27 March 2020 - Article
Offering employees the opportunity to take a sabbatical is increasingly being seen as a desirable benefit. Allowing employees to take time out to pursue their own interests e.g. to go travelling or to write a book, or to deal with other life issues such as to care for a relative, or to handle matters and recover from a bereavement, can be good for both employers and employees. The employee feels supported and returns to work refreshed and you, as an employer, can retain valuable employees.
What do I need to know?
The first thing you may want to consider is putting in place a formal sabbatical policy, a potential benefit that may help with recruiting and retaining staff. Such policies will typically allow an employee to take a period of leave (up to a specified maximum) once they have accrued a certain number of years’ service, and then at the same interval thereafter. However, if you explore this avenue, you may want to keep some rights to refuse a sabbatical in certain circumstances or to change the proposed dates, should it be necessary.
Alternatively, you may prefer an ad hoc policy where employees can request sabbatical leave and it will be up to your discretion whether to accept it or not. This may be a more suitable choice if you still wish to offer this flexible benefit but you have smaller teams and need to consider the effect on other employees if they have to take on additional or different duties.
Even if you don’t have a policy in place, you may be obliged to consider the request if it is a formal flexible working request or if the time off may amount to a reasonable adjustment for an employee with a disability. Here, you should also consider whether the time should be treated as some other form of leave, such as parental leave or sick leave.
What should I be thinking about?
With each approach it is helpful to set out requirements to request time off well in advance. However sometimes this may not be possible – for example, if the sabbatical relates to a particular event or if you are offering a sabbatical as a short term cost saving measure with a view to avoiding redundancies.
As circumstances are not always predictable, it can be helpful to have thought about some of the issues below in advance, even if they are not set out in a formal policy:
- Will the employee remain employed either for a short sabbatical of up to three months or for longer sabbaticals?
If employment will be terminated it is important to be clear whether the employee has a right to be re-hired at some future point or whether this is just a possibility. Bear in mind that termination for a sabbatical may not be sufficient to break continuity of employment (which is relevant for rights such as unfair dismissal or redundancy payments), but this is highly fact specific.
- How long a period should I offer?
Three months is often the maximum for formal schemes but there may be other occasions where longer would be appropriate, eg for a career break.
- Will I still be paying my employee?
Whilst often unpaid, employers may pay for a particular period or pay a reduced rate throughout to make it easier for employees to take advantage of the benefit.
- Should other benefits be maintained? If so, how long for and should any benefits be discontinued?
Some employers retain certain benefits, like medical insurance, during this period but there may be no contractual obligation to do so. Give particular thought to benefits provided by way of salary sacrifice and loans (e.g. cycle scheme or travel card) and be clear how these will be dealt with.
- Will the employee need to check emails, do any work or undertake any training?
Set clear expectations and ensure that employees are paid at least the national minimum wage where applicable.
- What about holidays?
Employees may be required to take a period of (paid) holiday as part of the sabbatical, or it may be stated that contractual holiday entitlement may be reduced for that holiday or possibly subsequent holiday years (if they remain employed then statutory holiday will continue to accrue).
- What about bonus and commission schemes?
Depending on the reason for the sabbatical it may be appropriate to pro-rate payments and/or targets.
- Will EMI options be affected?
On sabbatical employees may no longer meet the requirements regarding work, which could affect the tax treatment for the employee and your payroll obligations if and when the options are exercised.
- Do I need a power of attorney?
This could be helpful if the employee has any equity or securities and there may be transactions or reorganisations taking place while they are away and may not be contactable.
Sabbaticals are a great way to offer long standing and valuable employees the opportunity to take some time out from work. Planning ahead and considering the above factors can ensure clarity for both employers and employees and create a mutually beneficial situation.