What is leave of absence (LOA) and what does it mean for HR?

A guide to leave of absence

Life’s full of surprises and the unexpected can often impact people’s working lives. So, being able to offer your employees a ‘breathing space’ in the form of a leave of absence (sometimes referred to as LOA) can benefit your people and your business.

Here in the UK, neither the government nor professional bodies such as the Chartered Institute of Personnel and Development (CIPD) provides a specific leave of absence definition. But when asking ‘What is a leave of absence?’, it typically refers to an extended period an employee is away from work, but they remain employed.

LOA leave might be for personal, professional, family or medical reasons. A worker’s individual circumstances will usually determine why and how long they’re absent, and how you manage their absence.

A leave of absence needs management approval and can be either paid or unpaid. A worker’s entitlement to it will usually depend on the reason for the leave, your company policies and employment laws which dictate what conditions apply.

What does a leave of absence do for employees?

LOA leave supports your workers through sometimes difficult personal situations. It provides job security and a positive work/life balance as part of the caring workplace culture you offer. It also means they don’t have to choose between life’s surprises and their livelihood.

What does a leave of absence policy do for employers?

They enable you to support your people and retain the talents of a valuable member of your team. But unplanned absences can disrupt and reduce productivity while putting the rest of your team under pressure.

An effective leave of absence policy is crucial for balancing business efficiency with employee well-being.

Types of leave of absence

Leaves of absence fall into three main categories:

Authorised absences

These include paid leave of absence, such as contractual and statutory leave, like annual, parental and educational leave. Contracts of employment, company policies and employment law usually set out the terms for these.

Sickness Absence

Short-term breaks due to minor illnesses, such as colds and flu, are the most common. However, long-term medical leave of absence due to sickness also comes under this category. Again, contracts of employment and company policies will include terms for sickness absence, but government legislation is also a determining factor.

Unauthorised Absence

This can be the most concerning for employers and includes those absences which are less easily managed. These range from repeated lateness to taking leave without approval.

A closer look at the more common types of leave of absence

As there’s no clear leave of absence definition, for simplicity we’ve broken down the typical reasons for such leave under two headings — paid and unpaid.

PAID LEAVE OF ABSENCE

UNPAID LEAVE OF ABSENCE*

* Note: whether your company pays staff for these breaks is discretionary and depends on the provisions of your contracts of employment and other company policies.

You can find more details about paid and unpaid leaves of absence, including an A-to-Z guide, here.

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Leave of absence compared to other types of leave

We’d broadly define leave of absence as …

An extended period away from a job — while remaining employed — that can be paid or unpaid, for a specific and usually personal reason, such as illness, civic duties or care responsibilities.

Annual leave is …

The statutory amount of paid time off and taken for personal rest, relaxation and enjoyment. Annual leave is calculated on a pro-rata basis for your part-time workers.

Sick leave is …

A period your employees take off from work when they’re ill. During this time, they’re entitled to Statutory Sick Pay (SSP) which is paid by your company for up to 28 weeks.

Typically, your employees don't get paid for the first three days they’re off work ill. But, again, this may be varied if your firm has a more generous contract of employment.

Time your employees have a legal right to take for a wide range of specific family-related reasons. This can be a paid or unpaid leave of absence and includes maternity, paternity, adoption, shared parental and carer’s leave.

Employer and employee considerations

What is a leave of absence policy?

The way you define a leave of absence and draw up the required policy will depend on the specific needs of your business and its employees.

Your leave of absence policy should outline your employees’ rights and their responsibilities and separate statutory paid leave from discretionary leave. We’d recommend you include these essentials:

• Provide a leave of absence definition that suits your organisation and its people
• List and define the various types of leave available to your employees:
  Divide these into two selections — paid leave of absence and unpaid leave of absence, as we’ve described above.
• Eligibility criteria:
  Make clear who’s eligible for each type of LOA leave.
• Reporting unplanned absences
  Outline the procedure for your employees to report an unplanned break, such as a medical leave of absence (i.e. illness) or a doctor’s appointment. Make clear who should be contacted first in the business, how and when.
• Request and approval procedures: 
  Give your employees clear guidelines on asking for a leave of absence — including how the approval process works and in what time frame.
• Notice of leave required:
  Set out how much advanced notice of a leave of absence is required to take time off. Highlight the actions needed in emergency or unexpected situations.
• Documentation:
  List the paperwork needed to support a paid or unpaid leave of absence request, such as a medical certificate for illness or proof of jury duty. 
• Paid, partially paid or unpaid:
  Explain what compensation will be available for the various kinds of leave and make clear any limitations or conditions. 
• Communication:
  Clarify how and when employees should contact their manager and colleagues prior to and during their time off. This is particularly important if they’re away for an extended leave of absence. 
• Return-to-work procedures:
  Outline how and what’s involved in an employee returning to work, such as notice of the leave coming to an end and return to work meetings.
• Exceptional circumstances:
  Include how you’ll treat leave of absence when unusual but significant events might prevent your people working, such as extreme weather conditions.
• Compliance:
  Ensure your leave of absence policy complies with all the UK’s relevant employment laws and regulations. 
• Impact on benefits:
  Highlight how statutory leave entitlement (such as annual leave) comes with protected benefits, while unpaid leave of absences may impact benefits, like pension contributions or private health care cover.
• Communicate, review and update
  Everyone needs to know what to expect from your leave of absence policy and what’s expected of them in return. Include it in your employee handbook and review and update regularly.

Leave of absence — what HMRC needs to know

If a member of your team takes a leave of absence — particularly an extended leave of absence — your payroll team must inform HMRC by marking that employee as having an "irregular payment pattern" in the Full Payment Submission (FPS) until they return to work. This ensures their salaries are managed correctly for tax and National Insurance contribution purposes.

You can find out more on this topic here.

The challenges of tracking leave of absence manually

Manually managing your employee leaves of absence is complex, labour-intensive and time consuming.

But that’s not all. The challenges — and risks — of doing so can result in inaccuracies, inconsistencies, inflexibility, non-compliance and a lack of actionable data. 

Worse still, if your leave of absence policy isn’t delivered fairly and transparently, it can harm employee engagement, loyalty and motivation.

Why matter — how the right software helps you manage absence

Modern absence management software can streamline, automate and speed up your whole ‘requests to approvals’ leave of absence process. They can:

• Help you maintain HR leave of absence compliance — with the accurate and fair calculations of paid and unpaid leave supported by compliance audit trails.
• Boost your employee engagement and experience — via self-service portals enabling your staff to help themselves and get their personal up-to-date information.
• Centralise and track — for a 360-degree view across every employee in the business, to improve resource planning and prevent staff shortages.
• Extract reports and trend analysis — to identify issues and pressure points for improved decision-making based on accurate, real-time data.
   

FAQs

Conclusion: the difference leave of absence management software delivers

As an employer, when it comes to managing paid and unpaid leave of absence requests, your essentials should include:

• Having a clear, fair leave of absence policy to outline the rights and responsibilities of your business and your people
• Knowing and adhering to the relevant employment laws here in the UK
• Understanding the different types of leave of absence and how some are legally protected, while others are agreed at your discretion
• Having your payroll team keep HMRC correctly appraised of employees on leave of absence

It’s complex and time-consuming to manage leave of absence requests and approvals manually. ADP’s absence management software can help you track and administer both statutory and discretionary leave.

The result is that your business remains compliant and has the data you need to enhance your operations while boosting the employee experience.

Ultimately, managing employee absences is a balancing act — agreeing to legitimate requests while making sure your productivity and profitability aren’t compromised.

You can read more about our recommended Absence Management process here.

ADP Editorial Team The ADP editorial team is comprised of human resource professionals with extensive experience solving complex HR challenges for businesses of all sizes.