length of a LWOP absence.

If people start taking too much leave, even if it’s leave without pay, there will be both workflow issues and morale issues in your team.

As a rule of thumb, only approve leave without pay (especially for extended periods) under special circumstances (such as a federal law like the Family and Medical Leave Act). It might be a good idea to state a maximum period in your leave policy. 

Otherwise, if you’d prefer to allow maximum flexibility to your employees, you can look into an unlimited PTO policy

Leave Without Pay (LWOP) vs. Absence Without Official Leave (AWOL)

LWOP is very different from AWOL – absence without official leave. 

AWOL is basically when your employee stops showing up to work even though you haven’t approved leave. 

Unless you have something like unlimited PTO policy, AWOL is not something that should be tolerated – not only will it kill your workflow, but it also sends the wrong message to the rest of the team.

With LWOP, the leave request is reviewed and approved by HR, and it typically means the employee is still in good standing and that both parties expect work to resume after the leave period is over.

Should Your Business Allow Leave Without Pay?

As we discussed throughout the article, unexpected situations happen. And in these circumstances, your leave policy should be flexible enough to allow extended time off through leave without pay. 

If a team member needs additional time to care for a sick elderly parent, and they don’t have history of absenteeism, then being flexible enough and allowing them extra time is not only the compassionate thing to do, but it will also strengthen the appreciation they have for you as an employer. 

That means improved morale and enthusiasm when they come back to work. 

But if you find that too many employees are requesting LWOP, there might be underlying issues you need to address at the policy level. 

Maybe your employees are overstretched and they’re getting burned out? Or perhaps your paid time off policy is not adequate, or there is an issue of absenteeism among your staff.

If you suspect it’s the latter, take some time to evaluate your current policy and see if there is room for improvement or increased clarity. 

Andrew Buck's avatar

Andrew Buck

Andrew is the content manager at Flamingo. He has managed teams in multiple industries, for both physical and remote businesses, and has experience dealing with the ins and outs of HR and leave management on a daily basis.

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