Unpaid leave – basic rules

How can an employer grant an employee unpaid leave? And who is entitled to such unpaid leave? Most employees are familiar with the most popular types of leaves and have at least once in their lives used the days of holiday leave guaranteed by the Labour Code, took leave on request, training leave, parental leave or special leave. However, taking a few days off unpaid is something that both employees and employers often remain wary of. How to approach this topic and what should we know about it?

How does the Labour Code define unpaid leave?

First, let’s look at the definition of unpaid leave.

Unpaid leave is a type of leave that employees are entitled to under an employment contract, for which they do not receive remuneration. The period of unpaid leave is treated as a period of suspension in employment.

Most employees decide to take unpaid leave after they have exhausted all their holiday leave. Interestingly, although many people think that unpaid leave can be granted only at the employee’s written request, it can also be initiated by the employer. Such mandatory unpaid leave may result, for example, from an agreement between two companies using the skills of an employee of one of them.

Legal basis – who is entitled to unpaid leave?

Unpaid leave is governed by art. 174 and 174.1 of the Labour Code. Upon receipt of an employee’s application in accordance with the requirements of the regulations, the employer may comply with the request and agree to unpaid days off, but he also has the right to refuse unpaid leave and, importantly, he is not obliged to justify his decision. Both parties must also remember that the length of unpaid leave is not included in the period of work on which employee rights depend – unless internal regulations provide otherwise.

It may also happen that it is the employer who seeks to start the unpaid leave of the employed person. Then the entrepreneur, with the employee’s consent, grants him or her and unpaid leave for the duration of work for another employer – the duration of the leave is then determined in the relevant agreement between the employers. In the case of leaves used for this purpose, their days are counted towards the length of service of the employee with the employer granting the leave.

Does the duration of unpaid leave depend on the length of service?

Therefore, we already know how our issue is regulated by law, but we still have not touched on one important aspect – we do not know what the maximum length of an employee’s unpaid leave is. In the case of holiday leaves, the matter is clear and depends on the seniority. The specific number of days also applies to special leave. Training leave is a bit more flexible. And what does the Labour Code say about unpaid leave in this case? Can you take, for example, a month’s unpaid leave?

The regulations do not impose time limits when it comes to unpaid leave. However, it is worth knowing that in the case of a long-term unpaid leave – longer than 3 months – the parties are not obliged to continue it at any cost. Both the employer and the employee may decide to end the unpaid leave for important reasons. Then the content of the application should include a provision, e.g. about a weekly or two-week period of recalling an employee from unpaid leave.

What are the consequences of granting unpaid leave?

Pursuant to the provisions of the Labour Code, unpaid leave gives you the opportunity to take advantage of additional days off, but it affects other employee rights. This is especially important information in a situation where an employee fell ill during his unpaid leave.

During the unpaid leave, the employer does not pay social contributions (including sickness insurance contributions) for the employee, which means that the employee loses the right to sickness benefits and allowances during this time.

Not everyone also knows that during unpaid leave lasting more than 30 days, family members reported by the employee to health insurance will also lose their right to it.

Absence due to unpaid leave also affects holiday leave. For every 30 days of unpaid leave granted to an employee (these days can be added up), the employer reduces the annual leave by 1/12. An exception to this rule is the situation when the reduction of the holiday leave takes place only in the year of the employee’s return to work and for full years of absence. This is stated in Article 155² § 1 of the Labour Code.

Examples of unpaid leave consequences:

An employee with 6 years of seniority used unpaid leave from 1 September, 2021 to 30 April, 2022.

Annual leave for 2021 is due to the employee in full, because the condition for reducing the annual leave is the employee’s return to work in the year of using the unpaid leave.

The indicated unpaid leave reduces the annual leave due for 2022. The HR and Payroll Specialist must reduce the employee’s leave by 4/12 – due to the fact that he continues his work later this year.

If an employee’s unpaid leave covers a full calendar year and the person does not plan a single day of work, the entrepreneur does not determine the annual leave for that year at all.

Under what circumstances can an employee ask the employer for unpaid leave?

Unpaid leave is a good solution in a situation where an employee has used a training leave and failed to complete the process of improving his professional qualifications. You can also consider granting unpaid leave to spouses who are planning a longer trip together, or to employees who have already exhausted other possibilities of justified absence from work to settle their private matters or take advantage of the occasional offer of another job.

Let us remember, however, that the employer has the right to refuse to grant unpaid leave and that during the unpaid leave employees are not entitled to cash benefits, e.g. for the time of illness or child care, and their holiday leave may be proportionally reduced.