Confused about sick leave? Here’s your must-have guide

Sick leave is an important entitlement that’s enshrined in the Holidays Act 2003, but its details can be tricky to understand even for the most seasoned of people managers. While this leave type helps keep workplaces safer and healthier, business owners must know their rights and the law to manage sick leave fairly and correctly.

In this article, our experts break down the sick leave entitlement, the laws that govern it, and answer frequently asked questions (FAQ’s) about the entitlement.

Employee sick leave entitlements

An employee can be entitled to 10 days’ sick leave by two tests:

• After the employee has completed six months of continuous employment with the employer; or
• If the above doesn’t apply, the employee has, over six months, worked for the employer for:
  • At least an average of 10 hours a week during that period; and
  • No less than one hour in every week during that period or no less than 40 hours in every month during that period.

Employer obligations and sick leave entitlements: FAQ’s

1. What’s the employer obligated to provide? 

Employers must provide sick leave to employees after they’ve worked continuously for six months. This entitlement then renews every 12 months of ongoing employment, as long as the employee continues to meet the required conditions.

2. What’s leave in advance?

An employer and employee can agree to use sick leave before it’s officially due. If they agree, the leave taken will be subtracted from the employee’s future sick leave entitlement.

3. When can sick leave be taken?

An employee may take their sick leave entitlement if they, their spouse, partner, or dependent is sick or injured.

4. Can sick leave be carried over?

An employee may carry over 10 days’ sick leave from each entitlement year to a maximum of 20 days’ sick leave.

5. What happens in the case of termination?

Sick leave doesn’t need to be paid out upon termination.

6. How does managing medical certificate requests work?

An employer can ask an employee to provide proof of sickness or injury if they take sick leave for three or more calendar days in a row, even if some of those days aren’t workdays. The employer must tell the employee as soon as possible that proof is needed and cover any reasonable costs the employee has to get it. Parties can agree to proof requirements for sick leave provided in addition to minimum sick leave entitlements.

The employer doesn’t have the right to direct which person the employee obtains proof from.

7. How does calculating sick leave entitlements work?

An employer must pay an employee an amount that is equivalent to the employee’s relevant daily pay or average daily pay.

An employer can choose to top up the difference between an employee’s Accident Compensation Corporation (ACC) or first week compensation and their normal weekly pay. In this case, they might agree to deduct one sick leave day for every five days the employee receives ACC payments or first week compensation.

8. When does payment need to be made?

An employer must pay for sick leave in the same pay period when the leave is taken. However, if the employee is asked to provide proof for the sick leave and doesn’t do so without a good reason, the employer doesn’t have to pay for that sick leave until the employee provides the proof.

9. What’s the relationship between sick leave and annual holidays?

• During annual holidays: If an employee is on annual leave but qualifies for sick leave, the employer may agree to switch the annual leave to sick leave instead.
• Before annual holidays: If an employee has planned annual leave but qualifies for sick leave before it starts, the employer must let them use sick leave instead of annual leave for that time.
• Exhausted sick leave: If an employee has exhausted their sick leave entitlement, the employer may allow the employee to take their entitled annual holidays.

10. What about extra entitlements?

An employer may allow additional entitlements under the Holidays Act 2003. Accordingly, employers should always check employment agreements and policies to ensure they’re compliant, should they choose to provide additional leave beyond the minimum legislative entitlements.

11. Are there any precedent practices?

Please ensure that you manage employees not only under legislative requirements but also with employment agreements, policies and precedent practices. Should an employer differ from existing common practices, there could be a risk of unjustified disadvantage.

What happens if employers get it wrong?

Managing sick leave can be tricky for employers to navigate, and getting it wrong can cost your business more than just money. We know that business owners wear many hats every day, and mistakes aren’t intentional, but they can and do happen – this is where Citation HR can help. We’ll complete a thorough HR Compliance Audit for your business and help identify any risks before they become problems – and the best part – this service is included in our monthly, cost-effective HR Software subscription that’s designed to protect your business from costly risks.

If any of the information in this article has raised any questions or concerns about sick leave considerations, or if you have another workplace matter you need assistance with, you can book a complimentary consultation with our experts.