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In every Australian workplace, employee sick leave is a crucial safety net. It protects both staff and businesses if someone is too unwell to work. But what happens if you run out of sick leave? Whether you’re an employee using up your accrued leave, or a business owner managing an unwell team member, understanding your options is essential when sick leave runs out.
Handling sick leave is not just about ticking the right boxes – it’s about balancing your obligations under workplace law while maintaining a healthy, fair, and productive workplace. If you’re unsure where to turn when entitlements are exhausted, you’re not alone. Navigating what to do next can be daunting, but with the right knowledge and legal guidance, you can manage these situations smoothly and lawfully.
In this article, we’ll break down exactly what your options are when sick leave runs out, key legal requirements for employers and employees, and best practices for managing extended absence. If you need tailored advice, you can always reach out to our employment law team for guidance specific to your situation.
What Is Sick Leave And How Much Are Employees Entitled To?
Let’s start with the basics. Sick leave, also known as personal/carer’s leave, is a key entitlement under the National Employment Standards (NES). Full-time employees are entitled to 10 days of paid sick leave for each year of service, accruing progressively. Part-time staff get a pro rata amount based on their hours.
Sick leave can be used for:
- Personal illness or injury (including stress, mental health, or other serious health conditions)
- Caring for an immediate family or household member who is ill or injured, or facing an emergency
If an employee exhausts their paid sick leave but still needs to be absent for health reasons, different options and obligations come into play. That’s when it’s crucial for business owners and managers to know: what happens if you run out of sick leave?
What Happens If You Run Out Of Sick Leave?
Once all paid sick leave is used, employees face several possible scenarios. Here’s a clear outline for both employers and employees to refer to.
1. Accessing Other Leave Types
- Annual Leave: Employees may request to use annual leave if available. Employers must generally approve this unless there’s a valid business reason to refuse. This is a common way to cover an ongoing absence after paid sick leave runs out.
- Unpaid Leave: Employees are entitled to take unpaid sick leave if they have no paid sick leave balance and are not eligible for any other type of paid leave. This entitlement is included in the NES for absences due to illness or injury.
- Carer’s Leave: If the absence is to care for a family member, employees can also take unpaid carer’s leave if all paid entitlements are exhausted.
2. Workplace Flexibility & Other Arrangements
- Leave Without Pay: Employers may offer discretionary unpaid leave (often called leave without pay). There is no obligation to approve further leave, but many workplaces offer it where reasonable.
- Flexible Work Arrangements: If an employee’s illness is ongoing, they may seek flexible or reduced hours arrangements under the NES. This can help transition back to work or provide a supportive pathway for recovery.
- Personal Crisis Leave: Some awards, enterprise agreements, or company policies may also provide for special leave (paid or unpaid) in certain situations – review all applicable documents.
3. Long-Term Absence: What’s Next?
If an employee is absent from work for a long time due to illness or injury and all leave entitlements are exhausted, both parties need to consider their rights and responsibilities. Employers still have obligations under employment law, equal opportunity, and (sometimes) anti-discrimination legislation. Ending employment because of ongoing illness requires careful compliance with laws to avoid potential unfair dismissal or discrimination claims.
Key considerations include:
- Consultation: Workplace law or applicable Modern Awards may require consultation before making any significant changes, such as termination.
- Assessment: Employers need to consider whether reasonable adjustments can be made, and whether the employee can safely return. Get medical advice if needed.
- Dismissal: It is generally unlawful to dismiss an employee because of illness unless they’ve been absent for at least three consecutive months (or a total of three months over 12 months) and have exhausted all paid and unpaid leave. Seek professional advice before taking this step.
What To Do If You Run Out Of Sick Leave?
If you or your employee have run out of sick leave, here are the steps you can take to ensure both legal compliance and compassion in the workplace.
For Employees:
- Notify your employer: Keep communication open. Let your employer know as soon as you’re aware you’ll need more time away than your current sick leave balance covers.
- Request other leave: Check your annual leave balance. If you have holidays accrued, seek approval to use this for your absence.
- Seek unpaid sick leave: If you don’t have any annual leave left, you’re generally entitled to unpaid sick leave. Be prepared to provide evidence, such as a medical certificate or statutory declaration, if requested.
- Ask about flexible arrangements: If your illness or injury may impact your work long-term, you can request flexible work arrangements or a change to your hours or duties.
- Check your employment contract or award: Some workplaces offer additional leave entitlements or access to special leave. Review your contract, Modern Award, or enterprise agreement.
For Employers:
- Stay compliant: Familiarise yourself with the NES, Modern Awards, and your organisation’s sick leave and flexible work policies. Don’t make any decisions (especially termination) before checking your legal obligations.
- Document everything: Keep complete records of leave balances, approvals, correspondence, and any evidence provided, in case you need to justify your processes at a later date.
- Engage with empathy: Employees running out of sick leave are often facing significant stress and uncertainty. Open and transparent communication is key to a positive workplace culture and legal compliance.
- Consider alternatives: Offer annual leave or unpaid leave if possible, and consider flexible work arrangements if appropriate for your business.
- Seek legal advice if unsure: Before denying leave, changing an employee’s status, or moving towards dismissal, it’s worth getting tailored legal advice on performance management or termination.
Legal Requirements For Managing Extended Sick Leave
Australian workplace law sets down clear requirements for the management of sick leave and the steps to follow when entitlements run out. Here’s a quick overview of key obligations and best practices for employers and managers:
- Evidence: You can require employees to provide evidence (such as a medical certificate or a statutory declaration) for absences, even if taken as unpaid leave. Your business policy should specify what’s required and when.
- Protection from dismissal: Remember, employees on unpaid sick leave are generally protected from dismissal due to the illness itself for at least three months (continuous or cumulative over 12 months) after they run out of paid entitlements.
- Workplace health and safety: Ensure that any employee returning from sick leave is fit to resume work safely. You may request a fitness for work certificate if unsure.
- Discrimination law: Illness and injury may constitute a disability under Australian law. Be very careful not to discriminate, directly or indirectly, as this may expose you to legal risks.
- Modern awards and enterprise agreements: Always check whether any additional provisions or requirements apply to your business or industry.
Every situation is unique, so keep in mind that consultation is a legal requirement in some cases. For detailed obligations under the NES, awards, and contracts, our team can help you review your workplace policies and documentation.
What Are The Right Legal Documents & Policies For Managing Sick Leave?
It’s not enough to simply know the law – having the right contracts and policies in place is key to managing sick leave the right way, especially if entitlements are used up. Here are the essential legal documents your business should consider:
- Employment Agreement: Outlines the employee’s leave entitlements and the process for sick leave, annual leave, and even unpaid leave.
- Workplace Policy/Employee Handbook: Policies regarding attendance, evidence required for sick leave, and the process for requesting additional leave help set expectations and minimise disputes.
- Performance Management & Termination Policy: Procedures for managing ongoing or long-term absences, including compliance with the Fair Work Act and anti-discrimination rules.
- Grievance Policy: Ensures that issues can be raised and resolved before becoming larger legal risks.
If your policies or agreements haven’t been reviewed recently, now’s a great time to ensure they’re up to date with current best practice and legal compliance. Having clearly worded documents, accessible to all staff, can help prevent misunderstandings and ensure everyone knows what to do if they run out of sick leave.
How To Respond If Extended Absence Is Likely?
Sometimes, an employee may be looking at weeks or even months away from the workplace due to a serious health condition. In these cases, best practice is to:
- Communicate transparently and empathetically about available leave options and processes
- Offer support in the form of Employee Assistance Programs (where available), or provide information on external services
- Keep detailed records of all discussions and decisions
- Continually reassess the situation as new medical or personal information becomes available
- Ensure compliance with any obligations to consult under awards or agreements
This is not just about ticking legal boxes – it’s about protecting your business from unfair dismissal or discrimination claims, and supporting your team for the long term. If you’re facing a complex situation, our legal team can guide you through performance management and employee termination risks.
Managing Casual Employees And Sick Leave
It’s worth noting that casual employees usually don’t have access to paid sick leave. Instead, they receive a casual loading to compensate for the lack of certain entitlements, but can still take unpaid carer’s or sick leave if they need time off due to personal illness/injury or to care for a family member.
Casual staff are protected from dismissal for temporary absences due to illness, under similar rules as permanent staff. Make sure all types of employees – full-time, part-time, and casual – are treated fairly and in accordance with the law.
Practical Tips For Managing Sick Leave When Entitlements Run Out
- Encourage employees to maintain regular contact during extended absence
- Offer clear, written communication about leave entitlements, the process to apply for additional leave, and expected documentation
- Balance operational needs with legal duties – use temporary replacement staff or flexible work options where possible
- Keep up to date with fair work legislation and seek specialised legal guidance if in doubt
- Foster a supportive workplace culture to help employees feel comfortable asking for the help they need
Key Takeaways
- Paid sick leave entitlements are protected under the NES – but when those run out, employees and employers both have legal options and responsibilities.
- Annual leave, unpaid sick leave, or flexible work arrangements can provide support after sick leave is exhausted.
- Employers must comply with workplace, anti-discrimination and Fair Work laws before moving to dismiss an employee who’s run out of leave.
- Having clear employment agreements, workplace policies, and up-to-date documentation helps minimise confusion and legal risk.
- Regular, empathetic communication and compliance with legal obligations protect both your team and your business reputation.
- Seeking legal advice early is the best way to protect your business and employees in complex absence situations.
If you would like a consultation on managing employee sick leave and what happens if you run out of sick leave, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.
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