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?

If their employer agrees, an employee can spend time off work without being paid. Typically, the employee will return to the same position, with the same terms and conditions (unless the employee and employer agree otherwise). Leave without pay can affect an employee's payment and entitlement in some situations.

Annual holidays

When employees might take leave without pay

Employees are not legally entitled to take leave without pay – they can only do so if their employer agrees. This could be part of their or could be negotiated at the time leave is taken.

They might, for example, consider requesting a period of leave without pay:

  • if they do not have enough annual holidays to cover the time they want to take off work
  • if they do not have enough to cover a period of illness or injury
  • for study leave
  • for a sabbatical
  • if you cannot take parental leave or negotiated carer leave.

If they take time off work without their employer’s agreement, this is unauthorised leave and could result in disciplinary action.

Disciplinary process

Taking more than one week’s unpaid leave

If they take a continuous period of leave without pay of more than one week (not including unpaid sick or unpaid ), their anniversary date for entitlement to annual holidays moves out by the amount of unpaid leave taken (not including the first week). This means they become entitled to their annual holidays later each year from then on.

Their employer, however, may agree that their anniversary date for annual holidays entitlement remains the same.

If they take two periods of leave without pay, each being one week in duration, this does not have any impact on the anniversary date – the period of leave without pay greater than one week must be in one continuous period.

Annual holidays

Annual holidays pay

Oliver started working for Michael on 1 February. In November he asks Michael if he could 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 ok 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 is grateful for this and agrees. Oliver and Michael 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).

Annual holiday pay

Public holidays and other leave events during a period of leave without pay

If a public holiday falls during a period when an employee is taking leave without pay, they do not receive any payment for the public holiday. This is because it would not be a day that they would otherwise be working had it not been a public holiday.

For the same reason, they may not be entitled to sick leave or bereavement leave during a period of leave without pay because it would not be a day they would otherwise be working. There are some exceptions to this, so it’s important to work out whether the day is an   for them.

For example, they may be on leave without pay because they’re sick and do not have enough sick leave. If a public holiday falls within a period of leave without pay, on a day that you would have worked (if you had not been sick, and it was not a public holiday), they would be entitled to payment for the public holiday.

Otherwise working day

Clarifying and recording leave without pay

Make sure that the employer has agreed in writing for the employee to take time off work on leave without pay. If there is a misunderstanding, they could think the employee left their employment when the employee thinks they’re on leave without pay.

Employees also need to make sure that if they’re going on leave without pay for more than 1 week, they know whether their leave without pay will affect their anniversary date for annual holidays.

Holiday act guidance tool - Leave without pay [PDF, 785 KB]

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