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Unpaid Leave – When it is Approved and How

Nov 17, 2023

HBL > News > Article > Unpaid Leave – When it is Approved and How

Leave from work can also be unpaid. In which cases, under what conditions, how, and to whom all unpaid leave can be approved is explained below.

In addition to paid leave, about which we have written in detail, employers can grant employees leave from work without compensation. This is called unpaid leave because employees are absent from work and do not receive a salary.

The conditions and cases in which the use of unpaid leave can be approved are defined by the employer’s specific act, and certain reasons for approval are also determined by the Labor Law. More information on this topic follows.


1. Who Can be Granted Unpaid Leave?


Unpaid leave from work can be approved for employees who are in an employment relationship with the employer. However, this is not specified by the Labor Law, so the employer has the possibility to precisely determine through their act to whom (regardless of the type of contract and work engagement they have with the workers), and when unpaid leave can be approved.


2. Unpaid Leave Definition


When employees are granted leave from work without receiving salary compensation, it constitutes unpaid leave.

During this period, employees’ rights and obligations under the employment relationship are suspended. They do not receive monetary compensation for work, are not bound by employment obligations, and do not accrue other rights they would have as individuals in an employment relationship – contributions/length of service are not calculated or paid, they do not have social insurance, pension contributions are not made, and they do not have annual leave.

Employees can have only specific rights or obligations if the employer defines them in a general act, collective agreement, or employment contract.

Unpaid leave can be:

  • Mandatory unpaid leave – when the employment relationship is suspended, and approval is not dependent on the employer’s will (in this case, unpaid leave must be approved);
  • Unpaid leave dependent on the employer’s discretion – when the company decides whether to grant unpaid leave to the employee or not (in this case, unpaid leave may be approved or not).


3. Suspension of Rights and Obligations


The suspension of rights and obligations signifies the suspension of the employment relationship. According to the law, there are situations under which the employer is obligated to grant employees leave and suspend the employment relationship.

Employees in an employment relationship have all rights and obligations suspended if they are absent from work for the following five reasons:

  1. Due to military service or completion of military duty;
  2. Due to assignment to work abroad by the employer or within the framework of international-technical or educational-cultural cooperation, in diplomatic, consular, and other representations;
  3. Due to temporary assignment to work for another employer in an appropriate position, for a maximum of one year (Article 174 of the Labor Law);
  4. Due to election or appointment to a position in a state body, trade union, political organization, or another public function, the exercise of which requires temporarily ceasing to work for the employer;
  5. Due to serving a prison sentence (or imposed security, educational, or protective measures, lasting up to six months).

In these situations, unpaid leave and suspension of employment are mandatory for the employee using them. The employer is obliged to enable this.

In the case of the suspension of employment in the mentioned situations, the employee has the right to return to work within 15 days from the expiration of the suspension period. If they do not return within 15 days from the expiration date, the employer may terminate their employment.


4. Special Circumstances for Unpaid Leave


A unique scenario permits unpaid leave when a parent, adoptive guardian, foster parent, or custodian is entitled to unpaid time off until the child turns three. The employer must facilitate this leave upon the employee’s request.

During this break, all rights and duties are on hold—no salary or contributions are processed. However, health insurance remains the employer’s responsibility.


5. When is Unpaid Leave Approved?


When it comes to the first mandatory form of suspension of the employment relationship and unpaid leave, the company must approve unpaid leave for the employee, regardless of its will. The law defines the suspension of the employment relationship during unpaid leave, as well as the reasons for which the employer is obliged to send the employee on unpaid leave.

On the other hand, the law does not prescribe other cases for which unpaid leave can be approved for the employee. In other words, the company can independently decide in which situations employees can take unpaid leave, the duration, and how it will be resolved, provided that it does not disrupt the business process or the overall organization of the collective work. A written request from the employee is necessary to approve this form of unpaid leave.

In practice, numerous situations arise when employees are directed to take unpaid leave. As mentioned, this is possible only if the employer independently determines it by a general act (e.g., for education, taking exams, specialization, professional development, personal matters, visiting immediate family members abroad, caring for sick family members, etc.). It is not mandatory, but the company’s general act, collective agreement, or employment contract can specify other reasons when unpaid leave can be granted to employees.


6. Way of Taking Unpaid Leave?


To exercise the right to unpaid leave, approval is necessary. The employer must first approve the employee’s request. Approval of the request is mandatory.

The employee submits a written request for approval of leave without pay with justification (i.e., reason for absence), the period of absence, and the appropriate accompanying documentation that serves as proof of the legal basis for using unpaid leave.

The employer then has the right to autonomously decide whether to approve or reject the request. The decision can be made based on an assessment of the justification of the request and whether the absence of the worker will impact work, business, and the collective.

If approved, a resolution is issued, stating that the employee has the right to take unpaid leave for a specific reason, along with the duration. During the approved leave period, the employer is obligated to unregister the employee from insurance in the Central Register of Mandatory Social Insurance (CROSO) database. Upon the expiration of the approved unpaid leave period, the worker is obliged to return to work, and the employer is required to re-register them for insurance.


Feel free to contact us for consultations, additional questions, or any concerns regarding employment. HLB T&M Consulting Belgrade provides services related to calculation and payroll services , and including all tasks related to employee registration/deregistration.