Sick Leave During Employee Notice Period: Employer Guide

Yes, an employee can take sick leave during their notice period in Australia if they're genuinely unwell and have accrued paid personal/carer's leave.

The key rule for employers is simple: ordinary sick leave rules keep applying during notice, including notice, evidence and pay requirements.

For your business, the tricky parts are usually practical rather than theoretical. Do you still pay them? Can you ask for a medical certificate? Does the end date move? Can you deduct anything from final pay? Getting these calls right helps you comply with the National Employment Standards, the Fair Work Act 2009, any modern award or enterprise agreement, and your own employment documents.

What Counts As Sick Leave During A Notice Period?

A notice period is the time between notice being given and employment ending. Notice can be given by the employee, for example when they resign, or by the employer, for example after a termination or redundancy process.

During that period, the employment relationship continues. This means normal entitlements and obligations continue too, including paid personal/carer's leave, often called sick leave. Under the National Employment Standards, full-time permanent employees are entitled to 10 days of paid personal/carer's leave each year, and part-time employees accrue it on a pro rata basis. It accrues progressively, accumulates from year to year, and is paid at the employee's base rate for their ordinary hours.

If an employee is genuinely ill or injured during their notice period, they can use accrued paid personal leave if they follow your usual notification and evidence requirements. If they have no accrued paid personal leave left, the time away will generally be unpaid unless an award, enterprise agreement, contract or policy gives them another entitlement.

Unused paid personal leave isn't paid out when employment ends. It simply ends with the employment, unlike accrued annual leave, and in some cases long service leave, which may need to be paid in final pay.

If you choose payment in lieu of notice for an employer-initiated termination, the employment usually ends immediately and you pay the employee instead of having them work the notice. In that situation, there's no ongoing notice period for the employee to take sick leave during.

Can Employees Take Sick Leave After Resigning Or While Working Notice?

Yes. If an employee resigns and gives notice, they can still take paid personal leave during that notice period if they're unfit for work and have accrued leave available. The fact they have resigned doesn't remove the entitlement.

The same answer applies to common situations such as an employee calling in sick during their final week, taking stress leave during notice, or becoming sick after they have handed in their resignation. If the absence is because of illness or injury, it's treated under the personal leave rules. If it's stress-related and the employee is unfit for work, it can be personal leave, provided the usual requirements are met.

An employee can also resign while they're already on sick leave. Their notice can run while they're away from work. You should confirm the resignation in writing, record the final date of employment, and keep processing any personal leave requests according to your policy.

Where the employee is on workers compensation or their illness may be work-related, pause before making assumptions. Workers compensation rules are state and territory based, and separate protections can apply. You may need to coordinate the employment process with your work health and safety obligations and any insurer requirements.

Do You Have To Pay Sick Leave During Notice?

You need to pay sick leave during notice if the employee has accrued paid personal leave available and gives reasonable evidence when required. Payment is at the employee's base rate of pay for their ordinary hours. Penalty rates, overtime, bonuses, allowances and loadings are generally not included unless an award, enterprise agreement or contract says otherwise.

If the employee has run out of paid personal leave, the absence is usually unpaid. You might agree to annual leave, unpaid leave, or another arrangement, but be consistent and check the applicable modern award, enterprise agreement, contract and policy first. If this becomes a pattern, it's worth reviewing your approach to managing sick leave when entitlements run out.

Sick leave taken during notice usually doesn't extend the notice period. The original end date remains the end date unless a specific award, enterprise agreement or employment contract clearly says something different. Clauses that extend notice because of sickness aren't common, and you should check carefully before relying on one.

Final pay still needs to be calculated correctly. This usually includes unpaid wages up to the end date, any accrued annual leave, any applicable long service leave, and redundancy pay if the employee is entitled to it. For redundancy and notice calculations, you can also use this redundancy pay calculator as a practical starting point before checking the employee's exact instrument and circumstances.

What Evidence Can You Ask For During Notice?

You can ask an employee to provide reasonable evidence that would satisfy a reasonable person that they're taking leave because they're ill or injured. In practice, this is usually a medical certificate or statutory declaration. You don't need to know the employee's diagnosis. You only need evidence that they were unfit for work for the relevant day or period.

The employee must also notify you as soon as practicable that they're taking personal leave and tell you how long they expect to be away, if they can. Your workplace policy can set out the process for who they contact, when they contact you, and what evidence is required.

Be careful to apply evidence requirements consistently. If you only insist on certificates once someone has resigned, that can look unfair or targeted. A better approach is to have a clear policy that applies to everyone, then follow it calmly during the notice period. For more detail on when medical proof can be requested, check your process against guidance on requesting medical certificates.

If the employee can't get a certificate on the same day, give a reasonable timeframe. If they later provide valid evidence for the relevant period and they had accrued leave available, process it as paid personal leave. If they don't provide evidence after a reasonable opportunity, you can usually treat those specific days as unpaid.

Can Sick Leave Extend Notice Or Let You Withhold Pay?

In most cases, sick leave doesn't extend the notice period. If an employee gives four weeks' notice and is sick for three days during that time, those three days still sit inside the four-week period. Employment ends on the original end date.

You also shouldn't treat sick leave as a failure to work notice if the employee has properly notified you, has accrued personal leave and has provided reasonable evidence when required. They're exercising a workplace right, not refusing to work.

Withholding wages is different from treating a particular absence as unpaid. If evidence was reasonably requested and not provided, or there's no paid personal leave accrued, you may treat that absence as unpaid. But deductions from wages or final pay are only lawful if they're authorised by law, a modern award, an enterprise agreement, or a written agreement that meets the Fair Work Act requirements.

There's a separate issue where an employee resigns and doesn't give the required notice at all, or only gives part of it. Some modern awards allow an employer to deduct up to one week's wages from wages owed to an employee who is at least 18 if they fail to give the required notice and the deduction isn't unreasonable in the circumstances. This isn't automatic, and it isn't the same as punishing an employee for being sick during a valid notice period. Review the instrument, the contract and guidance on withholding pay from employees before making any deduction.

If an employee is fit to return before their end date, they should return to their ordinary duties for the rest of the notice period. If there are genuine safety or fitness concerns, you can request appropriate confirmation that they're safe to return, in line with guidance on medical clearance to return to work.

Worked Example: Resignation, Sick Leave And Final Pay

Imagine Mia is a full-time employee earning a base salary of $78,000 per year. Her base weekly pay is $1,500, and her ordinary work week is five days. That means her base daily rate for ordinary hours is $300.

Mia resigns on 1 August and gives four weeks' notice, with her employment ending on 29 August. At the time she resigns, she has 6.5 days of accrued paid personal leave and 8 days of accrued annual leave.

During the second week of notice, Mia is unwell for five ordinary work days. She notifies her manager on the first morning and provides a medical certificate covering the full week. Because she has enough accrued paid personal leave and has provided reasonable evidence, you pay her five days of personal leave at her base daily rate.

• Paid personal leave: 5 days x $300 = $1,500.
• Personal leave remaining: 6.5 days minus 5 days = 1.5 days.
• End date: 29 August, unchanged.
• Unused personal leave on termination: 1.5 days, not paid out.
• Annual leave on termination: 8 days, paid out in final pay.

If Mia had been sick for eight days instead, only 6.5 days would be paid personal leave. The remaining 1.5 days would generally be unpaid unless another entitlement applied or you agreed to another type of leave. Her notice end date would still usually remain 29 August.

If Mia simply stopped attending work and provided no evidence after you reasonably requested it, you would usually treat those specific days as unpaid. You would still need to be very cautious before making any broader deduction from final pay.

Employer Checklist For Calling In Sick During Notice

1. Confirm The End Date. Record who gave notice, when notice was given, the required notice period and the final day of employment.
2. Check The Instrument. Review the applicable modern award, enterprise agreement, contract and policy before deciding on pay, deductions or any unusual notice rule.
3. Ask For Evidence Consistently. Request a medical certificate or statutory declaration if your policy or the circumstances require it, and give a reasonable timeframe.
4. Check Accrued Leave. Confirm the employee's paid personal leave balance as at each day of absence.
5. Confirm Pay Treatment In Writing. Tell the employee whether the absence will be paid personal leave, unpaid leave, annual leave by agreement, or another approved arrangement.
6. Do Not Move The End Date Without A Basis. Keep the original end date unless an award, enterprise agreement or contract clearly requires a different outcome.
7. Calculate Final Pay Carefully. Include wages, paid leave taken during notice and termination entitlements, and check your final pay checklist before processing payroll.
8. Keep Records. Save notices, certificates, emails, payroll notes and final pay calculations in case the decision is later questioned.

It also helps to make sure your Employment Contract and workplace policies explain notification rules, evidence requirements and leave during notice. Clear documents make these moments much easier for managers and employees.

Legal Risks To Watch Before You Act

Taking personal leave is a workplace right. If you discipline, dismiss, threaten or disadvantage an employee because they have exercised that right, you may create adverse action risk under the Fair Work Act. Even where employment is already ending, your communications and payroll decisions should be measured and evidence-based.

Unfair dismissal risk can also arise if you move from a resignation or notice process into a termination decision because the employee is absent. If a dismissal is challenged, the Fair Work Commission can consider whether it was harsh, unjust or unreasonable, including the factors in section 387 of the Fair Work Act.

There are also specific protections around temporary absence because of illness or injury. As a broad rule, an employee must not be dismissed because of a temporary absence due to illness or injury where the legal protection applies, including where the absence is supported by required evidence and hasn't exceeded the relevant time limits. If the absence is long, recurring or connected to a disability, get advice before acting.

Anti-discrimination and work health and safety obligations can also be relevant, especially for mental health, stress leave, injury or return-to-work issues. If the situation involves suspected misuse of sick leave, performance problems, a medical condition and a looming termination date, separate each issue and avoid rushed decisions.

If an employee simply refuses to work their notice and isn't claiming personal leave, that's a different situation. Your response should still be based on the award, enterprise agreement, contract and facts. A structured approach to employees not working their notice can help you avoid overreaching.

Key Takeaways

• Employees can take sick leave during a notice period if they're genuinely unwell, have accrued paid personal leave and meet reasonable evidence requirements.
• Sick leave during notice is usually paid at the employee's base rate for ordinary hours, not penalty rates or overtime, unless an instrument says otherwise.
• Sick leave usually doesn't extend the notice period, so the original end date normally stays the same.
• You can treat a specific absence as unpaid if the employee has no accrued paid personal leave or doesn't provide reasonable evidence after being asked.
• Be careful with deductions from final pay. A deduction for failing to give notice is separate from sick leave and needs a clear lawful basis.
• Strong employment contracts, workplace policies, records and consistent manager training reduce disputes when employees call in sick during notice.

If you'd like help with managing sick leave during notice, updating employment contracts and workplace policies, or calculating final pay, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.