Alex is Sprintlaw's co-founder and principal lawyer. Alex previously worked at a top-tier firm as a lawyer specialising in technology and media contracts, and founded a digital agency which he sold in 2015.
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Personal leave pay is one of those employment topics that sounds straightforward until you’re the one processing payroll, managing rosters, and responding to “I’m unwell today” messages at 6:30am.
As a small business owner, you’re balancing compliance with running a productive team. Getting personal leave pay right matters for cashflow, employee trust, and reducing the risk of disputes (or Fair Work complaints) later.
This guide breaks down how personal leave pay works in Australia, what you need to pay (and when), and the practical steps you can put in place to manage it consistently.
Note: This article is general information for Australian employers and isn’t legal advice. Awards, enterprise agreements and contracts can change what applies in your workplace.
What Is Personal Leave Pay (And When Does It Apply)?
In Australia, “personal leave” is commonly used to refer to personal/carer’s leave under the National Employment Standards (NES) in the Fair Work Act.
For employers, the key compliance question is usually: when do you have to pay an employee for time off due to illness or caring responsibilities?
Personal/Carer’s Leave vs Other Types Of Leave
It helps to separate out a few concepts that often get mixed together in day-to-day conversations:
- Paid personal/carer’s leave: For permanent employees (full-time and part-time) when they are unfit for work due to personal illness/injury, or they need to provide care or support to an immediate family or household member.
- Unpaid carer’s leave: Available to all employees (including casuals) in certain circumstances.
- Compassionate leave: Separate entitlements for serious illness/injury or death of a close family/household member.
- Family and domestic violence leave: Separate NES entitlement, with specific rules about pay and evidence.
- Annual leave: A different entitlement entirely (sometimes employees ask to use annual leave instead of personal leave).
In this article, we’re focusing on the most searched and most operationally relevant issue for employers: paying employees correctly when they take personal/carer’s leave.
Who Gets Paid Personal Leave?
As a general rule under the NES:
- Full-time employees get paid personal/carer’s leave.
- Part-time employees get paid personal/carer’s leave on a pro-rata basis.
- Casual employees do not get paid personal/carer’s leave under the NES (but they may access unpaid carer’s leave and other protections).
Some modern awards, enterprise agreements, or employment contracts may contain additional or more generous entitlements. However, it’s generally uncommon for casual employees to have “paid sick leave” unless an enterprise agreement or contract specifically provides it, so it’s important to check what applies to your business.
How Much Personal Leave Pay Do You Owe (And How Do Accruals Work)?
For permanent employees, paid personal/carer’s leave accrues over time and is generally measured in hours (even if your payroll system shows it in days).
Accrual Basics For Full-Time And Part-Time Staff
Under the NES, a full-time employee accrues the equivalent of 10 days of paid personal/carer’s leave per year. For part-time employees, the entitlement accrues proportionately based on their ordinary hours of work.
In practical terms, most employers manage this by:
- accruing personal leave progressively each pay period, and
- deducting personal leave based on the employee’s ordinary hours they would have worked during the absence.
Does Personal Leave Roll Over?
Yes. Unused paid personal/carer’s leave accumulates from year to year for permanent employees.
This is one reason personal leave pay can become a financial and operational issue if you don’t have clear processes. Long-tenured employees can build up significant balances (which affects payroll administration, budgeting, and sometimes end-of-employment disputes).
Can Personal Leave Be Cashed Out Or Paid Out On Termination?
In most cases, no. Unlike annual leave, unused paid personal/carer’s leave is generally not paid out when employment ends. It also generally can’t be cashed out during employment, unless a specific award or enterprise agreement allows it and the strict rules for cashing out are met.
What Rate Is Personal Leave Paid At?
Paid personal/carer’s leave is generally paid at the employee’s base rate of pay for their ordinary hours. Whether allowances, loadings, penalties, overtime and commissions are included can depend on the employee’s industrial instrument (award or enterprise agreement) and the specific circumstances.
If you’re unsure what should be included for a particular role, it’s worth checking the applicable award/enterprise agreement and getting advice before you run into a complaint or underpayment issue.
Evidence And Notice: When Can You Ask For A Medical Certificate Or Statutory Declaration?
A common frustration for employers is uncertainty around evidence. You want to support genuine illness and caring responsibilities, but you also need consistency and an approach that doesn’t invite misuse.
Can You Require Evidence For Paid Personal Leave?
In many cases, yes. Under the NES, you can require evidence that would satisfy a “reasonable person” that the employee was genuinely entitled to take personal/carer’s leave.
Evidence commonly includes:
- a medical certificate, or
- a statutory declaration.
If your employee provides a statutory declaration, it helps to have a consistent format and process, and you may find it useful to refer them to a compliant way of preparing it (for example, statutory declaration requirements and practical drafting tips).
What About “Sick Leave Without A Certificate”?
Some workplaces allow (or are required under an award to allow) a limited number of days without a medical certificate, especially where absences are short. The trick is to apply your approach consistently and document it.
From a risk perspective, the more important point is this: if you deny paid personal/carer’s leave because evidence wasn’t provided, you’ll want to be confident that your request for evidence was lawful, reasonable, and clearly communicated.
If you’re building workplace policies, it may also help to understand what the common rules and expectations are around sick leave without a certificate (especially where your workforce spans different awards).
Notice Requirements: How Much Warning Does An Employee Need To Give?
Employees are generally required to notify you as soon as practicable that they will be absent, and advise (where possible) the expected duration.
In reality, “as soon as practicable” might mean a phone call before a shift, a text message first thing in the morning, or an email before start time, depending on your business.
The best practice for employers is to set a clear rule in writing (for example, “call the manager at least 1 hour before shift start, unless it’s an emergency”). This reduces confusion and improves fairness across the team.
Common Payroll Mistakes With Personal Leave Pay (And How To Avoid Them)
Personal leave pay errors are a frequent cause of wage disputes. Often, the issue isn’t “bad intent” - it’s messy rostering, unclear contracts, and payroll systems set up without the award rules in mind.
Here are some of the most common traps we see small businesses fall into.
1. Paying Personal Leave To Casual Employees By Accident (Or Not Paying It When Required)
Casual employees generally don’t receive paid personal/carer’s leave under the NES. If you accidentally pay paid sick leave to casual staff without intending to, it can create an expectation or pattern that is difficult to unwind later.
On the flip side, if someone is actually permanent (even if you call them “casual”), they may be entitled to paid personal/carer’s leave. Misclassification can lead to backpay and penalties.
If you’re unsure whether someone is genuinely casual, it’s worth reviewing how their engagement is documented and how their roster works. Having the right Employment Contract in place can reduce ambiguity from the outset.
2. Deducting The Wrong Number Of Hours
Personal leave should generally be deducted based on the hours the employee would have worked (their ordinary hours).
Problems commonly arise where:
- an employee’s roster varies week to week,
- the employee works shifts longer than a “standard day”, or
- the payroll system is set up to deduct “1 day” regardless of the scheduled hours.
A practical approach is to manage personal leave balances in hours and ensure your rostering and payroll systems align.
3. Confusion Between Annual Leave And Personal Leave
Employees sometimes ask to take annual leave instead of personal leave (for example, if they don’t want to provide evidence, or they’re preserving their personal leave balance). Whether you can allow this depends on the circumstances, your policies, and the relevant industrial instrument.
It’s also important that managers don’t “force” annual leave where personal leave is genuinely applicable, as this can create disputes later.
4. Not Handling Personal Leave During Notice Periods Properly
If an employee is resigning (or you’ve given notice of termination), and they take personal leave during the notice period, you still need to handle personal leave pay correctly. This is a high-risk period for payroll disputes and misunderstandings.
To avoid problems, it’s worth understanding how sick leave during notice periods tends to be treated and what your obligations may look like depending on the scenario.
Practical Steps For Employers To Manage Personal Leave Pay With Confidence
Personal leave pay issues are much easier to prevent than fix. The strongest approach is to set expectations early, document them, and make sure managers apply the rules consistently.
1. Check The Applicable Award Or Enterprise Agreement
Your starting point is to confirm which modern award (if any) applies to each employee, and whether there’s an enterprise agreement in place.
Many personal leave pay questions come down to “what does the award say about pay calculations, evidence, and shift workers?” If you need to locate an agreement, it can help to know how to find an EBA and confirm what’s currently in force.
2. Build A Clear Leave Process Into Your Workplace Policies
A simple leave process can prevent most disputes. Your policies should address:
- how to notify of absence (who to call/text and when)
- when evidence is required (and what evidence is acceptable)
- how you handle frequent short absences
- how leave requests are recorded and approved
- privacy expectations (how medical information is handled and stored)
Policies are also useful because they keep decision-making consistent across different managers and locations.
3. Make Sure Your Employment Contracts Match How You Actually Operate
If your contracts don’t reflect reality, you’re more likely to run into disputes around pay and entitlements.
For example, if you have staff with variable ordinary hours, shiftwork, or part-time arrangements that change seasonally, you’ll want the contract structure to match that. If you’re onboarding staff now, putting the right Employment Contract in place early usually saves you time (and cost) later.
4. Train Your Managers On What They Can (And Can’t) Ask
Personal leave touches privacy and employee relations. A well-meaning manager can create legal risk by asking overly intrusive questions or demanding details that are not required.
Keep it simple. The focus should be on:
- whether the employee is unfit for work (or needs to provide care/support)
- the expected duration, and
- what evidence is required for paid personal/carer’s leave.
If you’re ever considering asking for more detailed health information or “clearance” before returning, there are rules around when that is appropriate. For example, it can be helpful to understand medical clearance and how to approach it carefully.
5. Keep Proper Records (And Make Payroll Audits A Habit)
Good record keeping protects you if there is a dispute down the track. Make sure your records show:
- leave accrued and taken (in hours)
- leave approvals
- evidence provided (if required)
- payments made and how they were calculated
Even a small quarterly check can uncover issues early, especially if you have a mix of part-time staff, shift workers, and variable rosters.
Key Takeaways
- Paid personal/carer’s leave under the NES applies primarily to full-time and part-time employees (not casuals).
- Paid personal/carer’s leave accrues progressively and is usually best managed in hours to reflect ordinary hours and roster patterns.
- You can often require reasonable evidence (like a medical certificate or statutory declaration) before paying personal/carer’s leave, but your process should be consistent and clearly communicated.
- Personal/carer’s leave generally isn’t cashed out and isn’t paid out on termination (unlike annual leave), unless a specific industrial instrument allows cashing out and the rules are met.
- Common mistakes include misclassifying employees, deducting the wrong hours, and mishandling personal leave during notice periods.
- Clear workplace policies, correctly drafted employment contracts, and manager training are practical ways to reduce payroll errors and disputes.
If you’d like help setting up compliant policies and contracts (or you’re dealing with a tricky personal leave pay issue), you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.
