Understanding leave without pay
By Costa Brehas – Senior Workplace Relations Adviser, iHR Australia
When a staff member requests to take leave without pay (LWP), or unpaid leave, especially if it’s the first time an employer has received this request, they may ask themselves the following questions – what is my responsibility and are there any guidelines around leave without pay?
Begin by confirming an employee’s leave entitlements
The starting point to determine what leave entitlements an employee has should always be the Fair Work Act 2009 (FW Act) and, if applicable, relevant provisions in a Modern Award or Enterprise Bargaining Agreement. Sometimes, employment contracts also contain provisions which deal with leave which should be considered.
Circumstances that may require an employee to apply to take leave without pay
An employee who has exhausted a paid leave entitlement may be able to continue to take leave without pay (LWP) – for example where a full-time employee is unwell and has used up their personal paid leave entitlements but continues to be ill.
Under the FW Act, certain employees are entitled to take LWP depending on their circumstances For example:
- a casual employees who falls ill
- employees who are expecting a child
- employees who engage in community services such as voluntary firefighting activities).
Recent changes to the FW Act now gives employees who are subjected to domestic violence the right to take five days unpaid family and domestic violence leave each year.
In some circumstances, employees can be directed to take LWP. This may apply to circumstances beyond the employer’s control – for example the requirement to shutdown businesses during the recent COVID lockdowns. .
Employers may also enter into agreements with employees to take LWP where they do not have a legal entitlement to this (e.g. a career break). In those cases, it is important to be clear whether there will be continuity to their service or not – because this will impact the accrual of entitlements.
Establish a Leave Policy
It is always advisable for employers to develop a leave policy which summarises what leave entitlements employees have and in what circumstances they may take LWP or be directed to take LWP.
These policies can also address other issues of a more complicated nature such as whether leave entitlements will accrue while an employee is absent from work because of a workers compensation claim – which is dependent on State specific laws.
As at October 2022, the Federal Government was in the process of introducing legislation to change the current five days unpaid family and domestic leave entitlement to 10 days paid leave each year. As such, policies relating to this entitlement will need to be updated when those changes come into effect.
iHR Australia can provide the advice and support you need to create or review a Leave Policy.
About the Author
Costa is an experienced workplace relations practitioner having also previously practised as a lawyer for over 25 years.
Costa has acted as in-house legal counsel for peak employer organisations, has practised as a Senior Associate in the workplace relations departments of reputable mid-tier law firms and provided consultancy services across the entire spectrum of workplace relations issues. Costa has acted in numerous unfair dismissal matters, general protections applications, anti-bullying proceedings as well as discrimination, equal opportunity and sexual harassment disputes.
Costa has conducted complex workplace investigations into a variety of workplace disputes and complaints and has prepared comprehensive investigation reports. He has successfully mediated workplace disputes and has direct experience working within the human resources area of an international educational institution. His skills and years of experience in a diverse range of environments place Costa in a unique position to provide his services in an effective and efficient manner.
Costa holds a Baccalaureus Procuration is Law Degree. He was admitted to practise as an Attorney of the Supreme Court of South Africa in 1993 and as a Barrister and Solicitor of the Supreme Court of Victoria in 2002.