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Leave Without Pay

Published 17 Mar 2021

A common misconception we see repeated, usually from staff, is that to take leave without pay (LWOP) is their right, or that employees should be allowed to take time off work for extended periods when they need, providing they don't expect payment. It is not.

Unless you have an explicit clause in your Employment Agreement which outlines this ability, staff are contractually stipulated to continually work their hours unless they wish to apply for one of the mandated leave options, of which unpaid leave is usually not one.

Unpaid leave has to be agreed to by both parties and is usually reserved for very special circumstances only. If an unpaid leave request doesn't suit the employer they can simply decline it. If the employee persists in taking that leave it is unauthorised absence and should be dealt with in line with your disciplinary process.

If the employer does agree to it, it's important to note it doesn't change anything around the employee's status or terms and conditions of employment regardless of the length of leave. When the employee returns they should continue in the same role under the same terms as before.

If a company faces a restructure challenge at a point when staff are away on leave for any reason, whether paid or unpaid, they need to include the absent staff in the change management process if it affects them in any way.

LWOP over 1 week

In the situation where an employee takes more than 1 week of unpaid leave, that is not unpaid sick or bereavement leave, their anniversary date of employment may move out by the number of days taken minus 1 week. This means the date their entitlement to leave moves forward by that much.
The employer and employee can however agree to keep the anniversary the same but change the calculation for average pay.
In this case, when calculating average weekly earnings for annual holidays later in that year, the divisor would be 52 (weeks) minus the number of weeks (or part weeks) over one week that the employee was on leave without pay. You are strongly recommended to record this in writing if you choose to do this.

Entitlements during periods of LWOP

If an employee is away for an agreed period of LWOP (other than LWOP for sick or bereavement) that period is considered 'not an otherwise working day'. Therefore they are not entitled to other types of leave (sick or bereavement) during this period nor do they qualify for a Public Holiday if one should fall within that period.