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What is Unpaid time off (UTO)?

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Unpaid time off (UTO) is time away from work that employees are allowed to take, but will not be compensated for. UTO differs from paid time off (PTO) because unlike PTO, employees aren’t given their normal wages for unpaid time off.

What are the downsides to unpaid time off?

Because they’re not paid, employees may be hesitant to take unpaid time off when needed, which can affect their motivation, morale, and investment in the company.

Additionally, unpaid time off can:

  • Financially harm employers- employees seek other jobs if they need to take time off, but can’t afford the salary reduction from an UTO policy.
  • Impact employees’ career growth- taking a lot of unpaid time off may prevent employees from getting raises or earning promotions.
  • Affect benefits- depending on the business’s benefits, taking unpaid leave can compromise health care, pension, and other benefits.

What are the benefits to UTO?

Unpaid time off policies are often viewed as part of a company’s employee benefits package, as UTO gives them more flexibility and a better work–life balance. It also:

Gives employees more control over their time- offering unpaid time off lets employees choose between working and earning money or taking time off without compensation. In general, employees have more room to choose what works for them.

UTO can save the company money- If an employee takes UTO, they’re not paid, meaning businesses pay them less in payroll than they would if the employee used PTO.

What is the difference between unpaid time off and leave of absence?

A leave of absence is when an employee has permission from management to take time off from work for an extended period of time. The leave can be paid, unpaid, mandatory or voluntary depending on the employee’s circumstances.

Should employees ask for UPO?

Unpaid time off is common in most organizations. There’s nothing wrong with an employee asking their manager for extra time off as needed, but it’s always good to have a clear plan for getting the work done regardless of the time off.

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