The Employer’s Guide to Managing Sick Leave in Australia

Sick leave is a basic entitlement for employees in Australia, designed to protect their health and wellbeing. As an employer, understanding how sick leave works—and your responsibilities—helps you manage compliance and create a supportive workplace.

How Much Sick Leave Are Employees Entitled To?

➡️ Note:

Both sick leave and carer's leave entitlements accrue over time and roll over from year to year if unused. They’re calculated based on ordinary hours worked, giving both full-time and part-time employees proportionate leave benefits.

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Common reasons for taking sick leave include:

• Physical illness or injury (e.g. flu, surgery recovery)
• Mental health issues (e.g. stress, anxiety, depression)
• Pregnancy-related illness
• Emergencies impacting health

• Caring for a sick child, spouse or parent
• Assisting a household member who requires short-term care during an illness.

Carer's Leave

Employees can also access carer’s leave to support an immediate family or household member who is ill or injured. This includes:

• Caring for a sick child, partner, or parent
• Assisting a household member needing short-term care

Both sick leave and carer's leave fall under the NES and are part of an employee’s minimum entitlements.

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Here’s what you need to know:

Legal Obligations Under the National Employment Standards (NES)

Under the NES, most employees (except casuals) are entitled to 10 days of paid personal/carer’s leave each year, which covers both sick leave and carer’s leave. These entitlements:

• Accrue progressively throughout the year based on the employee’s ordinary hours of work
• Roll over from year to year if not used
• Are available to full-time and part-time employees from their first day of employment

Employers must provide these minimum entitlements and cannot contract out of them.

Ensuring Accurate Accrual and Record-Keeping

You are responsible for:

• Calculating leave accruals correctly, based on the employee's hours worked
• Recording leave balances accurately, including leave taken and remaining entitlements
• Maintaining leave records for at least 7 years in accordance with Fair Work legislation
  Accurate records are essential not only for compliance but also for managing staff availability and payroll effectively.

Maintaining Confidentiality

Any personal or medical information provided by an employee (such as medical certificates) must be treated confidentially. Employers should:

• Only share health information with individuals who have a legitimate need to know (e.g. HR or direct managers)
• Securely store medical documents and maintain privacy in discussions
• Obtain consent before disclosing information further, unless required by law
  
  

Avoiding Discrimination or Adverse Actions Related to Sick Leave

Employees are protected from adverse actions because they:

• Take sick leave
• Exercise their lawful workplace rights under the NES
  
  

• Dismiss, demote or disadvantage an employee for taking legitimate sick leave
• Threaten disciplinary action for reasonable absences supported by evidence

Adverse actions related to leave entitlements can result in serious penalties under the Fair Work Act 2009.

Supporting Fair Access to Entitlements

Employers should ensure all eligible employees have:

• Equal access to their sick leave and carer’s leave entitlements
• Clear communication around the process for applying for leave
• Support when managing health issues, including consideration of flexible working arrangements or return-to-work plans after long-term leave
  Fair access promotes a positive workplace culture and demonstrates your commitment to employee wellbeing.

Here’s how to handle it smoothly:

1. Develop a Clear Sick Leave Policy

Outline the process for taking sick leave, including:

• How to notify absences
• When medical certificates are needed
• How leave balances work
  Include this in employment contracts and handbooks for clarity and consistency.

Need further help ensuring your HR strategy is where it should be? Our HR Help team can help you streamline all aspects.

2. Keep Accurate Records

Track:

• Sick leave accruals
• Leave balances
  
  

3. Respect Employee Privacy

Handle medical certificates and related health information confidentially. Only share details on a need-to-know basis, in line with privacy laws.

4. Request Reasonable Evidence

It’s reasonable to ask for a medical certificate if an employee is off sick for more than two days. This supports fair leave management and helps prevent misuse.

5. Support Return to Work

For employees returning from extended sick leave, offer support such as:

• Gradual return-to-work plans
• Adjusted duties or hours
  This ensures employees feel supported and helps them transition back smoothly.

Here’s what you need to know when managing long-term sick leave in your workplace.

How to Handle Extended Sick Leave

Employees can take paid sick leave for as long as they have accrued leave available. If their paid leave runs out, they may be entitled to:

• Unpaid carer’s leave
• Unpaid leave under your company’s policies or other agreements

For detailed information on leave entitlements, visit the Fair Work Ombudsman: Sick and Carer’s Leave.

Employers should maintain regular, respectful communication with the employee throughout their absence, focusing on support rather than pressure.

Return-to-Work Programs

A structured return-to-work plan helps employees transition back to the workplace after a long absence. Consider:

• Gradual reintroduction to duties or reduced hours
• Flexible working arrangements (such as remote work or adjusted schedules)
• Temporary or permanent changes to workload

The goal is to support the employee’s recovery and reintegration while balancing operational needs.

For guidance on supporting employees’ return to work, check out Safe Work Australia’s Return to Work Resources.

Potential Adjustments to Duties

Employers have an obligation to explore reasonable adjustments that accommodate an employee’s medical needs. This could include:

• Modified duties
• Altered work hours
• Workplace modifications

Under anti-discrimination laws, employers must consider these adjustments unless it would cause unjustifiable hardship.

More information is available from the Australian Human Rights Commission: Employment and Disability.

Access to Unpaid Leave Options

If an employee exhausts their paid sick leave entitlements, they may request unpaid leave. While there is no automatic entitlement to extended unpaid leave under the NES, employers often offer it as a show of support or according to company policies, awards, or agreements.

Communication is key—clearly explain what leave options are available and what evidence is required.

Refer to Fair Work Ombudsman: Unpaid Carer’s Leave page for more information.

Interaction with Other Leave Types

In some cases, employees may use other forms of leave to cover a period of absence, including:

• Annual leave
• Long service leave (if eligible)
• Unpaid carer’s leave

The type of leave taken should be discussed and agreed upon between the employer and employee.

For further details, visit Fair Work Ombudsman: Types of Leave 

Potential Dismissal Due to Incapacity

In rare cases where an employee is unable to return to work due to illness or injury, termination of employment may be considered.

However, strict rules apply:

• Under the Fair Work Act, an employee can’t be dismissed for temporary absence due to illness or injury within a three-month period (or longer if they are using paid leave).
• Before taking steps toward dismissal, you must:
  • Obtain medical evidence confirming the employee’s capacity
  • Explore all reasonable adjustments
  • Follow a fair and transparent process

We recommend seeking legal or HR advice before making any decisions about termination in these circumstances.

A Supportive Approach Matters

Managing long-term sick leave in a fair and compassionate way protects your business from legal risk and helps maintain a positive workplace culture.

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How is sick leave calculated for part-time employees?

Part-time employees receive pro-rata sick leave. For example:

• If they work 25 hours a week (compared to a full-time 38-hour week), they accrue about 6.6 days per year (25 ÷ 38 x 10 days).
  Sick leave accrues from the employee’s first day of work.

Can employers refuse sick leave?

You can only refuse to pay sick leave if the employee hasn’t provided:

• The required notice
• The necessary evidence (like a medical certificate)
  Always handle suspected misuse carefully and in line with HR policies and legal obligations.

Does sick leave accrue during unpaid leave?

No. Sick leave only accrues when employees are:

• Working
• On paid leave (such as annual leave or paid parental leave)
  It doesn’t accrue during unpaid leave periods.

Do employees get paid out for unused sick leave on termination?

Generally, no. Unused sick leave and carer’s leave don’t need to be paid out when an employee leaves, unless specified in an award or employment agreement.

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• Full-time employees get 10 days of paid sick and carer’s leave annually.
• Part-time employees receive a pro-rata entitlement.
• Casual employees are usually only entitled to unpaid carer’s leave, but may have access to schemes like Victoria’s Sick Pay Guarantee.
• Implement clear policies, maintain accurate records, and protect employee privacy.
• Request reasonable evidence for extended absences and support employees returning from sick leave.

Worried About Leave Compliance? Pay Cat Can Help.

Accurately managing sick leave and carer’s leave entitlements is crucial for compliance with the National Employment Standards. Pay Cat’s payroll system automatically calculates and tracks leave accruals, ensuring you stay compliant and audit-ready.