Has an employee asked for extra time off to care for a loved one? Or maybe they need a long holiday. Here’s an HR guide to managing unpaid leave requests.

Life often throws up the unexpected. Employees may need to head overseas at late notice to be with family, or perhaps circumstances in their personal lives, such as divorce or illness, mean they need to urgently take time off. But what if they don’t have enough leave in their balance? 

HRM asked Alicia Mataere, Partner at Holman Webb Lawyers, to explain the legal ins and outs of unpaid leave requests.

Forefront fairness

Under The Fair Work Act, an employer must grant unpaid leave for parental leave, carer’s leave, compassionate leave, and family and domestic violence leave.

Outside these circumstances, there is no obligation to approve unpaid leave, but there are instances where an employer may grant it to avoid an unlawful discrimination claim.

“For example, where an employee is taking paid personal leave supported by appropriate medical evidence and does not have sufficient paid leave entitlements to cover that period, the employer may grant the employee unpaid personal leave,” says Mataere.

“The capacity to take unpaid leave for reasons such as caring responsibilities and health issues are all part of creating a positive and supportive workplace culture where employees are seen, appreciated and cared for.”

“A company might say their employee can take two months off – one month of annual leave and one month without pay – because they understand most people haven’t had a holiday in a very long time.” – Alicia Mataere, Partner, Holman Webb Lawyers

But employers need to be careful to treat employees fairly.

“For example, if unpaid carer’s leave for extended family [those not fitting within the definition in the Fair Work Act] is granted to one employee, employers need to be mindful that other employees will expect the same should they be in similar situations.”

Extended holidays

As borders reopen, and burnout rates are sky high after a challenging few years, some employees may need an extended holiday. Even if they’ve accrued annual leave, it might not cover the period they hope to take off.

In this situation, the business needs to weigh up the benefits and costs of denying the leave request, says Mataere.

“You might be better off letting them take leave without pay rather than risk losing them. Employers need to think about how valuable that employee is, noting that they will find it more difficult to find a replacement if that staff member leaves.

“A company might say their employee can take two months off – one month of annual leave and one month without pay – because they understand most people haven’t had a holiday in a very long time.”

Read HRM’s guide to denying someone’s annual leave request.

Denying an unpaid leave request

An employer can deny an unpaid leave request, but Mataere says this is rare and usually occurs when there are underlying problems, such as performance issues.

Also, in some instances, a request to take unpaid leave to pursue studies may be unreasonable. The issue is when the study “has no correlation to the business and/or the employee is requesting an unreasonable amount of time”.

“The employee might be missing in action for seven weeks of the year, and who is picking up that slack?”

In all instances of unpaid leave, businesses need to engage in forward planning. For example, consider engaging a contract worker or temporarily bringing in an employee from another team on an internal secondment.

Mataere says organisations shouldn’t shy away from having frank conversations.

“Ask someone how long they plan to take off and anticipate if that’s realistic. If somebody is going through a life-altering event, such as cancer treatment, and they only ask for a month off, that’s unlikely to be enough time.

“Even if they do come back after a month, they probably won’t return full-time, so think ahead to fill that gap and support them. What changes can you make within your team to try and cover it?” 

This article was first published in the August 2022 edition of HRM Magazine.

If you want to get better at having difficult conversations at work, sign up for AHRI’s short course on the topic. Sign up for the next session on 18 October 2022.