Unpaid leave

What is unpaid leave?

The National Employment Standards (NES) provides entitlements to unpaid parental leave and unpaid community service leave but in many cases, ‘unpaid leave’ refers to an agreed absence from work rather than a particular entitlement.

Unpaid leave is not an entitlement under the NES and therefore does not count as service under the Fair Work Act 2009 (Cth) (FW Act) which means that when an employee is on a period of unpaid leave, they will not accrue annual leave or personal/carer’s leave.

What are some common situations that an employee may want to take unpaid leave?

An employee may seek to take unpaid leave when they find themselves in a situation where they have used up their paid personal leave (sick leave) entitlement but continue to be unfit or unable to return to work.

Another situation is where an employee runs out of their paid carer’s leave entitlement while caring for a family member who is ill or injured.

Unpaid leave could be an option for an employee who wishes to take an extended holiday but has insufficient annual leave or long service leave for the whole period.

If a public holiday falls during a period of unpaid leave, does an employee get paid for the public holiday?

If an employee is on unpaid leave and a public holiday occurs during that period, they are not entitled to receive payment for the public holiday. This means that the employee must be on unpaid leave on the working days before and after the public holiday.

Do employees need to apply for unpaid leave?

Although there is no entitlement to unpaid leave under the NES, some employers may choose to include their approach to unpaid leave in a leave policy.

If an employer decides to include unpaid leave in the leave policy, then the application and approval process should be clearly outlined to help employees understand that unpaid leave must be applied for and approved in the same manner as other leave types. Existing leave application forms could be updated to include ‘unpaid leave’ as a leave type.

This means that if the employee is using unpaid leave because they unwell or are caring for an ill family member, their employer could still require they provide notice and evidence to support their absence.