What is a leave of absence? All you need to know

Whether you want to build morale, entice new talent, increase retention, or show employees you care, a fair and thoughtful leave-of-absence policy can be a game changer. You’ll build loyalty and watch retention soar.

Here, we’ll explain what a leave of absence is, guide you through the different types of leave (paid versus unpaid options), and help you craft a plan that keeps your team happy, healthy, and productive. 

What is a leave of absence?

A leave of absence is any instance where a worker takes extended time away from their job, but it differs from traditional paid time off (PTO). Typically, PTO policies cover more common scenarios (like illness or vacation) for shorter periods (like a week or two). A leave of absence usually refers to an extended period during which an employee can’t work for an extreme reason, like childbirth, military service, a medical emergency, or taking on a role as a full-time caregiver. This leave may or may not be paid.

There are different types of leave for different reasons, and PTO laws vary depending on location. Some reasons for leave are protected by law, but businesses looking to stand out often extend their offerings beyond the legal minimums to motivate employees. They may provide longer leaves or broader reasons, like a sabbatical. 

Types of leaves of absence

Not all absences are treated the same. Someone taking a personal leave of absence to tour the world, for example, would be taking voluntary leave, while an employee who needs an extended medical leave of absence beyond their allotted sick days would be taking protected leave. 

Many types of leave exist, but the two main types of leave are protected (or mandatory) and voluntary.

Protected leave 

This includes absences covered by federal, state, or local law. The most common protected reasons in the United States come from federal laws, like the Family and Medical Leave Act (FMLA). Under federal rules, workers may take time off to:

• Care for or bond with a child, including an adopted child
• Serve as a caregiver for a family member in need of medical help
• Recover from or deal with an ongoing medical condition
• Observe religious holidays
• Serve on a jury (protected by the Jury Systems Improvement Act)
• Serve in the military, National Guard, or emergency reservists (including FEMA)
• Care for a family member who’s a current military service member (they can use up to 26 weeks of leave)

Additionally, unions or industries may have their own rules, and companies are free to add more time or reasons as benefits.

Voluntary leave 

This type of leave refers to absences that arise from circumstances employers choose to accommodate, often because it helps attract potential talent and boost morale. For example, Microsoft provides unlimited PTO and time off for mental health reasons, while Patagonia offers paid childcare leave and sabbaticals. Other reasons for voluntary leaves of absence might include:

• Time to move houses or relocate to a city closer to work
• Time to complete higher education or certificate training, thereby trading work days for a more skilled employee
• Non-federally protected family emergencies, including the death of a loved one

The benefits of allowing extended time off

As an employer, you may be anxious about someone asking for time off. But just because an employee hands in a time-off request form doesn’t mean they’re quitting. In fact, offering employees a break before they burn out completely can help you retain talent.

Consider this: An employee who’s too stressed to work benefits neither the team nor themselves, especially if taking time off means risking their job. Offering an extended break with guaranteed job security gives them time to recharge and saves you the valuable time and resources required to train new workers.

Paid vs. unpaid leave of absence

In addition to understanding the difference between protected and voluntary time off, it's also important to consider whether these leaves of absence are paid. 

The short answer is often yes. Paid leaves of absence protect workers’ well-being by maintaining their regular pay, similar to sick leave. Companies may offer paid leave for job-related education, bereavement, or emergencies. This demonstrates the employer’s commitment and attracts top talent. 

Although paid leave is typically a voluntary company incentive, some U.S. states require payment for specific reasons. Unpaid leave is more common and is the primary focus of the Family and Medical Leave Act. The benefit of unpaid leave lies in the assurance that an employee’s position will be waiting for them when they return.

Family and Medical Leave Act

Since 1993, private employers in the U.S. with at least 50 employees have been required to provide leave under the Family and Medical Leave Act. This act entitles employees to 12 weeks per year of unpaid, job-protected leave with their usual health benefits during qualifying life events. To be eligible for FMLA leave, employees must have worked at the company for at least a year and have put in a minimum of 1250 hours.

Sabbaticals

Once reserved for academia, sabbaticals are now common in many industries, from biotech to fast food. 

Typically paid and lasting around a month, though lengths can vary (Intel offers up to eight weeks), sabbaticals allow employees to take an extended break while their colleagues cover their responsibilities. This helps other team members grow and build redundancy within the team. Upon returning, employees bring renewed experience and enthusiasm to the office. Sabbatical programs provide committed employees with a valuable incentive and something to look forward to.

How to create a leave of absence policy

The basics of a well-crafted leave of absence plan are straightforward:

• Adhere to laws: First and foremost, ensure compliance with all applicable laws. You must honor the FMLA in the U.S., but state and local regulations also matter. For global companies, considering international regulations is crucial.
• Do your homework: Research your industry competitors. Are they offering unlimited vacation or leave for continuing education? Find out the current industry standards for leave, which may have evolved in recent years. Don't assume that offering leave is unaffordable; many companies recoup the costs through increased employee retention and productivity. Analyze the numbers based on actual leave usage.
• Foster a healthy workplace culture: A leave policy only benefits your company if employees use it. Foster a culture where time off is normalized. Employees who never see their manager take leave may be afraid to do so themselves. While it may look better in the short term, this approach can lead to burnout. Encourage time off to truly reap the benefits of your leave policy.

Boost retention with a competitive leave policy

Showing your staff you care is a universal virtue, and a comprehensive leave-of-absence policy is a key component in demonstrating that commitment. It fosters a supportive work environment that drives long-term success, no matter where your employees are based. By offering flexible and thoughtful leave options, you'll help boost their satisfaction, reduce turnover, and build a loyal, motivated team. With Oyster, you can seamlessly implement and manage these policies across your global workforce.

Discover how Oyster's global employment platform can revolutionize how you attract, hire, and retain top talent in more than 180 countries while ensuring compliance with local regulations.

About Oyster

‍Oyster is a global employment platform designed to enable visionary HR leaders to find, engage, pay, manage, develop, and take care of a thriving distributed workforce. Oyster lets growing companies give valued international team members the experience they deserve, without the usual headaches and expense.

Oyster enables hiring anywhere in the world—with reliable, compliant payroll, and great local benefits and perks.