Should Employers Allow Unpaid Time Off?

Updated October 2018

Unpaid Time Off can be kind of a tricky policy to navigate. For companies without a 9 to 5 type schedule, such as restaurants or hospitals, it isn’t so bad since employees can pick up and drop shifts with some amount of ease. However, professions in an office environment typically have employees who do similar jobs on the same schedule, so they have to rely on Paid Time Off (PTO) for vacations and sick days. But what happens when that PTO bank runs dry? Many factors can contribute to an employee running out of PTO. Perhaps they were a little frivolous early in the year and didn’t plan ahead, or else got ill and had to take more time off than expected. Either way, there usually comes a time when a supervisor or manager gets asked by an employee if they can take some unpaid time off. 

Simplify Time Off Requests


The first (and most obvious) benefit to allowing unpaid time off for your employees is that it saves you money. After all, you don’t have to pay the employee for work that he or she isn’t doing. This can really add up over time, and the money you save could be reallocated to a Leave Management Software that helps you process time off requests with ease. 

Offering unpaid time off also builds positive relationships with your team by demonstrating how you’re willing to work with them when necessary. Life happens, and we’ve all found ourselves stuck between a rock and a hard place. When your employees know you are willing to work with them and be flexible with their schedules, you'll increase retention rates and create a better work environment.


The biggest negative effect that can occur with unpaid time off is having employees take advantage of this policy. When abused, it can decrease productivity at work and sometimes cause a lot of a harm depending on your industry. Most of the time, employers offer an appropriate amount of PTO that helps with recruiting and retention while maintaining a high level of productivity. If employees start taking more time off, even though it’s unpaid, it can still cost your business money. Additionally, if you allow certain employees to take advantage of this but not others, things can really blow up in your face. Playing favorites is never good in the workplace, and being lax about PTO is a big perpetrator for these issues. 


If you’re leaning toward not allowing unpaid time off at all, consider the solution a former employer of mine took: I had to write a formal request for unpaid time off, explaining why I needed it and how it wouldn’t be a regular occurrence. Then it was up to my supervisor to approve it or not, and she reserved the right to use her discretion. This made me wary of asking for unpaid time off unless I absolutely needed it, even though ultimately I was never denied a request. Forcing your employees to jump through a hoop or two will make sure nobody takes advantage of your policy and allows you to make judgments on a case-by-case basis, while still being able to honestly say you offer it as a blanket policy to all employees. 

Whatever you decide, make sure you’re doing it for all your employees across the board. If you allow one employee to take unpaid time off under certain conditions, make sure all employees know they have this option available under similar conditions. 

Get a personalized demo to see how Dominion's Leave Management Software can help you customize your time off policies to exactly how you want them.  

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