How does unpaid leave work?
Under the Workplace Relations Act any employer can direct employees to take annual leave for a period of shut down, however, the act specifies that the employee must have the leave accumulated. If the employer wants employees to take unpaid leave they need the employee’s consent. That’s where this agreement comes in handy.
Unpaid vs Paid Leave
Annual leave is an important part of working life and one of the National Employment Standards (NES). All employees, other than casuals, are entitled to four weeks away from work each year or five weeks if they are shift workers.
So, when might an employee take leave without pay? Typically an employee would take leave without pay when they have exhausted their other leave provisions. This might be employer driver, ie in an attempt to reduce costs/redundancies during business hardship or employee driven, for example requesting extended time off to self-isolate during a pandemic, despite them no being infected.
What is unpaid leave/Leave Without Pay
Leave Without Pay is an unpaid leave of absence from employment, agreed to by an employer and employee. It is rare for unpaid leave to be prescribed by a modern award or an enterprise agreement, and is not a statutory entitlement in Australia. It is usually granted at the complete discretion of the employer.
What if my employee refuses to take unpaid leave?
Your employee is well within their rights to refuse to take unpaid leave (special Christmas shutdowns excluded), but most do recognise that the alternative may instead mean redundancy.
Do I still need to meet my NES requirements for employees on unpaid leave?
Under the Fair Work Act, an employee does not accrue annual leave, personal/carer’s leave, or have an entitlement to a public holiday during a period of unpaid leave. It will also affect an employee’s entitlement to redundancy pay. However, a period of unpaid leave does not break the employee’s continuity of service, meaning that service with the employer, both prior to and subsequent to unpaid leave, will count when calculating an employee’s entitlement.
Unpaid leave does not affect continuous service with respect to the NES provisions which relate to notice of termination by an employer, flexible working arrangements and unpaid parental leave.