Unpaid leave and sabbaticals in Australia
Reviewed by Mellow Editorial Team, HR & payroll content team
Unpaid leave and sabbaticals are not the same thing in Australian law, and employers are not generally required to offer sabbaticals at all. What you grant beyond the statutory minimum is a matter of policy and negotiation.
What the law actually requires
The National Employment Standards (NES) set the floor for most Australian employees. The NES includes several categories of unpaid leave that employers must provide:
- Unpaid parental leave — up to 12 months for an eligible employee, with the right to request a further 12 months
- Unpaid carer's leave — 2 days per occasion when paid personal/carer's leave is exhausted
- Unpaid compassionate leave — 2 days per occasion (though most awards and agreements provide this as paid leave)
- Community service leave — unpaid, for jury duty and eligible emergency management activities (jury duty attracts make-up pay rules under some awards)
- Family and domestic violence leave — now 10 days paid for most employees, but the unpaid entitlement remains the baseline for those not yet covered
Beyond these, the NES does not create a general right to unpaid leave for personal projects, travel or study. An employee who asks for three months off to travel has no statutory entitlement to it. You can say yes or no.
Sabbaticals: discretionary, not statutory
A sabbatical is an extended period away from work — typically weeks or months — for rest, study, research or personal development. Australia has no legislation that creates a sabbatical entitlement for private-sector employees.
Some enterprise agreements or workplace policies do include sabbaticals, often framed as "purchased leave" or "extended leave." A common structure is:
- The employee takes unpaid leave for an agreed period (say, 4 to 12 weeks)
- Their salary is reduced across the year to spread the cost — for example, working 48 weeks but receiving pay for 52 weeks at a reduced rate, or simply taking unpaid leave in a lump
- Continuity of employment is preserved throughout
If your workplace policy or enterprise agreement is silent on the topic, a sabbatical is simply a discretionary grant of unpaid leave agreed in writing between employer and employee.
Payroll and super implications during unpaid leave
This is where employers often get caught out.
PAYG withholding stops when there is no payment to withhold from. You report via Single Touch Payroll (STP) at each pay event; if an employee is on unpaid leave with no pay event, there is nothing to report for that period. When they return and you resume paying them, normal PAYG withholding applies again.
Superannuation Guarantee is calculated on ordinary time earnings. If an employee receives no ordinary time earnings during unpaid leave, you generally have no SG obligation for that period. From 2026, the SG rate is 12%. However, check the employee's award or enterprise agreement — some instruments require super to continue during certain types of unpaid leave, particularly unpaid parental leave under specific conditions.
HECS/HELP repayment is income-contingent and repaid through payroll on a banded scale. With no income being paid, no repayment withholding applies. This does not reduce the employee's underlying debt; it simply means no repayment is collected during that period.
Annual leave accrual does not accrue during unpaid leave unless your policy, award or agreement says otherwise. Confirm this in writing before the leave begins to avoid disputes on return.
Employment continuity and notice
Unpaid leave, including a sabbatical, generally counts as continuous service for the purpose of entitlements like redundancy pay under the NES. The redundancy pay scale is based on years of service, so it matters that unpaid leave does not break continuity.
You should confirm all of this in a written leave agreement before the employee departs. The agreement should state:
- The start and end dates
- Whether the employee must return for a minimum period (common for longer sabbaticals)
- What happens if they resign or are made redundant before returning
- Which entitlements accrue (and which do not) during the absence
- The process for requesting an extension
Managing the return
Employees on unpaid leave retain their right to return to their position — or an equivalent one — at the end of the approved period. This mirrors the parental leave return-to-work right, and while it is not always legally required for discretionary unpaid leave, it is best practice to honour it and to state it explicitly in the agreement.
Re-onboarding after a long absence is worth planning. System access, updated policies, payroll reinstatement via STP, and any superannuation fund changes the employee made during their absence all need to be checked before their first day back.
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