Unpaid Leave
Time off granted to employees without salary payment, often for personal, family, or medical reasons. Policies for unpaid leave vary by company and legal jurisdiction.
Unpaid leave is authorised time off granted to an employee without salary payment. It is typically taken for personal, medical, or family reasons when paid leave options are exhausted or unavailable. Unlike paid leave, unpaid leave pauses the employee’s earnings for the duration of the absence.
In India, unpaid leave policies vary by organisation and industry. While the law does not mandate unpaid leave in most cases, certain provisions like the Maternity Benefit Act, 1961 or Persons with Disabilities Act may allow extended unpaid leave under specific circumstances. Employers often define eligibility, duration, and approval processes in their HR policies.
💬 “With Pagarai’s leave management system, we streamlined unpaid leave approvals and maintained accurate payroll adjustments.” — Kiran, HR Operations Manager
👉 Want to simplify leave management? [Get Pagarai’s leave policy and tracking toolkit →]
Common Reasons for Unpaid Leave
| Reason | Description |
| Personal Reasons | Family events, relocation, or emergencies |
| Extended Medical Leave | When paid sick leave is exhausted |
| Education | Higher studies or specialised training |
| Maternity/Paternity Extension | Additional time off beyond statutory paid leave |
| Travel or Sabbatical | Personal development or long-term travel plans |
Bonus: In India, some companies allow employees to retain benefits like health insurance during unpaid leave as a goodwill policy.
Why It Matters
- Provides flexibility for employees without burdening payroll
- Helps retain employees who might otherwise resign
- Supports work-life balance in exceptional circumstances
- Clarifies expectations through documented policy
- Aligns leave management with business continuity planning
Common Tools for Managing Unpaid Leave in India
- HRMS platforms like Keka, Zoho People, GreytHR
- Payroll software with leave deduction integration
- Pagarai HR Suite – for policy creation, approval workflows, and payroll sync
How Pagarai Helps
- Creates customised unpaid leave policies for different roles
- Automates leave requests, approvals, and payroll adjustments
- Maintains compliance with labour laws and company rules
- Tracks leave balances and impact on benefits
- Generates reports for HR and management review
FAQ
Q1: Is unpaid leave mandatory in India?
No — it is at the employer’s discretion unless covered by specific laws.
Q2: Does unpaid leave affect seniority?
Generally no — but it may affect benefits like bonuses or increments depending on policy.
Q3: Can unpaid leave be denied?
Yes — unless it is a legal entitlement under specific acts.
Q4: How does unpaid leave affect PF and ESI contributions?
If unpaid leave results in zero wages for a month, contributions may not apply for that period.
