Everyone
Leave without pay
Employees can take leave without pay if their employer agrees. This agreement should be recorded in writing.
What is leave without pay?
When an employer allows an employee time off work but does not pay them for this time. Also known as ‘unpaid leave’. Any person, whatever their age, who is employed by an employer to do any work for hire or reward under a ‘contract of service’ (commonly called an ‘employment agreement’).
When employees might take leave without pay
Employees are not automatically entitled to take leave without pay – it’s not an entitlement in law.
Employees can take unpaid leave if their An individual or organisation that hires 1 or more employees and contracts them to work in exchange for wages or salary under a ‘contract of service’ (commonly called an ‘employment agreement’). A written document setting out the terms and conditions of employment agreed by the employer and employee (also known as a ‘contract of service’). It can include other contractual documents and agreements made by the employer and employee. Every employee must have a written employment agreement.
Employees might consider requesting a period of leave without pay, for example:
- if they do not have enough
annual holidays to cover the time they want to take off workPaid time away from work for rest and recreation.
- if they do not have enough
sick leave to cover a period of illness or injuryPaid time away from work that eligible employees can take to care for themselves, their partners or children, or other dependants.
- for study leave
- for a sabbatical
- if they cannot take
parental leave orTime an employee who is having a baby or becoming the primary carer of a child under the age of 6 can take off work to care for their child. There are 4 main types of parental leave: primary carer leave, partner’s leave, extended leave, and negotiated carer leave.
negotiated carer leave .Unpaid time off work that an employee who is having a baby or becoming the primary carer of a child under the age of 6 and who does not qualify for primary carer leave can take to care for their child.
If they take time off work without their employer’s agreement, this is unauthorised leave and could result in disciplinary action.
Taking more than 1 week of unpaid leave
If an employee takes a continuous period of more than 1 week’s unpaid leave (not including unpaid Paid time away from work that eligible employees can take to care for themselves, their partners or children, or other dependants. Paid time away from work that gives an eligible employee time to grieve and to take care of matters if someone close to them dies. It can be taken at any time and for any purpose relating to the bereavement. Paid time away from work that eligible employees can take if they, or a child who lives with them, are affected by family violence.
- the date they become entitled to annual holidays (their anniversary date) moves out by how many extra weeks (more than 1) of unpaid leave they took. The employee will have to wait longer before they become entitled to annual holidays, or
- they can agree with their employer that their anniversary date stays the same. This changes the calculation for annual holiday pay. This option can be easier for employers to manage in their payroll system.
If the anniversary date stays the same
The employee still gets their annual holiday entitlement after 12 months if their anniversary date stays the same. However, when they take holidays, the extra unpaid leave they took (the amount that exceeds 1 week) is not counted in the calculation for 1/52 of an employee’s gross earnings for the 12 months up to the end of the last pay period before they take annual holidays (or however many weeks they’ve worked if it’s under a year).
When calculating AWE, reduce the divisor (the number of weeks gross earnings are averaged over) by the number of whole or part-weeks of extra unpaid leave taken. Do this every time you calculate AWE until the unpaid leave was taken more than 52 weeks ago.
For example, if an employee takes 3 weeks of unpaid leave, you reduce the divisor by 2 (the amount more than 1 week) to 50 weeks instead of 52.
Examples of taking more than 1 week's leave without pay
Oliver started working for Michael on 1 February. In November he asks Michael if he can take leave without pay for 2 weeks (10 working days for Oliver) and an additional 2 days, as he is not entitled to any annual holidays yet and needs the time off to study for a course. Michael agrees but explains that it will affect Oliver’s entitlement for annual holidays. Oliver says that that’s okay with him, and he takes the leave without pay. Michael moves Oliver’s anniversary for annual holidays entitlement out by 1 week and 2 days to 10 February (the first week of leave without pay does not affect annual holidays entitlement).
The following year Oliver wants to take leave without pay for another 2 weeks. Michael decides to ask him if he wants his anniversary date for annual holidays to stay the same this time. Oliver agrees to this, and they record their agreement in writing so that there are no misunderstandings. When Oliver takes annual holidays a few months later, Michael calculates Oliver’s average weekly earnings by dividing his gross earnings by 51, not 52, because he agreed not to move Oliver’s anniversary date for annual holidays.
Public holidays and other leave during a period of leave without pay
When an employee is on unpaid leave, they will generally not get paid for:
- a public holiday
- sick, bereavement or family violence leave.
This is because the employee was not going to be at work, so they’re not entitled to paid leave.
The exception to this is when an employee is on unpaid leave because they’ve run out of sick, bereavement or family violence leave. If a public holiday:
- falls while they’re on unpaid sick, bereavement or family violence leave, and
- is on a day they would usually work (an otherwise working day)
they are entitled to payment for the public holiday.
Clarifying and recording leave without pay
Any agreement about unpaid leave should be recorded in writing.
For unpaid leave of more than 1 week, employers and employees should agree in writing what happens to the employee’s anniversary date so that everyone is clear.
Keeping a record of what was agreed helps avoid any confusion later.