Can You Dismiss An Employee For Too Many Sick Days In Australia?

It’s natural to worry about business continuity when staff are frequently absent due to illness. Rosters blow out, overtime costs creep up, and team morale can take a hit.

At the same time, Australian employment law gives employees important protections around sick leave and illness. As an employer, you need to tread carefully.

This guide walks you through when (and when not) you can dismiss an employee for “too many sick days” in Australia, what the Fair Work laws actually say, and a practical, defensible process you can follow to manage ongoing absences while staying compliant.

Can You Dismiss Someone For Too Many Sick Days?

Short answer: not simply because they’ve used their sick leave. In Australia, employees have entitlements to personal/carer’s leave and protections around illness under the Fair Work Act 2009 (Cth).

Employees who are genuinely ill and provide reasonable evidence are generally entitled to take personal/carer’s leave in line with the National Employment Standards. You can learn more about how this entitlement works in our guide to sick leave entitlements.

The law also protects employees from dismissal because of a “temporary absence” due to illness or injury (more on that below). However, these protections are not unlimited. If an absence moves beyond a “temporary absence” and an employee cannot perform the inherent requirements of their role even with reasonable adjustments, you may be able to lawfully end employment-provided you follow a fair, evidence-based process.

What Counts As A “Temporary Absence” Under The Fair Work Act?

Under the Fair Work Act and Regulations, you must not dismiss an employee because of a temporary absence due to illness or injury.

Generally, an absence is considered “temporary” if it is for no more than three months, or if the total absences don’t exceed three months in a 12‑month period, and the employee provides acceptable evidence (like a medical certificate). Once an absence goes beyond that threshold, the specific “temporary absence” protection may not apply. But that doesn’t mean you can automatically dismiss-other protections still apply, such as unfair dismissal, general protections (adverse action), and disability discrimination laws.

So, think of the three‑month rule as a minimum protection. If absences are shorter than this and the employee provides evidence, a dismissal because of that absence will likely be unlawful. If absences extend beyond this, you still need a careful, lawful capacity process before considering termination.

Lawful Options When Absences Become Long‑Term

When absences are ongoing and start to impact operations, shift your focus from “too many sick days” to the employee’s capacity to perform the inherent requirements of the role. The goal is to make a balanced, well‑documented decision that weighs medical evidence, operational needs, and your legal obligations.

1) Manage Leave And Evidence

Start by ensuring you’ve managed personal/carer’s leave correctly. Confirm accruals, track paid and unpaid leave, and request reasonable evidence for each absence. If paid leave has been exhausted, you still need a consistent approach for extended absences-see our tips on managing sick leave when entitlements run out.

It’s reasonable to ask for medical evidence and, in some cases, a fitness for work assessment or clearance-especially before a return to higher-risk duties. Here’s a helpful overview on requesting medical clearance to return to work.

2) Assess Capacity And “Inherent Requirements”

The key legal question is whether the employee can perform the inherent requirements of the role, with reasonable adjustments if needed. This depends on the role’s core duties (not every incidental task), the employee’s medical restrictions, and whether adjustments are practical.

If the employee can perform the inherent requirements with reasonable adjustments, dismissal is unlikely to be fair or lawful. If they cannot, even with adjustments, termination may be possible-but only after you follow a procedurally fair process.

3) Consider Reasonable Adjustments And Redeployment

Before moving towards termination, consult with the employee about adjustments that could help them return safely-reduced hours, modified duties, altered shifts, or equipment changes.

Also consider whether there is any suitable alternative role. If you’re a larger business with multiple sites or teams, document those considerations and outcomes. This shows you’ve genuinely looked for ways to keep the employee engaged in work.

4) Seek Independent Medical Evidence

Where medical information is unclear or conflicting, it’s reasonable to obtain an independent medical assessment to understand the employee’s capacity and prognosis. Make sure the questions you ask the specialist are targeted to the role’s inherent requirements.

If the employee refuses consent, take advice-privacy and anti‑discrimination issues can be engaged at this point. You still need to make a decision based on the best information available, but be careful not to draw unfair inferences.

5) Follow A Fair Process

Even if capacity appears limited long‑term, you must follow a procedurally fair process: notify the employee of concerns, provide the medical evidence you’re relying on (where appropriate), invite a response, allow a support person, and genuinely consider alternatives before deciding. A well‑structured show cause letter helps set this out clearly.

If, after all of this, termination is the only viable path, it should be characterised as a capacity‑based termination (not “for too many sick days”). Our guide to termination on medical grounds outlines the key steps and risks.

Avoiding Unfair Dismissal, Discrimination And General Protections Risks

Ending employment due to illness carries several legal risks. Planning and documentation are everything.

• Unfair Dismissal: For eligible employees, the Fair Work Commission will examine whether there was a valid reason related to capacity and whether you followed a fair process. See how the Commission assesses this in our overview of section 387 factors.
• General Protections (Adverse Action): You cannot take adverse action (including dismissal) because an employee exercised a workplace right (like taking sick leave) or because of a protected attribute (such as disability). Your records must show the decision was due to capacity to perform inherent requirements, not because they took leave.
• Discrimination Laws: Disability discrimination claims are common in long‑term absence matters. Consider and document reasonable adjustments and alternatives before deciding on termination.
• Workers’ Compensation: If the illness or injury is work‑related, there are extra obligations and timing considerations under state workers’ compensation laws. Get advice early if this may apply.
• Health And Safety: You must ensure a safe workplace under WHS laws. Balancing safe duties and business needs with an employee’s medical limits is part of this duty.

Putting these elements together, a capacity‑based termination is typically lawful only after you’ve explored suitable adjustments, considered redeployment, obtained clear medical evidence, consulted with the employee, and provided procedural fairness.

Practical Steps And Policies For Employers

Day‑to‑day, it helps to have a consistent framework for managing absences. This reduces risk and makes conversations easier.

• Set Clear Sick Leave Rules: Your staff handbook and leave policies should explain how to notify absences, when evidence is required, and how fitness for work assessments are handled.
• Train Supervisors: Front‑line managers should know when to ask for evidence, how to record absences, and when to escalate long‑term absence matters to HR or legal.
• Use Evidence Consistently: Ask for medical certificates or statutory declarations consistently and proportionately. For casuals, take a look at our guide to medical certificates for casual employees.
• Consult Early And Often: Keep communication open with the employee. Regular check‑ins, return to work plans, and graduated duties can improve outcomes and reduce disputes.
• Keep Meticulous Records: Document absences, evidence provided, discussions, adjustments considered, and reasons for decisions. Good records are your best defence in any claim.
• Mind Mental Health: Many long‑term absences involve stress, burnout or psychological injury. Make sure your approach aligns with employer obligations regarding mental health.

If you’re rebuilding your leave and absence framework, it’s smart to update your Employment Contract templates and any relevant workplace policies at the same time so everything is consistent.

What About Dismissing During Or After Sick Leave?

You should never dismiss because an employee has taken sick leave. That will almost certainly be unlawful.

However, if an employee remains unfit for work beyond a temporary absence and cannot perform the inherent requirements even with reasonable adjustments, a procedurally fair capacity‑based termination may be possible. Timing matters-don’t rush a decision while you’re still waiting on medical evidence or haven’t consulted on adjustments.

If the situation reaches a point where termination is on the table, use a structured process with the right documents. Our Employee Termination Documents Suite and performance management process support can help ensure you meet your procedural fairness obligations and communicate decisions clearly.

How Much Sick Leave Is “Too Much” In Practice?

There’s no magic number of “too many sick days.” What matters is capacity and reasonableness:

• Is the employee genuinely unfit for work, as supported by medical evidence?
• Are they likely to regain capacity within a reasonable timeframe?
• Can you make reasonable adjustments that allow a safe return?
• Have you considered redeployment options?
• Have absences moved beyond a “temporary absence” and-critically-have you followed a fair, consultative process?

If you can answer those questions with well‑kept records, you’re on stronger ground. If not, pause and fill the gaps before taking further steps.

Capacity Vs Conduct: Don’t Mix The Two

Illness‑related matters should be handled as capacity issues (fitness for work), not conduct or performance issues-unless there is clear misconduct or wilful non‑compliance (e.g., falsifying medical evidence). Mixing frameworks creates legal risk.

Even where conduct issues do arise, ensure you follow the relevant process for warnings, evidence, and procedural fairness appropriate to misconduct. Keep the capacity process separate so it’s clear the decision isn’t about punishing the employee for being sick.

Common Pitfalls To Avoid

• Counting Sick Days Like KPIs: A rigid “cap” on sick days can lead to unlawful decisions. Focus on capacity and evidence, not arbitrary numbers.
• Skipping Adjustments: Not exploring reasonable adjustments or redeployment exposes you to discrimination and unfair dismissal risks.
• Rushing Decisions: Terminating mid‑treatment or before a specialist review is complete is a common red flag.
• Poor Documentation: If it’s not written down, it didn’t happen. Keep notes of every conversation, document every piece of evidence and every option considered.
• Confusing Paid Entitlements: Be clear about when personal/carer’s leave is paid, when it’s unpaid, and how you’ll manage ongoing absence-our articles on when sick leave runs out and termination on medical grounds can help you map this out.

Key Legal Documents To Have In Place

The right contracts and policies make absence management far easier. Consider the following:

• Employment Contract: Sets out leave entitlements, evidence requirements, and fitness for work provisions tailored to your roles. See our Employment Contract option for full‑time and part‑time employees.
• Staff Handbook/Leave Policy: Explains notification rules, when medical evidence is required, how graduated returns work, and who to contact-our Staff Handbook Package is designed for small businesses.
• Workplace Policies: Clear procedures around WHS, mental health and fitness for work support good decision‑making. You can standardise these with a tailored workplace policy.
• Show Cause Letter: A consistent template helps you put concerns, evidence, and proposed adjustments to the employee and invite a response-see our plain‑English guide to show cause letters.
• Termination Documents: If capacity‑based termination becomes necessary, use clear, compliant documentation-our Employee Termination Documents Suite can help you get this right.

Key Takeaways

• You can’t dismiss someone just for “too many sick days” in Australia-genuine illness is protected, and temporary absences (generally up to three months) attract specific protections.
• When absences become long‑term, focus on capacity to perform the inherent requirements of the role and whether reasonable adjustments or redeployment are viable.
• A lawful pathway to termination on medical grounds requires medical evidence, consultation, consideration of adjustments, and a fair, documented process.
• Major risks include unfair dismissal, general protections and disability discrimination-robust records and a careful process are your best protection.
• Strong foundations-an Employment Contract, leave policies, and consistent templates-make absence management clearer and reduce disputes.
• Get advice early if you’re unsure-especially where workers’ compensation, mental health, or complex medical issues are involved.

If you’d like a consultation on managing long‑term sick leave or capacity issues in your business, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no‑obligations chat.