Companies could cut wage bills by as much as 8 per cent by allowing staff take unpaid leave, according to accountants KPMG.

Such a measure would not only lower overheads in a period of tough trading but could also provide an alternative to layoffs, seasonal or otherwise, it suggested.

By allowing workers four weeks' unpaid leave, a company with a €100 million annual wage bill could save €8.3 million in salary and PRSI contributions, according to a KPMG study.

But care should be taken not to unduly alarm or demotivate staff and to ensure that remaining workers are capable of and willing to take up the slack, the report warns.

Mr Raymond McKenna, people strategies director at KPMG Dublin, said unpaid leave offered many benefits to staff and management.

"Unpaid leave is just one of many flexible working options that companies can adopt to 'flex' their workforce. It needn't just be an alternative to redundancy - it could be offered to staff in companies that have seasonal 'quiet' periods. It needn't be positioned in a negative light - it could be a great opportunity for staff to travel, acquire new skills or spend more time with their family," Mr McKenna said.

"Unpaid leave gives companies the flexibility to manage headcount and maintain the skills of its workforce and, at the same time, making savings on the payroll bill.

"It is an innovative alternative to making staff redundant, which in itself can impose very heavy financial costs."

Internationally, unpaid leave has become increasingly popular, said Mr McKenna.