A leave of absence (LOA) is a formal arrangement where an employee is authorised to be away from work for a specified or indefinite period while maintaining their employment relationship. During an LOA, the employee’s position is typically held open, benefits may continue and the employee is expected to return to work at the end of the leave period. An LOA is distinct from termination of employment, which ends the employment relationship entirely.
Key Takeaways
- A leave of absence preserves the employment relationship, unlike resignation or termination
- LOAs can be paid or unpaid, voluntary or involuntary, and may be required by law (e.g. FMLA in the US) or offered as a discretionary benefit
- The key legal risk is ensuring the employee’s position is held open or an equivalent position is available on return
What Leave of Absence Means for Employers
Leave of absence arrangements serve both employees and employers. Employees benefit from knowing their job is protected during a period of personal need. Employers benefit from retaining experienced staff rather than going through the cost and disruption of recruitment and onboarding.
The most common types of LOA include: parental leave (which is legally protected in most jurisdictions), medical leave for the employee’s own serious health condition, bereavement leave, sabbatical leave (typically a discretionary benefit) and military leave (protected by USERRA in the US). Each type has different legal implications, notice requirements and benefit continuation rules.
For HR teams, managing LOAs requires tracking the leave start date, expected return date, benefit continuation, position protection obligations and any conditions for return. The Fair Work Act in Australia provides for unpaid parental leave and unpaid leave as discretionary employer provisions. In the US, FMLA provides for up to 12 weeks of unpaid, job-protected leave, which may run concurrently with state-mandated paid leave programmes.
Leave of Absence Rules by Region
| Country | Rule | Detail |
|---|---|---|
| UK | Employment Rights Act 1996 | Statutory leave types include maternity, paternity, adoption, shared parental and unpaid dependant leave; additional LOAs are contractual |
| AU | Fair Work Act 2009 (Cth) | Unpaid parental leave of 12 months is a NES entitlement; other unpaid LOAs are discretionary employer provisions |
| US | FMLA and state laws | Up to 12 weeks unpaid, job-protected leave; state programmes (CA, NY, NJ) provide paid leave that runs concurrently |
How Leave of Absence Works in Practice
A UK technology company grants a senior developer, Raj, a six-month unpaid leave of absence to pursue a personal project. The company’s LOA policy requires a minimum of three months’ notice, the leave to be for at least one month and the employee to have completed at least two years of service. Raj meets all criteria.
During the LOA, Raj’s employment is suspended but not terminated. His accrued statutory annual leave continues to accrue (as confirmed by the Employment Appeal Tribunal in Naturally Yacons Ltd v Mr A Green), and his private health insurance continues for the first three months, after which Raj can elect to pay for continuation.
At the end of six months, Raj returns to his role. The company had held his position open, but if it had been filled during his absence, an equivalent role with the same pay, terms and conditions would have been offered.
Common Mistakes with Leave of Absence
- Failing to document the LOA in writing, leading to disputes about the terms, duration and conditions of the leave
- Not holding the employee’s position open or offering an equivalent position on return, which may constitute a breach of contract or unfair dismissal
- Terminating an employee’s employment during an LOA without following proper dismissal procedures
- Not continuing employee benefits during the LOA where the policy or law requires it
- Confusing an LOA with constructive dismissal, where the employee claims they were pressured into taking leave
FAQ
What is a leave of absence?
A leave of absence is a period during which an employee is away from work but retains their employment status. Unlike resignation or termination, the employment relationship continues and the employee is expected to return to work.
Is a leave of absence paid?
It depends on the type of leave and employer policy. Statutory parental leave is unpaid in Australia and the UK (though some employers offer paid parental leave). FMLA leave in the US is unpaid. State programmes may provide paid leave. Employer-discretionary LOAs may be paid or unpaid.
Can an employer refuse a leave of absence?
For statutory leave types, the employer cannot refuse a qualifying request. For discretionary LOAs, the employer may set eligibility criteria and can refuse requests that do not meet those criteria.
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