If an employee wants (or needs) an extended leave of absence, their employer might agree to a sabbatical. We explain what this means for employers, and what to consider.
What is a sabbatical?
A sabbatical is an extended break from work which employees agree with their employer for a set period of time. Employees are still employed by the business during a sabbatical, and will still have a role to return to.
A sabbatical shouldn’t be confused with their holiday entitlement or sick leave, though an employee may wish to use their accrued holiday leave at first.
What is the purpose of a sabbatical?
There’s an entire planet to explore, new ideas to work on, and discoveries to be made. An extended sabbatical enables staff to pursue other interests or to reflect whilst away from the work environment.
Employees are likely to return feeling rested and rejuvenated, and hopefully with plenty to inspire them. And really, the appeal of a sabbatical is the promise of returning to stable employment afterwards; taking an unpaid break from work is a lot less scary if the job is still there to go back to.
It’s not all about supporting employees though. Being approachable on the subject of prolonged personal absences has benefits for employers, too. A member of the team being away for an agreed length of time is probably preferable to losing valuable knowledge and experience from the business altogether.
Do I need to pay staff for sabbatical leave?
Paid sabbatical leave is rare, though as an employer you can offer it at your own discretion. It’s more commonly the case for academics who are taking a break from their usual role to pursue an area of research.
How does sabbatical leave work on payroll?
During a sabbatical an employee is still just that – an employee. Staff taking a prolonged leave of absence should still be included in the payroll and on PAYE submissions, even if their pay is zero for that payroll period. Just remember to change the salary amount, both when they finish to avoid over payments, and when they return to avoid frayed tempers!
Will sabbatical leave affect tax?
Yes, taking a sabbatical can affect an employee’s tax bill. Permanent employees usually have their monthly tax deductions worked out on the expectation of what their salary will be for the full tax year, so this means their tax-free Personal Allowance is spread across the year too. Taking unpaid leave during the tax year might mean they don’t use all of the allowance up, so they might not have to pay as much tax as originally thought and will be due a refund on the tax they’ve already paid.
The overpayment can be dealt with either as:
- A lump-sum refund through the employer
- A tax code adjustment so that the employee pays slightly less tax the following year, to balance out the overpayment
Overpayments can only be repaid once the tax year has finished though!
If the employee decides not to come back (and yes that’s always a possibility) then obviously refunds can’t be processed through the employer. In that case, the employee will need to request a refund through their Personal Tax Account (PTA).
If you have questions about this or other payroll procedures, talk to a member of our team to learn more. Call 020 3355 4047 and get an instant online quote.
Want to learn more?
Subscribe to our newsletter to get accounting tips like this right to your inbox
