Employers offering sabbaticals or career breaks are often unclear on what happens regarding contractual benefits they offer and holiday and other time off work rights during the period of absence.
The position partly depends on what happens with the contract of employment during the employee’s time off work, but also on individual negotiation or the employer’s position.
Holiday
Many employers are under the impression that holiday doesn’t accrue during sabbaticals and career breaks, however this may not be the case. For longer career breaks where the contract of employment ends entirely, with the employee effectively resigning, with the possibility of a job if and when they choose to return, holiday will not continue to accrue.
However, if the contract will remain in place, which is usually the case for shorter sabbaticals of less than a year, holiday will continue to accrue. The fact the employee isn’t working doesn’t impact this, in the same way as for other long absence, such as maternity leave or long term sickness. In fact, recent case law confirming that term time or other part year workers get the full year holiday entitlement also confirms the same position for those on sabbatical. If they are employed, whether they are physically working the whole year or not, holiday continues to accrue.
This is disappointing to some employers, however, it’s just something to factor in. One way to see it is that if you would like to retain some control over the employee in terms of their trust and confidence, notice requirements and other contract clauses during their time off work, the price to pay for that is accrual of holiday. The position only applies to statutory holiday, so if you do offer more than statutory minimum, you can specify that anything over and above statutory does not accrue while they are away from work.
Pensions
It’s worth just checking the rules of your particular pension scheme, but employees (ie those on shorter sabbaticals during which the contract remains in effect) on unpaid leave would not generally have any entitlement to pensionable service/contributions during absence. For auto-enrolment purposes, whilst an employer is supposed to ensure continuity of membership, the break in membership would effectively be because the employee has requested it, which is acceptable. In any case, under auto-enrolment requirements, the employer’s contributions depend on the employee’s earnings, meaning that effectively there is no requirement while they are unpaid.
Some employers do choose either continue their own contributions, or even to make up both employer and employee contributions. Another possibility is to make the option available for the employee to make contributions anyway during their leave, to preserve their pensionable service.
Other contractual benefits
If you offer other contractual benefits, such as healthcare, gym membership, life insurance or anything else, it is generally up to the employer whether any or all of these continue. Some of them may involve fairly minimal expense for the employer and a certain amount of admin hassle in stopping and starting, so for pragmatic as well as employee engagement reasons, you may decide that at least some of them should continue.
As with anything, clarity is important. As long as the employee is clear about the terms of their sabbatical, and understands the position around contractual benefits, there should be no issues. Where problems arise is if the employer hasn’t been clear and there is a misunderstanding over whether a contractual benefit is still available.
If you’d like further advice and holiday and benefits during sabbaticals and career breaks, do get in touch.