Leave without pay is exactly what it sounds like, a situation in which an employee takes time off from work without being paid. This is contrasted with paid days off, such as vacation or sick days, and is also contrasted with being actually laid off or put on indefinite leave. It is generally assumed to be a temporary condition, although it may occur regularly on a set schedule, for a number of reasons. In contracts and technical documents, it may be simply abbreviated as LWOP.
As the economy weakens, many companies turn to leave without pay to make up budget shortfalls. Although in the long run, having employees taking time off may mean less productivity and a downturn, in the short run, it may be necessary if there simply aren’t the funds to continue paying employees for their full-time work. The hope is generally that as the temporary situation improves, employees will no longer be asked to take days off without pay, making for a seamless return to the way things were before the downturn.
In this way, this type of leave can be viewed as an alternative to laying off employees or reducing full time employees to part time. Leave without pay accomplishes much the same thing, but does it in a less demanding, less permanent way. It is also generally less traumatic for employees to be asked to take a few days off every month than it is for them to be told their hours are being cut, or that they are being laid off until the company recovers.
Employees may also request to take leave without pay, depending on their personal situation. In jobs that don’t include vacation time or sick leave, an employee may take leave as a way to travel or if they are unable to go to work. Or an employee may have already used up their paid leave days, and still find themselves in need of time off. In this case granting the leave is at the discretion of the company, and of course depends entirely on the circumstances of the business and the role the employee plays.
Governmental organizations generally have policies in place that handle this leave when it is requested by employees. Usually, various agencies are able to handle within their departments individual requests for leave, but there are some situations in which an employee may be guaranteed this type of leave. These situations depend on the organization, but may include veterans in need of medical treatment, employees who have a period of service in the uniformed services, or during some family and medical emergencies.
Political institutions may also use mandatory leave without pay as a way of handling budget shortfalls. For example, in February 2009, the state of California found itself with a massive budget shortage, and so ordered all employees to take two days of leave without pay each month. This meant that a range of government offices, from the Department of Motor Vehicles to the Governor’s emergency services office, were closed. Although generally objected to by government employees, it offered an immediate and easy way for governmental bodies to save desperately needed funds in a time of crisis.