Global HR Glossary

What is Unpaid Time Off? 

Unpaid Time Off (UTO) is when employees are allowed to take leave without pay. This option is often used when employees have exhausted their paid leave options or need time off for reasons not covered by company-paid leave policies.

Managing Unpaid Time Off

• Policy Guidelines: Clearly articulate the circumstances under which UTO can be taken and the process for approval.
• Balance: Ensure that UTO policies balance the needs of the business with the well-being of employees.
• Compliance: Adhere to any legal requirements such as those under the FMLA or other local and federal laws.

Implications of Unpaid Time Off

• Flexibility: Provides employees with flexibility in managing personal obligations.
• Cost Savings: Can save on labor costs in certain situations.
• Employee Morale: Must be managed carefully to prevent negatively impacting morale and engagement.