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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Managing sick leave fairly and lawfully is part of running a safe, sustainable workplace. As an employer in Australia, you have clear obligations under the National Employment Standards (NES) and other laws - from how leave accrues and is paid, to what evidence you can request and how you must handle sensitive health information.
In this guide, we’ll break down your core responsibilities in plain English, cover common scenarios (like long-term illness or sick leave during a notice period), and share practical steps so you can support your team while staying compliant.
If you’re feeling unsure where to start, don’t stress - with the right systems and documents in place, you can navigate sick leave confidently and protect your business.
What Counts As Sick Leave In Australia?
Under the Fair Work Act 2009 (Cth), “sick leave” sits within personal/carer’s leave. It covers two main situations:
- Personal illness or injury: when an employee is unfit for work because of their own illness or injury.
- Carer’s responsibilities: when an employee needs to care for or support an immediate family or household member who is ill, injured or affected by an unexpected emergency.
Personal/carer’s leave is paid for full-time and part-time employees and accrues over time. Casual employees do not receive paid personal/carer’s leave under the NES. However, casuals can take unpaid carer’s leave (generally two days per permissible occasion) and may have extra entitlements under an award or enterprise agreement.
There are related leave types to be aware of:
- Compassionate leave: generally two days per permissible occasion (paid for permanent staff, unpaid for casuals).
- Family and domestic violence leave: currently 10 days of paid leave per year for eligible employees, including casuals, with specific payment rules.
Personal/carer’s leave is separate from annual leave and long service leave. Each entitlement has its own rules and purpose, so it helps to keep them clearly distinguished in your policies and payroll settings.
Your Core Obligations As An Employer
Most employers in Australia have the following responsibilities for sick leave:
- Provide minimum NES entitlements: paid personal/carer’s leave for permanent staff (which accrues and carries over), unpaid carer’s leave for casuals, plus access to compassionate leave and paid family and domestic violence leave as applicable.
- Pay correctly: when paid personal/carer’s leave is taken, pay at the employee’s base rate for their ordinary hours they would have worked during the absence.
- Allow accrual and carryover: personal/carer’s leave accrues progressively and rolls over from year to year - there’s no “use it or lose it.”
- Require reasonable notice and evidence: employees must tell you as soon as practicable that they’re taking leave and, if requested, provide evidence that would satisfy a reasonable person (often a medical certificate or statutory declaration).
- Protect privacy: only collect medical information you reasonably need, keep it secure and restrict access to those who genuinely need it for HR/work health and safety reasons.
- Avoid discrimination and adverse action: it’s unlawful to take adverse action against an employee for exercising a workplace right (like taking personal/carer’s leave) or because of a disability or illness.
- Keep accurate records: maintain leave and pay records and issue compliant payslips.
- Apply awards and agreements: if an award or enterprise agreement applies, meet any additional requirements (e.g. evidence rules, notice steps or specific processes).
- Support safety and wellbeing: meet your WHS duties, including considering reasonable adjustments for injured or ill workers where appropriate.
It’s also smart to set expectations in writing. A well-drafted Employment Contract and a clear sick leave policy help managers apply rules consistently and reduce the risk of disputes.
Accrual, Pay And Public Holidays: How Sick Leave Works
Accrual: Paid personal/carer’s leave accrues progressively based on an employee’s ordinary hours and accumulates year to year. A full-time employee typically accrues the equivalent of 10 days per year; part-time staff accrue on a pro-rata basis.
Payment: Personal/carer’s leave is paid at the employee’s base rate of pay for the ordinary hours they would have worked during the absence. Loadings, overtime, penalties and allowances are excluded unless your applicable instrument says otherwise.
Carryover and cashing out: Unused personal/carer’s leave carries over each year and generally cannot be cashed out under the NES (unless an enterprise agreement allows it and strict conditions are met). Unused paid personal/carer’s leave is not paid out when employment ends, unless a contract or instrument specifies otherwise.
Becoming sick during annual leave: If an employee becomes ill while on annual leave and provides acceptable evidence, that period can usually be reclassified as personal/carer’s leave, and the annual leave can be re-credited.
Public holidays during sick leave: If a public holiday falls on a day the employee would ordinarily work and they are on paid personal/carer’s leave, it’s treated as a public holiday under the NES. You don’t deduct that day from the employee’s personal/carer’s leave balance, and they should be paid for the public holiday in line with the usual rules.
Notice, Evidence And Privacy: Getting Documentation Right
Notice: Employees should notify you of their absence as soon as practicable and advise how long they expect to be away. Your policy can outline preferred channels (e.g. who to call or email), but allow flexibility for emergencies or hospitalisation.
Evidence: You can ask for evidence that would satisfy a reasonable person, and many employers require it for every absence or for absences of a specified length. If you’re unsure about the parameters, it’s helpful to understand when you can request medical certificates and the kind of information that’s appropriate to ask for.
When an employee can’t get a GP appointment in time, a statutory declaration can be a practical alternative. If staff want guidance on the format, point them to how to write a statutory declaration for sick leave.
Casual employees: While casuals don’t get paid personal/carer’s leave under the NES, they can generally access unpaid carer’s leave by providing reasonable notice and evidence. For the nuances in verifying absences for casual staff, see medical certificates for casual employees.
Privacy: You rarely need a diagnosis. Ask only for what you genuinely need to verify the absence or to assess temporary adjustments. Store health information securely and limit access to HR/management on a strict “need to know” basis.
Managing Long Or Repeated Absences
From time to time, you’ll face extended illness or recurring absences. A clear, supportive process reduces legal risk and helps employees get back to safe work sooner.
When Paid Leave Runs Out
Permanent employees may exhaust their paid personal/carer’s leave but still be unfit for work. Consider options like unpaid personal leave, annual leave on request, or temporary adjustments to duties or hours if medically appropriate. For a step-by-step approach, it’s worth reviewing managing sick leave when entitlements run out.
Medical Clearances And Return-To-Work Plans
It’s reasonable to request a medical clearance (sometimes called a “fit note”) before a return if there are genuine safety concerns or inherent requirements that could aggravate a condition. Keep requests proportionate - focus on capacity and any recommended adjustments, not diagnoses.
If medical advice suggests adjustments are needed, collaborate with the employee on a plan. Temporary modifications to duties, hours, equipment or location can support a safer return. Document your discussions and review the plan regularly.
Mental Health Considerations
Handle mental health-related absences with particular care. Train managers to recognise signs of distress, have sensitive conversations, and escalate to HR appropriately. Maintain confidentiality and, where possible, provide access to support (such as an employee assistance program) in addition to your WHS controls.
Ending Employment For Medical Incapacity
Where an employee cannot perform the inherent requirements of their role - even with reasonable adjustments - over a sustained period, ending employment on capability grounds may be lawful. This is a high‑risk decision. Before taking any step, ensure you:
- Obtain current, objective medical evidence regarding capacity
- Consider reasonable adjustments thoroughly
- Follow award/enterprise agreement processes (if any)
- Apply a fair process and give the employee a chance to respond
For the legal framework and risks, see termination on medical grounds and get tailored advice for your situation.
Common Scenarios Employers Ask About
Can Employees Take Sick Leave During A Notice Period?
Generally, yes - if they’re unfit for work and have accrued paid personal/carer’s leave, they can take it during the notice period. The notice period usually continues to run while they’re on paid sick leave (unless an applicable instrument says otherwise). Make sure you apply your evidence rules consistently. For a deeper dive, explore sick leave during a notice period.
What If An Employee Becomes Sick During Annual Leave?
If acceptable evidence is provided, those days can typically be converted to personal/carer’s leave and the annual leave re-credited. Keep your policy clear about evidence requirements so payroll and managers apply this consistently.
Do Public Holidays Reduce A Sick Leave Balance?
No. If a public holiday falls on a day the employee would ordinarily work during a period of paid personal/carer’s leave, it is treated as a public holiday. You don’t deduct that day from their personal/carer’s leave balance.
Do You Pay Out Unused Sick Leave On Termination?
Under the NES, accrued paid personal/carer’s leave is not paid out when employment ends (unless a contract or enterprise agreement says otherwise). Make sure your offboarding processes and payroll are aligned with this rule to avoid over or underpayments.
What Documents Help Managers Handle Sick Leave Consistently?
Clarity prevents confusion. Ensure your team has access to a well‑structured Employment Contract and a practical sick leave policy (often included within a broader staff handbook). This is where you set expectations around notice, evidence, contact points, privacy, and return‑to‑work steps so everyone is on the same page.
Key Takeaways
- Personal/carer’s leave covers an employee’s own illness/injury and caring needs; it accrues progressively for permanent staff and carries over year to year.
- When paid sick leave is taken, pay at the base rate for ordinary hours the employee would have worked; generally, unused sick leave isn’t paid out on termination.
- You can require timely notice and reasonable evidence, but keep requests proportionate and respect privacy. If needed, use a medical certificate or a statutory declaration.
- Public holidays that fall during paid personal/carer’s leave are treated as public holidays under the NES and should not be deducted from sick leave balances.
- Have a clear process for long or repeated absences: rely on current medical evidence, consider reasonable adjustments, and use fit‑for‑work notes where genuinely needed before a return.
- Complex scenarios - like sick leave during a notice period or potential termination for incapacity - carry legal risk, so seek advice early and document each step.
If you’d like a consultation on your sick leave obligations and documents, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.
