Unpaid leave - Advantages and disadvantages for employees and employers

Publication date: 14 May 2023

From the following article employers and employees can learn useful information about unpaid leave, in terms of definition and provisions of the Labour Code, as well as the procedure by which it can be obtained. In addition, the advantages and disadvantages of unpaid leave for each party will be consulted, as well as some useful tips for dealing with the situation properly.

Contents:

1. What is unpaid leave + Labour Code when it comes to unpaid leave

1.1. Definition of unpaid leave + duration of unpaid leave

1.2. Labour Code provisions on unpaid leave - is the MTA suspended?

1.3. Procedure and model for obtaining unpaid leave

2. Advantages and disadvantages of unpaid leave for employees and employers

2.1. Advantages and disadvantages of unpaid leave for employees

2.2. Advantages and disadvantages of unpaid leave for employers

3. Advice for employees and employers on unpaid leave

1. What is unpaid leave + Labour Code when it comes to unpaid leave

Work is a stressful, energy- and time-consuming activity. For this reason, the state has introduced provisions in labour law allowing for time off from normal work. This period, known as leave, can be of several types, such as paid rest leave, maternity or sick leave and unpaid leave.

1.1. Definition of unpaid leave + duration of unpaid leave

Unpaid leave is defined as that variable period of time during which the employee does not actually participate in normal work activities, but can carry out his or her own activities as desired. Unpaid leave differs from rest leave primarily in that the employer does not pay the employee's salary for the duration of the leave.

Secondly, the two types of leave differ in duration. While in the case of rest leave the period is limited to a certain number of days per year (in most cases 21 days per year), in the case of unpaid leave there is no minimum or maximum period laid down by law, the duration being determined by agreement between the two parties, either by means of a collective or individual employment contract.

1.2. Labour Code provisions on unpaid leave - is the MTA suspended?

The Labour Code is the legislative document that regulates relations between employees and employers. The part dealing with the issue of unpaid leave is represented by Articles 153, 154 and 155. The main conditions contained in these articles regarding unpaid leave are as follows:

• All employees in Romania, whether employed by the state or privately, are entitled to unpaid leave. The employer may not unjustifiably refuse to grant this right unless he proves that the absence of the employee could mean a serious problem for the company. Otherwise, the refusal is considered to be an abuse.
• The duration of unpaid leave is determined either by the collective agreement or by the company's internal rules. In the case of state employees, unpaid leave is limited to 90 working days per year in certain circumstances and more than 90 days in other circumstances.
• During the period of unpaid leave, the employment contract is suspended and no salary benefits are obtained. However, for three months the employee will be covered by the public health insurance system, even if payments to this fund are not made.

1.3. Procedure and model for obtaining unpaid leave

The legislative documents specify the steps to be taken in order to obtain a period of unpaid leave. This involves the employee who will submit a request and the employer who may approve or reject it under certain conditions.

Thus, an employee who wants to study, take care of their health or that of their loved ones or who wants to carry out various personal projects must submit an application at least one month before the start of the period. The application form is available on the internet. The application must also specify the start and end dates of the leave and the reasons for it. For example, if the reasons are medical, the employee can provide documents justifying the need for time off work.

The employer receiving such a request is obliged to consider it properly. It is normally only permissible to refuse approval if the economic operator's activity would be genuinely endangered in the absence of the employee concerned. Otherwise, the law considers this unjustified action an abuse and may punish it. After approval of the application, the suspension of the individual employment contract (CIM) is mandatory, with salary benefits being stopped for the whole period. In practice, the employer must register the unpaid leave in Revisal.

2. Advantages and disadvantages of unpaid leave for employees and employers

Unpaid leave is a common form of leave because it offers some additional advantages over other types of leave. It is true that this form of time off also comes with some disadvantages. Both in terms of benefits and problems arising are important from the point of view of employees and employers.

2.1. Advantages and disadvantages of unpaid leave for employees

The Labour Code allows state or private workers to apply for and obtain the right to receive unpaid leave. The advantages of these forms are quite significant, as evidenced by the large number of applications submitted each year in various fields of activity:

• Flexible time management, depending on personal or family needs. Normally, the free time of employed people is quite limited, which does not make it possible to achieve objectives that require a longer period of dedication. Paid leave is limited to a few dozen days a year and often not enough for a significant personal project. So people who want to study for a new qualification, or who want to devote their time off to travel or building a house, can take the form of unpaid leave if the duration is significantly longer.
• Unpaid leave offers the opportunity to deal with difficult personal or family issues, such as caring for a family member.
• Many of today's jobs are exhausting and stressful. A period of unpaid leave can bring well-deserved rest and eliminate stress or burnout.

Unpaid leave comes with some disadvantages. Obviously, the most significant of these is the absence of income during this period. Another undesirable situation may be related to career advancement problems. Often, such absence from work can mean missed opportunities.

2.2. Advantages and disadvantages of unpaid leave for employers

Although it seems counter-intuitive, employers can also benefit from offering employees the opportunity to take unpaid leave. At first glance, leaving an employee for an extended period of time can be problematic for a company, but studies have shown that it can make a decisive contribution to employee satisfaction and loyalty. They will appreciate the understanding and remain loyal employees. Flexibility in managing the workforce can also be an advantage.

As for the disadvantages for the employer, the main problem is that of additional operational costs and sometimes the difficulty of hiring another specialist for the period when the worker is absent. The situation can be adequately addressed by using specialised HR and payroll firms, which have many potential candidates in their portfolios that are easy to integrate. In addition, these firms also offer additional services related to the granting of unpaid leave, such as accounting consultancy and administrative services, which relieve the employer of work.

3. Advice for employees and employers on unpaid leave

The period of unpaid leave brings many challenges to both parties involved in this employment relationship. In order to manage this situation effectively, experts have some useful recommendations for employers and employees. The former should pay attention to the following elements:

• Establish a clear internal policy on how to obtain unpaid leave, its maximum duration and the criteria for granting it;
• Communicate openly and transparently with all employees on the subject;
• Comply with labour law on unpaid leave;
• Have a clear procedure in place for replacing the workforce on unpaid leave. In this respect a collaboration with a human resources firm is essential to get access to experienced and qualified workforce at any time;
• Show empathy for the needs of employees;
• Offer alternative options if the employee's work is indispensable, but they simply need extra time off. For example, instead of unpaid leave, offer flexible working hours, either part-time or remote;
• Monitor and improve this working relationship on an ongoing basis by identifying measures that can make it easier in the future;
• Submit the request for unpaid leave to the accounting department for amendment in Revisal.

Employees who are on a financial break or who want to take unpaid leave in the near future should consider some useful tips:

• Plan ahead as far as possible to get unpaid leave. Although the law specifies that the minimum period for giving notice of intention is one month, it is advisable for the employer to find out about it well in advance so that the necessary steps can be taken to continue working normally;
• To save the money needed to comfortably get through the period when he will not take the salary. The amount can be determined by calculating the minimum monthly expenses multiplied by the number of months he will be on unpaid leave;
• Discuss with your employer about financial benefits or flexible working hours. For example, you can work reduced hours, either fewer hours per day or intermittently on and off;
• Reduce expenses by giving up extravagant habits, such as expensive trips abroad, buying luxury goods or dining at expensive restaurants;
• Identify additional income options through freelancing, which can be done when there is unused downtime;
• Maintain communication with the employer to keep abreast of changes in the company and to ensure that when they return to work they can carry out their work without difficulty;
• Find out about the various support programmes offered by governmental or civil society organisations. In many cases, these bodies offer social assistance programmes to help people in financial difficulty.

If these tips are heeded by both parties, it can help turn a potential labour dispute into a mutually beneficial period. Both the employee and the employers can benefit, but it is mandatory, firstly, to comply with the Labour Code legislation on this approach and, secondly, to understand each other's situation.

In conclusion, unpaid leave can be an opportunity for personal development or to solve pressing personal problems. Although there are some drawbacks, employees and employers can benefit from addressing the situation properly.

*This material has been prepared for information purposes only and is not intended to provide tax, legal or accounting advice. We recommend that you consult with your tax, legal and accounting team before making any decisions on the topics mentioned in this article.