Having a clear understanding of no-pay leave or unpaid leave entitlements can benefit both employers and employees. Despite having strong and transparent employment regulations, unpaid leaves are typically not governed by Singapore’s Employment Act.
Managing unpaid leaves has the potential to become a flash point – especially as local employees increasingly prefer flexible work arrangements (FWA). Underscored by the thumbs up given by the Government to FWA, requiring employers to process all flexi-work requests since December 2024.
Read Also: Complete Guide To Unpaid Infant Care Leave For Working Mothers And Fathers
What Is Unpaid Leave (Or No-Pay Leave)?
Unpaid Leave and no-pay leave are commonly used interchangeably. They refer to approved leaves that employees take beyond their paid annual leave entitlements. Since unpaid leave is typically not governed in Singapore, it can be for any reason, including a sabbatical, education, personal emergencies or caregiving responsibilities for loved ones.
One instance where unpaid leave is mandatory for employees is the Unpaid Infant Care Leave (UICL) entitlements – which grant up to 12 days of unpaid leave for parents who have infants under the age of 2 years old.
Moreover, the Tripartite Standard on Unpaid Leave for Unexpected Care Needs also specifies that employers should have a caregiving leave practice. The suggestion is for employees to be offered up to 4 weeks of unpaid leave per year if their child is below the age of 2 and is either born preterm, with congenital conditions, or as part of multiple births. It also encourages employers to provide up to 2 weeks of unpaid leave per year for employees to care for immediate family members who are hospitalised or after hospitalisation.
Unpaid leaves must be approved by employers, and appropriate deductions can be made from the employee’s salary. Therefore, it is important for employers to keep a record of all leave approvals, whether paid or unpaid.
Employees cannot simply not show up for work, even if they are willing forego pay. According to the Ministry of Manpower (MOM), if an employee is absent from work for more than 2 working days continuously without approval, they are considered absent without leave (AWOL) and would have breached their contract. The employee must pay salary-in-lieu of notice to the employer, and employers are not required to encash any annual leaves.
Read Also: Complete Guide To Understanding Annual Leave Entitlements In Singapore
Why Should Employers Have An Unpaid Leave Policy?
Employees may want to take unpaid leaves for a range of personal reasons which may include the mandatory requirement to use up to 12 days of Unpaid Infant Care Leave (UICL) or under the Tripartite Standard on Unpaid Leave for Unexpected Care Needs.
Furthermore, employees who have worked for less than 3 months are not entitled to paid annual leaves under the Employment Act or the UICL. Employees may also use up their paid annual leave entitlements before the end of the year, and find that they require more for personal reasons.
Including unpaid leaves in an HR policy will provide more assurance and clarity that they can get time off if they require it. For employees who want to apply for UICL, it is also an entitlement they have. Employees may also be using it for caregiving needs.
Employers can consider establishing an application process, outlining the eligibility criteria, approval process, duration limits and documentation requirements.
Providing unpaid leaves, especially for reasons supported by the government can position companies as a progressive employer with strong and fair employment practices. Employers will have the exclusive right to use the Tripartite Standards logo in publicity and recruitment materials.
Read Also: 17 Types of Leaves Offered By Singapore Companies (Statutory And Non-Statutory)
How Many Days Of Unpaid Leave Are Employees Entitled To Take?
Beyond the up to 12 days of Unpaid Infant Care Leave (UICL) entitlement, unpaid leaves are not statutory requirements. As such, unpaid leave entitlements are usually established by individual employers.
Employers can also take reference of the Tripartite Standard on Unpaid Leave for Unexpected Care Needs, providing between 2 weeks and 4 weeks of unpaid leave for caregiving needs for hospitalised loved ones and newborns who may need more attention (highlighted above).
Beyond any HR policy in place, it’s safe to assume that employees are less likely to take unpaid leave frivolously and employers can consider requests more compassionately – they may really need the time off.
Does Unpaid Leave Count As Service?
According to the Employment Act, the period that the employee is granted unpaid leave will be “disregarded for the purpose of computing the period of continuous service”.
This will impact other things, such as pro-rating an employee’s annual leave entitlement during the year. For example, an employee is entitled to 14 days of paid annual leave and takes 4 days of unpaid leave, 2 in March and 2 in April.
The number of pro-rated annual leave he will have from 1 Jan to 30 April is:
(3 completed months ÷ 12 months) X 14 days of paid annual leave = 3.5 days
How To Calculate Salary Of Employee Who Took Unpaid Leave In The Month?
Employees who take unpaid leaves are considered to have performed an incomplete month of work – similar to if they started working mid-way through a month.
MOM has outlined the method to calculate the salary for such employees – using the formula:
[Monthly gross rate of pay X Total number of days you worked in that month] ÷ Total number of working days in that month
For example, an employee’s monthly gross rate of pay is $4,000, and he works 10 days in May. In this scenario, he has taken 11 days of unpaid leave in May (which has 21 working days).
[$4,000 X 10] ÷ 23 = $1,739.13For greater understanding on how this works, you can use the calculator provided by MOM for salary computations for an incomplete month’s work.
Read Also: How To Calculate Leave Encashment Or Salary-In-Lieu Of Notice Period For Your Employees
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