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'Decision-Making Leave': A Process to Cut Turnover and UI Costs

Employers are required to contribute to their state unemployment insurance (UI) tax fund. On the plus side, this is one of the few taxes that business managers and owners can control.

Employees who are discharged for reasons that cannot be classified as “for justified cause” result in an escalation of the employer’s UI tax contribution rate, adjusted annually. A discharged employee will qualify for unemployment benefits unless the employer can demonstrate, with acceptable documentation, that the employee was discharged “for cause” rather than leaving “at will.”

Unfortunately, there are employees who didn’t understand or claim to have misunderstood the company’s expectations. Often these employees are not aware of just how fragile their continued employment has become. In these instances, an effective way to take emotions out of the situation is by providing a "decision-making leave"—with or without pay—allowing employees to decide if they want to continue to work for the company, given the standard of performance or behavior that is expected.

Consistently documenting the process by which employees are given a decision-making leave can reduce turnover rates and help control UI taxes.

A decision-making leave can provide documentation
that an employee was discharged “for cause.”


One Last Chance

In most cases, once the decision is made to terminate an individual’s employment there is little that can be done to alter it. By this point, the decision has turned into an emotional response: The manager has had enough and the employee has to go.

The decision-making leave provides employers with one last chance to outline what's expected of employees and what they need to do to avoid termination. It enables employees to explain that they understand their failings and provides a final opportunity to commit to positive change or face termination.

As part of this process, the employee is required to demonstrate they understand the process by:

Submitting in writing that they understand the steps they must take in order to keep their job.

Submitting in writing that they understand the consequences of continuing not to meet the employer's expectations going forward.

Businesses spend much time and money training employees. If a company can pull a wayward employee back from the brink of termination through a decision-making leave, it could save thousands of dollars in training expenses while reducing turnover—and UI taxes.

Once the errant employee is asked to participate in the decision-making leave process, one of three things will happen:

The employee decides that he or she does not want to comply with the process. This employee has left voluntarily and will not be eligible for UI benefits.

The employee returns to work but will not be able to live up to the commitment outlined in the decision-making leave documentation and is subject to termination. The employee made written commitments that acknowledged his or her understanding of the consequences, including termination, and can be discharged for cause without qualifying for UI benefits.

The best result: the employee finally understands what is expected to remain employed and follows through on the commitments made as part of documenting the decision-making leave process.

These scenarios will help employers to control their state UI tax rate, whether the departing employee stays or goes.

A Successful Employer Appeal

Here's an example of how the process works: An employee was suspended and placed on decision-making leave and asked to complete paperwork spelling out the commitments required to remain at the job. The employee returned to work without completing the required forms and was fired immediately.

The former employee then filed for, and was awarded, UI benefits. The employer appealed, and the administrative law judge reversed the original decision based on the fact that the employee had been required to go through the decision-making leave process and understood what was required to be reinstated but had failed to follow through.

The former employee’s refusal to complete the process was ruled to be insubordination, and the discharge was found to be "for cause." The employer's UI account was spared the $10,500 claim that had been approved originally. In this case as in a number of others, the decision-making leave process proved to be one of the best ways for employers to manage their UI costs.

The decision-making leave process is an excellent tool for saving trained employees who want to be saved and retooled into productive workers. On the other hand, if employees refuse to make the necessary commitment, they will most likely have to endure being unemployed without UI benefits. The employer reduces its UI costs either way.

Randall Barker, SPHR, is vice president of human resources at A Plus Benefits and has been involved in HR for over 20 years. He is a certified employment law specialist (CELS) and has extensive experience with the U.S. Equal Employment Opportunity Commission (EEOC), having successfully managed more than 80 discrimination claims for clients during the past 14 years.

Decision-making leave paperwork and instructional information can be obtained by contacting the author at

Related Articles:

Is ProgressiveDiscipline a Thing of the Past?, SHRM Online Employee Relations Discipline, January 2010

Designing a ProgressiveDiscipline Policy, SHRM Online Employee Relations Discipline, January 2010

Discipline: The Fine Art of Documentation, SHRM Online Employee Relations Discipline, February 2010

Related Resource:

Progressive Discipline Policy and Procedure, SHRM Sample Policies

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