Using unpaid leave to cut back hours

Give yourself room to ease back

Fatigue can creep up. Caring responsibilities tend to expand. Or maybe retirement is coming into focus and you're curious about what less work feels like before you get there. 

You don't need a big life event before you ease back on work, and you don't have to choose between full-time work and stopping altogether. Unpaid leave is a lower-commitment way to see what working less feels like, because you don’t have to negotiate a permanent change to your role.

Ways unpaid leave can work for you

There's more than one way to do this, and each keeps your role as it is:

• An unpaid day(s) each week or fortnight. A regular, predictable breather built into your existing routine.

• A little less, every day. Start later or finish earlier across the week, unpaid for the hours you're not there. A gentler way to ease back while staying in touch with work daily.

• An extended unpaid break. Leave without pay for a longer period, giving yourself a break from the routines and responsibility of everyday work.    

If you're age 55 or older, you already meet one of the qualifying reasons under the Fair Work Act to formally request a change like this, with no other circumstances needed - though parents, carers, and people affected by family violence can also qualify. Your employer can only say no for genuine and specific business reasons - beyond ‘this doesn’t suit us’. 

If you don't meet the criteria, you can still ask; it just comes down to reaching an agreement with your employer rather than a leaning on a legal right.

Setting yourself up for a good conversation

A clear and considered request will make an easier conversation:

• Be clear on what you're asking for and for how long.

• Giving some context on what's behind your request can help your employer find the arrangement that works best all-round.

• Show how your role responsibilities could be managed while you're away.

• Suggest a trial run. It's a comfortable way in for everyone.

What it means for your pay and your super

Of course your take-home pay will drop as soon as unpaid leave begins, so looking at your budget and expenses before you commit is a smart first step. 

Worth knowing too: periods of unpaid leave generally don't count towards your paid leave balance, though your overall length of service keeps adding up around it. 

Less pay now means less going into your super. And the closer you are to retirement, the more that can be a concern. These options can help soften the impact on your super:

• Salary sacrifice. It may seem counterproductive to be contributing more to super at the very moment you're earning less. However, the tax break that comes with before-tax contributions is often overlooked. Salary sacrifice contributions are taxed at 15% rather than your usual, often higher, income tax rate, so even a small amount goes further. 

• A retirement transition strategy. If turning 60 is not that far away for you, then salary sacrifice as part of the transition strategy starts to make a bit more sense. At age 60 you’re able to access your super by opening a super pension account like Aware Super’s Retirement Transition account, which pays you a regular income (pension). Payments made to you from this account are tax-free – and the bonus is your super remains invested. 

Curious what unpaid leave could mean for your take-home pay and your super?

You don't need to weigh this up on your own. Working out what suits your circumstances is exactly what our advice and guidance experts are here for.  
 
If you're with Aware Super, you can book a 45-minute one-on-one appointment with one of our qualified super specialists, it’s all part of your membership so at no extra cost. They can help answer your questions about super and retirement transition. 

Click here to book your Retire Ready Check-in.