Also known as unpaid leave, this is a form of leave that employees may take in a variety of circumstances, including if they have used up other leave entitlements, for study leave, at the end of paid parental leave or if the employee cannot take paid parental leave. The conditions of extended leave are subject to agreement between the employer and employee and in most circumstances, are at the discretion of the employer.
Should I Have an Extended Leave Policy?
Businesses are not required to have an extended or unpaid leave policy, however, it can be an effective way to retain staff. By giving employees the option to take extended leave, they have the security of knowing they can return to the same employer afterwards.
Below are some guidelines for employers to specify:
How other entitlements are accrued while taking extended leave
Whether the company allows for ‘career breaks’ of a year or more, and if there is a qualifying period or not
Have the flexibility to cater for individual cases and strike the right balance between the needs of employees and the business
Extended Sick Leave
If an employee has used all of their sick leave entitlements and still needs extra time to recover from an illness or injury, they have a few options:
Ask their employer to use sick leave in advance. For example, if the employee is two months away from receiving an additional five days of sick leave, they can on agreement, use two of those five sick leave days to recover. When the time comes to receive the additional sick leave, they will get three days, as they already used up two of the total sick leave days
Use their annual leave to recover from illness or personal injury
Ask their employer to take an extended unpaid sick leave
Extended Leave of Absence
Extended leave for circumstances such as holiday, sickness, injury or study, are not an automatic entitlement under New Zealand’s employment law and can only be taken with the employers’ permission. However, under the law employees are entitled to take extended parental leave, the length of extended leave available to the employee is set out within the Parental Leave and Employment Protection Act 1987.
The conditions of extended leave should be negotiated between the employer and employee and recorded in writing. If an employee takes an extended leave of absence without permission from their employer this will be considered unauthorised absence and they could face disciplinary action or dismissal.
What if an Employee Takes More Than One Week of Unpaid Leave?
By taking an extended leave of absence (not including unpaid sick or bereavement leave), it may impact when an employee’s annual holiday entitlements are renewed.
For example, if an employee takes two weeks of unpaid leave, the date of renewal for their annual holiday entitlements would be moved forward by the amount of unpaid leave taken (not including the first week). In this case, the date would be pushed back by one week.
If an employer agrees not to change the renewal date, the employer must reduce the total amount of weeks used to calculate the average weekly earnings. This would mean reducing it by the number of weeks greater than the first week the employee was on leave.
What if An Employee is Away for Longer than 3 Months?
If an employee has been on unpaid sick leave for longer than 3 months, a process of termination may be available to the employer.
However, as is the case for every termination, the employer must ensure they conduct a fair and reasonable process, including opportunity for consultation. If an employee is terminated based on medical incapacity, they may dispute the termination in the following ways:
Raise a claim of unjustified dismissal on the basis that the decision to terminate is harsh, unjust or unreasonable; or
If the employee feels the dismissal is based on their disability, they can raise a claim for discrimination either to the Employment Relations Authority or the Human Rights Commission.
For advice on creating an extended or unpaid leave policy and managing leave cases, contact Employsure on 0800 568 012.
