Drafting Master Class Sabbatical Agreements

Increasingly, employees are asking to take a career break, whether to travel, pursue other interests or look after a dependant. In this article we focus on those factors which need to be addressed when recording the terms of any sabbatical arrangement.

There is no legal right to a career break, as such, in Great Britain. Normally, where staff want to take time off to deal with family issues, they opt to take parental leave, time off for dependants or annual leave. However, increasingly employees are seeking time off work for other reasons, whether to travel, complete further education or simply pursue another interest for a period of time. Employers who wish to offer staff the opportunity to take a career break need to think carefully about the terms on which the career break is offered and ensure that these are clearly set out in writing to avoid there being any confusion down the line.

Continuity of Employment

One of the key issues which needs to be agreed is whether the employee’s employment will continue during any period of absence. Many employers require employees who wish to take a sabbatical to resign from their current role with the result that they would have to reapply for a role when they were ready to return to work. In such circumstances, the employer would want to be clear that there is no guarantee of a role being available and would need to process the employee as a leaver. The legal advantages for the employer if the employee does resign include:

• the employee will stop accruing statutory holiday entitlement;
• their continuity of service will most likely be broken; and
• the employee will have no right to make a claim for unfair dismissal or redundancy pay if their job is no longer available at the end of the sabbatical period.

However, some employers may be willing to hold the employee’s role open for them during the sabbatical period. In such circumstances it is critical that a sabbatical agreement is entered into confirming the length of the sabbatical, what terms of employment will continue during the sabbatical period and what rights the employee will have on their return to work. In particular, employers will want to remind employees of their continuing obligations during any sabbatical period, such as their ongoing duty of confidentiality and any restriction on them working for a competing business whilst they are on sabbatical.

Replacements

In some instances, an employer may need to recruit a new employee to fulfil the role of the employee on sabbatical leave. If an employer wishes to replace an employee who remains employed whilst on sabbatical leave, they should ensure that any replacement employee is engaged on a fixed-term basis and that they make clear the fixed term will end once the original employee returns to work.

Holiday Rights

Employees will continue to accrue statutory holiday entitlement if they continue to be employed whilst they are on sabbatical leave, and again this should be clearly set out in the sabbatical agreement.

There are ways in which an employee’s holiday entitlement can be limited in the event they take sabbatical leave, depending on when an employer’s holiday leave falls and when the sabbatical leave commences. In most instances, where an employee remains employed during sabbatical leave, their holiday will usually be deemed to have been taken during their leave. If this is the intention, then this should be clarified in the sabbatical agreement.

Bonuses and Benefits

Where an employee continues to be employed during a sabbatical, they will continue to be entitled to their contractual terms and conditions unless there is a clear agreement otherwise. Therefore, employers will want to ensure that any sabbatical agreement sets out exactly what is to happen in respect of contractual pay, pension and other contractual benefits like car allowance or private medical insurance as well as ensuring that the agreement is signed by the employee prior to the start of the sabbatical to avoid any breach of contract or unlawful deduction claims.

It is wrong to assume that just because an employee is absent on sabbatical leave, they do not need to be considered for any bonus payments or discretionary benefits. However, it is possible for an employer to withhold a discretionary bonus on the basis that the bonus is only payable to employees in active service for the employer, or if the employer can demonstrate that a review of discretionary bonus entitlement has been carried out and an explanation provided to the employee if needed. Employers should ensure that the position regarding any bonus entitlement and any other discretionary benefits is clearly set out in the sabbatical agreement to avoid any dispute in the future.

Company Property

Another consideration for any sabbatical agreement is whether the employee will be required to return any company property for the duration of the sabbatical, such as laptop, mobile telephone, company car or security pass.

Returning to Work

In some instances, where an individual remains employed during their sabbatical break, the employer may require them to keep in touch with the business and ensure that their skill levels remain high. This can be achieved in a variety of ways, such as regularly visiting the workplace (with the employer’s agreement), keeping them updated with company news via email or post and keeping them up to date of any training opportunities. Any such requirements will need to be set out in the sabbatical agreement.

In some situations it may be possible to agree a return date with the employee and record this in the sabbatical agreement. Otherwise, employers should make sure they set out any notice requirements for the employee coming back to work, and set any limits on the maximum length of the sabbatical if appropriate. It is also advisable to set out any notice requirements should the employee decide they do not wish to return to work.

Whilst it may be that the intention is for the employee to return to their original role, depending on the length of the sabbatical, it may not be possible to guarantee this will happen and therefore the employer needs to be clear in the sabbatical agreement that any return could be to an alternative role instead of the employee’s original role or that even, if there is no alternative available, that the employee may be at risk of redundancy.

Coming up next

Our next article in the drafting masterclass series will focus on the key terms and considerations when preparing fixed term contracts.