The effect of unpaid leave on annual holidays
When an employee takes unpaid leave of more than a week during the year, this
can be managed in one of three ways:
- The employer can choose to extend the time required before the employee becomes entitled to annual holidays by the period of unpaid leave in excess of one week. That is, if an employee takes two weeks’ unpaid leave, they become entitled to annual holidays one week after the anniversary of the starting date of employment.
- The employer and employee can agree that an employee’s average weekly earnings calculation will be modified to reflect the number of whole or part weeks greater than one week that the employee was on unpaid leave. For example, if an employee takes two weeks’ unpaid leave during the year, it can be agreed that the annual holiday pay is calculated on the basis of a 51 week year, not on the basis of 52 weeks.
- The employer and employee can agree that the unpaid leave will have no effect on the employee’s annual holiday entitlement.
Time while an employee is on ACC, parental leave or leave for voluntary military service does not affect the anniversary date for annual holiday purposes.
