The one place US law grants a sabbatical, stated precisely so it is not mistaken for a general rule. Title 5 of the United States Code, section 3396(c)(1), provides that "the head of an agency may grant a sabbatical to any career appointee for not to exceed 11 months in order to permit the appointee to engage in study or uncompensated work experience which will contribute to the appointee's development and effectiveness", and that the sabbatical "shall not result in loss of, or reduction in, pay, leave to which the career appointee is otherwise entitled, credit for time or service, or performance or efficiency rating." The conditions at 3396(c)(2) are strict: not more than once in any ten-year period, and only after seven years of qualifying service, at least two of which must be in the Senior Executive Service. Section 3396(c)(3) requires the appointee to agree to serve two more consecutive years afterward, and makes them liable to the United States for all expenses of the sabbatical, salary included, if they fail to do so without good and sufficient reason.
That provision reaches a small population of senior federal executives, and it is worth knowing chiefly because its existence is sometimes read as evidence of a general framework. There is no such framework: nothing in federal law requires a private employer to offer a sabbatical, sets a minimum length or rate of pay for one, or protects the job while it is taken.
What stops when the pay stops. An elective deferral to a 401(k) or 403(b) is a percentage of compensation, so an unpaid month contributes nothing and triggers no employer match on that month. Contributions to a health savings account or a flexible spending account made by payroll stop the same way. So do the pre-tax elections that fund health premiums, which is what makes the next point matter.
What continues, and what it costs. Group health coverage generally continues during an approved leave if the policy says it does, but the employee's share of the premium still has to be paid, and with no paycheck to deduct it from the employer will usually bill for it directly. An unpaid leave is therefore a month in which money flows outward for coverage that used to be invisible. Group life and disability premiums behave the same way. Whether a reduction in hours during the leave is itself an event that ends coverage — and so starts a continuation-coverage right — is a question for the plan document and the employer's policy, and it is worth asking before the leave starts rather than after.
The retirement service point is the one nobody checks, and it can cost a vesting year. Under Internal Revenue Code section 411(a)(5)(A), a "year of service" for vesting purposes means a 12-month period "during which the participant has completed 1,000 hours of service", and section 410(a)(3)(A) uses the same 1,000-hour test for participation. The definition of an hour of service, at 29 CFR 2530.200b-2(a)(2), credits "each hour for which an employee is paid, or entitled to payment, by the employer on account of a period of time during which no duties are performed", listing vacation, holiday, illness, incapacity, layoff, jury duty, military duty and leave of absence.
Read the two together and the distinction is sharp. A paid sabbatical credits hours for time in which no duties are performed; an unpaid one credits none. There is a ceiling on the paid side that is easy to miss: 2530.200b-2(a)(2)(i) requires no more than 501 hours of service to be credited for "any single continuous period during which the employee performs no duties", so a paid absence longer than about three months stops adding credited hours at that point unless the plan is more generous. An employee working a standard schedule accumulates roughly 2,080 hours in a full year, so a three-month unpaid absence still leaves them comfortably above 1,000 — but someone part-time, someone taking a longer leave, or someone whose absence straddles two plan years in the wrong proportions can land under the threshold and lose a year toward vesting or, in the first year, toward eligibility. The plan's own computation period is what decides it, and the plan administrator can say what that period is.
Two smaller items worth putting on the list. A sabbatical is not family and medical leave and gets none of its protections, so the job-restoration right that comes with a qualifying medical or family leave does not attach to a discretionary sabbatical unless the policy grants one. And a year with several unpaid months is a low-income year, which is the reason the term shows up in tax planning discussions at all; what to do with a low-income year is covered by the tax planning, tax gain harvesting and Roth conversion entries rather than here.
