Working-Life > Vacation > Leave without Pay

Leave without Pay

Definition, Explanation

If your vacation is not enough or already taken for the current year, or you want to take a time-out from work, then an unpaid leave is a solution. While the unpaid leave is widely taken in the countries of UK, Canada, Australia and Switzerland, it is less usual in Germany. Mostly, the unpaid leave, here, is only taken for the parental leave and for an educational leave.

Noone is generally entitled to be granted an unpaid leave. However, there are exceptions in cases of duty of care, e.g. in the case of illness of a family member. Legal entitlement is given if the employee is recruited by the Bundeswehr (military) or for alternative service, or participates in resverve duty training or has sick children to look after. Special regulations resulting in entitlement to an unpaid leave can be contained in the collective agreement or the company agreement or in your employment contract. Also reasons of equality of treatment, providing for all employees the same standards, or reasons of company practice can provide entitlement.

During the time of an unpaid leave, the employment relationship is a resting one. Both work and income are stopped. However, the so-called side-duties like duty of loyalty, duty of care, and restraint on competition, are maintained. All usual regulations concering dismissal, dismissal protection and vacation remain maintained also. Allowed are proportional cuts on Christmas bonuses, on vacation money or on company pension.

The insurance by social security, meaning also by statutory health insurance, remains maintained for up to 4 weeks from the beginning of the unpaid leave. During this time span, employees are not allowed any salary-substitutes like illness benefit or a parental leave. The employee remains insured even if the duration of the absence is not yet known or is set longer than 1 month. If the time of absence is longer than 1 month, then the employee has to report this on the last day of those 4 weeks at the latest. This ends the health insurance and social security insurance.

With recommencing work and payment, the employer has to be re-registered for social security, by the company. As long as no payment is given, no insurance contribution is due. If the employee receives special bonuses like Christmas bonus or a profit-share, during the leave, then these are liable to contribution and are also included into determining the income threshold. Also wage tax has to be paid.

Tips, Checklist

• Effect a private health insurance, or be insured voluntarily in statutory health insurance, for the time span of your leave. If you are already health-insured, you do not have to do anything. Contributions are paid on
• Plan a longer unpaid leave of yours in cooperation with your employer
• Contact your health insurance and social security insurance and be councelled personally concering effects on your entitlement to services
• Ask your employer if a scheme is possible in which you work fully and are paid partially, while you would get the rest of pays during your leave/sabbatical. This would cause no exceptional trouble with insurance matters, for contributions are paid throughout the time

Last update: 06/17/2010