How To Create An Unpaid Leave Policy In Australia

Managing time off can be tricky for any workplace - especially when the request is for unpaid time. A clear Unpaid Leave Policy helps you balance compassion with compliance, and gives your team clarity on when they can step away and how requests will be handled.

In this guide, we’ll walk you through what unpaid leave is, the key legal considerations in Australia, and the practical steps to draft, implement and maintain a policy that works for your business.

What Is Unpaid Leave (And Why Have A Policy)?

Unpaid leave (often called “leave without pay” or LWOP) is any time off work an employee takes where they are not paid wages for the absence.

Sometimes the entitlement is set by law (for example, certain types of unpaid parental leave), and other times it’s by agreement between you and your employee. Your policy is the playbook that explains how those requests are made, assessed and recorded.

Without a policy, decisions can be inconsistent, managers may make ad hoc calls, and employees won’t know what to expect. With a policy, you standardise your approach and reduce the risk of disputes or non‑compliance.

If you’d like a quick refresher on the legal basics, start with an overview of Unpaid Leave under Australian employment law.

Key Laws To Consider Before You Draft Your Policy

Your Unpaid Leave Policy should align with Australia’s National Employment Standards (NES), any applicable modern award or enterprise agreement, and anti‑discrimination laws.

• National Employment Standards (NES): The NES sets minimum entitlements for all employees covered by the Fair Work system, including certain unpaid leave types (for example, unpaid parental leave). Your policy can’t undercut these minimums.
• Awards and Enterprise Agreements: Industry awards or enterprise agreements may include specific rules about taking unpaid leave, evidence requirements, or how leave interacts with rosters and penalty rates. Always check what applies to your workforce.
• Anti‑Discrimination: Your decision-making should be fair and consistent. Be careful not to discriminate (directly or indirectly) when approving or declining requests (e.g. based on gender, disability, family responsibilities, religious observance or other protected attributes).
• Interaction With Other Leave: Consider how unpaid leave interacts with paid sick, carer’s, annual or long service leave - and set out the order in which these should be used.
• Record‑Keeping: Employers must keep accurate records of leave. This includes requests, approvals and the dates taken.

As you shape your rules, keep in mind common operational questions like minimum notice, roster impacts and evidence. This short guide to leave without pay rules is a handy reference as you plan.

Step‑By‑Step: How To Create An Unpaid Leave Policy

1) Define Purpose, Scope And Eligibility

Start with a simple purpose statement: why the policy exists and what it covers. Then, specify who it applies to (e.g. all permanent staff, or permanent and casuals) and whether different rules apply to different categories (for example, casual vs part‑time employees).

Note any carve‑outs where separate policies apply (e.g. unpaid parental leave handled under a dedicated Parental Leave Policy).

2) Identify The Types Of Unpaid Leave You’ll Allow

List the types of unpaid leave that may be requested in your business and tie them to the circumstances when they’re available. Common categories include:

• Unpaid parental leave (statutory entitlements under the NES).
• Unpaid carer’s leave (for eligible employees who have exhausted paid carer’s leave).
• Unpaid compassionate leave (where applicable under the NES).
• Unpaid leave for personal reasons (by agreement, outside of statutory entitlements).
• Unpaid community service leave (e.g. voluntary emergency management activities - statutory rules apply).
• Religious or cultural observance (by agreement to support inclusion, subject to business needs).

You can allow other categories that make sense for your workplace. The key is to describe them plainly and reference any legal minimums that apply.

3) Set Request And Approval Processes

Spell out the process for making a request: who the employee asks, how far in advance, what form is used and what information is required. Then, explain how managers assess requests (e.g. team capacity, critical deadlines, fairness and past approvals).

Include timeframes for a response, escalation steps, and whether conditional approvals (like partial leave) are possible.

4) Clarify Evidence Requirements

Be clear about what supporting documents you may ask for and when. For example, you might request medical evidence for extended personal leave, or a statutory declaration if other evidence is not reasonably available. If you set standards, align them with workplace law and your award or agreement.

For guidance on when it’s reasonable to ask for evidence, see this overview of employer requests for medical certificates.

5) Explain The Impact On Pay, Accruals And Service

Employees need to know how unpaid leave affects their entitlements. Your policy should explain, in plain English:

• Pay And Super: Unpaid leave usually means no wages for the period. Address whether superannuation is contributed (typically not, unless otherwise required).
• Accruals: Generally, paid leave entitlements (like annual leave) do not accrue during unpaid leave periods, although some unpaid leave types may count for continuity of service. Keep this section general and align it to your award and the NES.
• Public Holidays: Clarify whether unpaid leave overlapping a public holiday is paid or unpaid in your workplace (again, subject to NES and awards).

6) Address Rosters, Minimum Notice And Business Impacts

Set a default minimum notice period for non‑urgent requests and a faster pathway for urgent situations. Explain how rosters will be handled (e.g. swapping shifts, relieving staff) and who is responsible for finding coverage, if applicable.

7) Set Duration Limits And Return‑To‑Work Steps

Include maximum durations or thresholds that trigger a review (for example, requests beyond a certain number of weeks may require additional approvals). Add a simple return‑to‑work process, which may include reasonable updates if the leave end date changes, or a check‑in meeting to plan reintegration.

8) Build In Fairness, Accessibility And Adjustments

Confirm that decisions will be consistent and based on legitimate business considerations. Encourage employees to raise any disability, health or caring responsibilities that may require reasonable adjustments under anti‑discrimination laws.

9) Map Your Policy To Contracts And Other Documents

Ensure your policy aligns with your Employment Contract, any staff handbook and related policies (e.g. parental leave, flexible work, WHS). If there’s a conflict, note which document prevails and update the out‑of‑date document promptly.

What To Include In Your Unpaid Leave Policy (Suggested Clauses)

Use these headings and clause ideas as a practical checklist. Keep the language simple and consistent with your other workplace policies.

• Purpose And Principles: A brief statement describing the goal of the policy (clarity, fairness, compliance with the NES and awards).
• Scope And Definitions: Who the policy applies to, definitions of “unpaid leave”, “manager”, “business days”, etc.
• Types Of Unpaid Leave: A short description of each category you recognise (e.g. unpaid parental leave, personal leave by agreement, community service leave).
• Eligibility: Any employment status or service requirements (subject to law and awards).
• How To Request Leave: Notice requirements, how to submit, information to include, who approves.
• Evidence: What evidence is required (if any), and when you may ask for more information.
• Decision‑Making Criteria: Operational considerations (team capacity, critical deadlines), fairness and any tie‑breakers you’ll consider.
• Duration, Extensions And Cancellations: Maximum periods, how to ask for an extension, and what happens if plans change.
• Pay, Super And Accruals: Clear statements about pay during leave, superannuation treatment, and whether paid leave entitlements accrue.
• Public Holidays And Shutdowns: How unpaid leave interacts with public holidays or annual shutdown periods.
• Rosters And Coverage: How shifts are managed during an unpaid absence, including any obligation to assist with coverage (if appropriate).
• Return To Work: What’s required before returning (e.g. confirmation of availability, medical clearance where relevant), and how you’ll handle phased returns if needed.
• Privacy And Confidentiality: How you’ll handle sensitive information and store records in line with your Privacy Policy.
• Related Policies: Cross‑references to your Workplace Policy framework, parental leave, flexible work, and any mental health or wellbeing initiatives.
• Dispute Resolution: A simple pathway for employees to raise concerns or appeal decisions.
• Review Cycle: When you’ll review the policy (e.g. annually or when laws change) and who owns the document.

Optional: Separate Policies For Complex Leave Types

Some employers keep unpaid parental leave in a standalone document to capture eligibility, keeping in touch days, return‑to‑work guarantees and related benefits. If that’s you, maintain a short section in your main policy that points to your Parental Leave Policy for the detailed rules.

Rolling Out Your Policy: Training, Systems And Record‑Keeping

A great policy only works if it’s easy to find, understood by managers and applied consistently. Here’s how to roll it out with confidence.

Communicate Clearly

• Add the policy to your intranet or employee hub and announce it via email or team meeting.
• Summarise the key steps employees must follow (who to ask, how much notice and what evidence may be needed).
• Encourage employees to speak up early if they think they’ll need time away so you can plan workload and coverage.

Train Managers

• Walk leaders through the legal basics, evidence standards and decision‑making criteria.
• Reinforce equitable treatment and how to avoid bias - for example, when two employees make similar requests.
• Set escalation rules for unusual or sensitive scenarios.

Align Contracts, Systems And Forms

• Check your Employment Contract templates to ensure there’s no inconsistency with the new policy.
• Build a simple request form (digital is best), including consent to collect any necessary personal or health information in line with your Privacy Policy.
• Configure your HR/payroll system to record unpaid leave types separately for reporting and accrual impacts.

Keep Records And Review

• Maintain records of requests, approvals, evidence and dates taken. This supports compliance and helps you spot trends (e.g. seasonal spikes).
• Monitor how the policy works in practice. Are response times reasonable? Are decisions consistent across teams?
• Review at least annually or when laws change, awards are updated, or your business needs shift.

Support Wellbeing And Safe Work

Unpaid leave requests sometimes reflect underlying health issues, caring duties or personal stressors. Consider signposting support channels (EAP, flexible work, workload adjustments) and make it clear that safety comes first. If mental health arises, ensure managers understand their workplace obligations and the importance of compassionate, lawful handling.

Common Practical Questions (Answered Simply)

Do Employees Accrue Entitlements On Unpaid Leave?

As a general rule, paid leave entitlements (like annual leave) don’t accrue during periods of unpaid leave. Some unpaid leave types may still count for continuity of service. Because the rules depend on the type of leave and your award or agreement, your policy should explain the general principle and point employees to HR for specifics.

Can I Ask For Evidence?

Yes - if it’s reasonable in the circumstances and consistent with your award or agreement. Keep your requirements clear, proportionate and respectful of privacy. For health‑related absences, have a consistent approach to medical certificates so managers don’t apply different standards.

How Much Notice Should Employees Give?

For non‑urgent requests, many workplaces set a minimum notice period (for example, a set number of business days). For urgent or compassionate reasons, allow flexibility. Your policy should balance operational needs with fairness and legal obligations.

What If The Request Falls During Probation?

You can apply the policy during probation, but be careful not to treat probationary employees less favourably for taking lawful leave. This quick primer on taking leave during probation covers the main considerations for employers.

Essential Documents To Support Your Policy

A strong Unpaid Leave Policy sits within a broader set of employment documents and policies. At minimum, make sure you’ve got:

• Employment Contract: Your contracts should reference your leave policies and avoid conflicting terms. See our standard Employment Contract for full‑time and part‑time staff.
• Workplace Policy Framework: Keep related policies consistent, including code of conduct, flexible work and grievance processes. A centralised Workplace Policy framework helps with accessibility and updates.
• Parental Leave Policy: If you manage unpaid parental leave in a separate document, ensure it’s up to date and cross‑referenced from your main policy. A dedicated Parental Leave Policy can streamline longer absences.
• Privacy And Data Handling: Any personal or health information you collect for leave requests should be handled under your Privacy Policy, with appropriate access controls and retention rules.
• Staff Handbook: Centralise your employment policies in a staff handbook so employees know where to find them. If you’re building or updating one, consider packaging your leave, conduct and safety rules for easy rollout.

If you’re not sure how these pieces fit together, our team can help you align your leave rules with your contracts, awards and HR processes so everything is consistent and compliant.

Key Takeaways

• An Unpaid Leave Policy sets clear and fair ground rules for when employees can take leave without pay and how requests are handled.
• Make sure your policy aligns with the NES, relevant awards or enterprise agreements, and anti‑discrimination laws.
• Cover the essentials: eligibility, request and approval steps, evidence, duration limits, pay/super/accrual impacts, rosters and return‑to‑work.
• Keep the policy consistent with your Employment Contract, related policies (like a Parental Leave Policy) and HR systems.
• Train managers, record decisions, review regularly, and support employee wellbeing while meeting your operational needs.
• For practical planning tips, revisit the basics of Unpaid Leave and your business’ own leave without pay rules.

If you’d like a consultation on drafting or updating your Unpaid Leave Policy for your Australian workplace, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no‑obligations chat.