In general, payments received during a sabbatical are a form of salary continuation, and are paid with the expectation that the employee will return to work upon expiration of the sabbatical. In other words, sabbatical payments are special wage payments paid during an existing employment relationship, and, as such, are earnings for deduction purposes in the month for which paid. This is so even if the employee retires after the sabbatical without having returned to work, because the employer granted the sabbatical with the expectation that the employee would return to work.

There are instances, though these are rare, where an employer will make sabbatical payments to an employee it knows will not return to work upon expiration of the sabbatical. Sabbatical payments in these cases are earnings for deduction purposes, but they are chargeable to the last month worked because the employer has no expectation that the employee will return to work (i.e., the employment relationship has terminated).