Leave Without Pay (LWOP): Definition, Employee Rights, and Employer Obligations
Leave Without Pay (LWOP) is an arrangement where an employee is granted time off work without receiving their regular wages. Unlike annual leave, personal leave, or other paid entitlements, LWOP is generally not an automatic right under Australian employment law — it is typically granted at the employer's discretion based on individual circumstances and business needs.
LWOP is relevant across all industries, but is particularly common in contact centres and customer service environments where staffing flexibility is important and employees may need extended time away for personal, family, or health reasons after exhausting their paid leave entitlements.
This guide covers when LWOP applies, the specific unpaid leave types that are legally protected under Australia's National Employment Standards, how LWOP affects employee entitlements, and what both employees and employers need to know.
What LWOP is
Approved unpaid time off beyond an employee's paid leave entitlements — generally at the employer's discretion, not an automatic right.
When it's protected
Certain types of unpaid leave are legally protected under the National Employment Standards — compassionate leave, carer's leave, parental leave, and community service leave.
What this guide covers
Common LWOP reasons, NES-protected unpaid leave types, effects on entitlements, employer rights, alternatives, and key FAQs.
What is Leave Without Pay?
Leave Without Pay (LWOP) — sometimes written as "unpaid leave" or appearing as "LWOP" on payslips — refers to an arrangement where an employee is granted approved time off work without receiving their ordinary wages for the period of absence.
Under the Fair Work Act 2009, there is no general entitlement to unpaid leave in Australia. However, certain types of unpaid leave are specifically protected under the National Employment Standards (NES) — meaning employers cannot refuse them in the circumstances defined by law. Beyond these protected types, granting LWOP is generally at the employer's discretion.
This flexibility makes LWOP a useful tool for both employees — who may need extended time away for personal reasons — and employers who want to support their workforce without the obligation of continued pay. However, it requires careful management to ensure compliance with workplace laws and fairness across the workforce.
Key distinction
Some unpaid leave is legally protected and cannot be refused (NES leave). Other LWOP is discretionary — the employer can approve or decline it based on operational needs and circumstances.
Common Reasons for Leave Without Pay
Employers may grant discretionary LWOP for a wide range of reasons. The following are the most common situations where employees request unpaid leave beyond their NES entitlements:
Extended holidays
Employees who have exhausted their annual leave may request LWOP to extend a planned trip or take a longer break than their paid leave allows.
Health and recovery
Employees recovering from serious illness or attending healthcare appointments may need unpaid leave after exhausting their personal/sick leave entitlements.
Study and professional development
LWOP can support employees pursuing education or training that enhances their skills and benefits the organisation in the long term.
Additional parental support
New parents may request LWOP beyond their parental leave entitlements to extend time at home supporting their family or bonding with a new child.
Career breaks and sabbaticals
Employees may request extended unpaid leave for overseas travel, personal milestones, volunteering, or other significant life experiences.
Personal and family obligations
Caring responsibilities, family emergencies, or personal circumstances that require an extended absence beyond existing paid leave balances.
💡 Employer discretion applies
For discretionary LWOP requests (i.e. those not covered by NES protections), employers should evaluate each request on a case-by-case basis, considering the operational impact, the employee's history, the reason for the request, and the length and timing of the absence. Clear LWOP policies help ensure consistency and fairness.
NES-Protected Unpaid Leave Types
While LWOP is generally discretionary, the Fair Work Act 2009 and the National Employment Standards (NES) provide specific protected unpaid leave entitlements that employers cannot refuse when the qualifying circumstances are met.
Unpaid Compassionate Leave
Employees can take unpaid compassionate leave if an immediate family or household member is gravely ill, has a life-threatening injury, or has passed away. This is available to all employees including casuals, and cannot be refused.
Unpaid Carer's Leave
Employees may take unpaid carer's leave when a family or household member requires care due to illness, injury, or an unexpected emergency. This is available once paid personal/carer's leave is exhausted, and cannot be refused when the qualifying circumstances apply.
Unpaid Parental Leave
Eligible employees are entitled to up to 12 months of unpaid parental leave (with the right to request a further 12 months) for the birth or adoption of a child. This is an NES entitlement and cannot be refused for eligible employees.
Community Service Leave
Employees are entitled to unpaid leave for jury duty or voluntary emergency management activities (e.g. SES, volunteer fire service). Jury duty also attracts make-up pay for the first ten days. This cannot be refused.
Beyond NES protections
All other LWOP — extended holidays, career breaks, study leave, and so on — is discretionary. Employers can approve or decline these requests based on operational needs, the employee's circumstances, and workplace policy. Employees do not have a legal right to these types of unpaid leave.
How LWOP Affects Employee Entitlements
Taking Leave Without Pay has a range of effects on an employee's entitlements that both parties should understand before agreeing to an LWOP arrangement.
Annual leave accrual pauses
Annual leave and personal leave do not accrue during LWOP periods. The employee's leave balance remains unchanged while they are on unpaid leave.
Public holidays are not paid
Employees on LWOP are not entitled to payment for public holidays that fall within their unpaid leave period, as they are not receiving ordinary pay during that time.
Superannuation may not be paid
Employers are generally not required to make superannuation contributions during LWOP periods. Employees may choose to make voluntary contributions to maintain their retirement savings during extended LWOP.
Continuity of service is generally maintained
Most LWOP periods do not break employment continuity — the employee's service period is generally maintained. However, LWOP periods may not count towards service calculations for redundancy or unfair dismissal entitlements depending on the circumstances.
Long service leave may be affected
Depending on the applicable award or state legislation, extended LWOP periods may affect long service leave accrual or qualifying periods. Check the specific rules applicable to your state and award.
Pay continuity
Any pay-related entitlements — salary, shift allowances, and other regular payments — cease during LWOP. The employee's pay record will show the LWOP period as unpaid absence.
Employer Rights and Obligations
Understanding when employers can approve, refuse, or even require LWOP is important for both workplace compliance and people management.
Can employers refuse LWOP?
Yes — for discretionary LWOP requests (non-NES), employers can refuse on reasonable grounds including operational impact, staffing requirements, timing, and length of the requested absence. NES-protected unpaid leave cannot be refused when qualifying circumstances are met.
Can employers require LWOP?
In rare circumstances, yes — through a "stand down" provision when the employment contract allows it, a trade union agreement supports it, or a significant business disruption outside the employer's control prevents work. Stand-downs should be temporary and well-documented, and employers should seek legal advice before enforcing unpaid leave.
Best practice for employers
Establish a clear LWOP policy outlining when requests will be considered, the approval process, maximum duration, and the effects on entitlements. Consistency in how LWOP requests are assessed reduces the risk of unfair treatment claims.
Alternatives to Leave Without Pay
Before agreeing to LWOP, it is worth exploring whether alternative arrangements could meet the employee's needs while minimising operational disruption.
Flexible work arrangements
Adjusted hours, remote work, compressed weeks, or job sharing may meet the employee's needs without requiring unpaid leave at all.
Accrued paid leave first
Where the employee has annual leave, personal leave, or long service leave available, using these balances first preserves the employee's income and entitlements.
Leave in advance
Some modern awards and enterprise agreements allow employees to take annual leave before it has been fully accrued — with a repayment arrangement if employment ends before the leave is earned back.
Reduced hours arrangement
Rather than a complete absence, an employer and employee may agree to temporarily reduce hours — maintaining some income and entitlements while accommodating the employee's needs.
Long service leave
Eligible employees with accrued long service leave may be able to use this entitlement instead of taking LWOP — maintaining pay continuity while still meeting their personal needs.
Secondment or leave for community service
For employees seeking extended leave for specific purposes (community work, overseas projects), secondment arrangements or NES community service leave may be more appropriate than general LWOP.
Frequently Asked Questions About Leave Without Pay
Is Leave Without Pay a legal entitlement in Australia?
Not in a general sense. Under the Fair Work Act 2009, there is no automatic entitlement to unpaid leave beyond the specific NES-protected types (compassionate leave, carer's leave, parental leave, and community service leave). All other LWOP is at the employer's discretion. Some awards or enterprise agreements may include additional unpaid leave provisions beyond the NES minimums.
Does annual leave accrue during Leave Without Pay?
No. Annual leave and personal leave do not accrue during LWOP periods. The leave balance remains unchanged while the employee is on unpaid leave. This is one of the most important practical effects of LWOP that employees should consider when making a request.
Does superannuation get paid during Leave Without Pay?
Generally no. Employers are not required to make superannuation contributions during LWOP periods, as there is no ordinary time earnings being paid. Employees concerned about the impact on their retirement savings may choose to make voluntary contributions during extended LWOP periods.
Can an employer refuse Leave Without Pay?
Yes, for discretionary LWOP requests. Employers can decline requests based on operational needs, staffing requirements, the timing and length of the absence, or other reasonable grounds. NES-protected unpaid leave types (compassionate, carer's, parental, and community service) cannot be refused when the qualifying conditions are met.
How does Leave Without Pay affect continuity of employment?
In most cases, LWOP does not break employment continuity — the employee is still considered continuously employed. However, LWOP periods may not count towards service calculations for redundancy payments, unfair dismissal qualifying periods, or long service leave accrual, depending on the circumstances and applicable legislation. Seek specific advice from the Fair Work Ombudsman if this is a concern for your situation.
What is a stand down, and how does it differ from LWOP?
A stand down is when an employer directs an employee to not work (and not be paid) due to circumstances outside the employer's control — such as equipment failure, natural disaster, or other events that prevent work. Unlike voluntary LWOP, a stand down is imposed by the employer. It can only lawfully occur where the employment contract allows it, a union agreement supports it, or under specific Fair Work Act provisions. Employers should seek legal advice before initiating a stand down.
Should employers have a formal LWOP policy?
Yes — strongly recommended. A clear LWOP policy outlining the circumstances under which requests will be considered, the approval process, maximum durations, and the effects on entitlements helps ensure consistency, fairness, and legal compliance. It also reduces the risk of claims that LWOP was granted or refused unfairly across the workforce.
Where to Next
Understanding your leave entitlements is an important part of working in any organisation. Whether you are an employee trying to understand your rights or an employer managing your workforce, these resources will help.
Customer Service Hub
Resources, tools, and practical guidance for customer service professionals across all industries and experience levels.
Penalty Rates
Current Australian penalty rates for weekends, public holidays and shift work — explained clearly with the applicable Contact Call Centre Award rates.
RDO (Rostered Day Off)
What an RDO is, how it works, how it is calculated, and who is entitled to one under Australian workplace law.
Annual Leave
Understand your annual leave entitlements in Australia — how much you get, how it accrues, and how it interacts with other leave types.
Summary: Leave Without Pay (LWOP)
Leave Without Pay is a practical arrangement that allows employees to take time off beyond their paid leave entitlements, without receiving pay during the absence. In Australia, it is generally at the employer's discretion — there is no general legal right to unpaid leave beyond the specific NES-protected types.
Key NES-protected unpaid leave types include unpaid compassionate leave, unpaid carer's leave, unpaid parental leave, and community service leave. These cannot be refused by employers when qualifying conditions are met. All other LWOP requests are discretionary.
Employees should understand that LWOP pauses leave accrual, typically eliminates superannuation contributions during the period, and means no pay for public holidays falling within the absence. Clear LWOP policies help organisations manage these arrangements fairly and consistently.
For specific advice, always refer to your award, enterprise agreement, or the Fair Work Ombudsman.
