Managing employee absence and what Australian employers must do

Every employer will eventually deal with an employee who cannot come to work. The employee might be sick, caring for a family member, injured, or simply not following your notification process. How you respond is regulated more tightly than many business owners expect, and the obligations sit across several laws at once: the National Employment Standards (NES) in the Fair Work Act 2009 (Cth), privacy and health-records legislation, anti-discrimination law, and the unfair dismissal and general protections framework.

The core obligation is straightforward to state and harder to apply consistently. When an employee is absent for a permitted reason, you must pay the leave they are entitled to, request evidence only on a reasonable basis, keep any health information confidential, and manage repeated or long-term absence through a fair, consultative process rather than a quick dismissal. Getting any of those steps wrong can expose your business to penalties, compensation orders and discrimination claims. This article sets out who the obligations apply to, the four duties in practice, what non-compliance costs, a checklist you can act on, and when to bring in a lawyer.

Who these obligations apply to

The NES applies to national system employers, which covers virtually all private-sector employment in Australia. Its provisions are minimum standards: an employment contract or workplace policy cannot undercut them, and a modern award or enterprise agreement can only add to them.

The obligations are triggered by the type of absence and the type of employee. The main triggers are:

Personal illness or injury: A full-time or part-time employee who is unfit for work is entitled to paid personal/carer's leave.
Caring responsibilities: Leave can also be taken to care for or support an immediate family member or household member who is ill, injured or affected by an unexpected emergency.
Exhausted entitlements: Where paid leave has run out, different options apply, including unpaid carer's leave and agreed leave arrangements.
Work-related injury: Workers' compensation and return-to-work laws operate alongside the NES, and leave does not accrue while an employee is receiving workers' compensation (s 130 of the Fair Work Act 2009 (Cth)).
Patterns of absence: Once absences become frequent or long term, obligations around consultation, reasonable adjustments and lawful termination are triggered.

Casual employees sit outside part of this framework. They do not accrue paid personal/carer's leave, but they are entitled to unpaid carer's leave and to compassionate leave (which is unpaid for casuals). Keeping these distinctions straight in your rostering and payroll is where most day-to-day errors happen.

Pay the leave an employee is entitled to

The first duty is to pay leave correctly. Under s 96 of the Fair Work Act 2009 (Cth), a full-time employee accrues 10 days of paid personal/carer's leave for each year of service, on a pro-rata basis for part-time employees, accruing progressively across the year and carrying over from year to year.

An employee can take that leave in two situations set out in s 97: they are not fit for work because of a personal illness or personal injury, or they need to provide care or support to an immediate family member or household member who is ill, injured or affected by an unexpected emergency. The Fair Work Ombudsman explains that an unexpected emergency is an unforeseen, sudden and urgent event, and that the definition of immediate family extends to spouses, partners, children, parents, grandparents, grandchildren and siblings, including step-relations.

When leave is taken, s 99 requires payment at the employee's base rate of pay for their ordinary hours of work in the period. That means a standard working day is paid in full, not a proportion, and the leave reduces the employee's balance one day at a time.

Two further entitlements matter when the paid balance runs out. Under s 102, every employee including casuals is entitled to 2 days of unpaid carer's leave for each occasion of caring need, but s 103 makes clear it cannot be taken if paid personal/carer's leave is still available. And under s 104, an employee is entitled to 2 days of compassionate leave for each occasion involving a life-threatening illness or injury, a death, a stillbirth or a miscarriage, with s 106 requiring payment at the base rate for non-casual employees.

You also need to record all of this. Section 535 requires employers to make and keep employee records, including leave, for 7 years. The practical consequence is in s 557C: if you have not kept the records, you may carry the burden of disproving an employee's allegations in proceedings, which makes defending a claim significantly harder.

Request evidence, but keep the test reasonable

The second duty is to run a lawful notice and evidence process. Section 107 of the Fair Work Act 2009 (Cth) requires the employee to give notice as soon as practicable, which can be after the leave has started, and to advise the period of leave. You can then require evidence that would satisfy a reasonable person that the leave is being taken for a permitted reason.

That statutory test is deliberately flexible. A medical certificate or a statutory declaration is the most common evidence, but you cannot demand a particular form of proof that goes beyond what a reasonable person would need, and you should not ask for diagnostic details unless they are genuinely necessary. Consistency is the safeguard: if your policy asks for a certificate after two consecutive days of sick leave, apply that to everyone, and record when you ask for evidence and what you receive.

For safety-critical roles, or where you have genuine concerns about an employee's capacity to perform their duties, a fitness-for-work assessment can be appropriate. Keep it focused on capacity to do the job rather than on the underlying diagnosis, give the assessor a clear list of the role's requirements, and treat the result as confidential information.

Protect the health information you collect

The third duty is to handle the health information that flows from these requests carefully. It is a common misconception that the Australian Privacy Principles (APPs) in the Privacy Act 1988 (Cth) automatically regulate medical certificates held by employers. In fact, s 7B(3) of that Act exempts acts directly related to a current or former employment relationship and to an employee record, which is why most routine employment health records fall outside the federal APPs.

That exemption is not a licence to mishandle information. State and territory health-records laws can still apply; Victoria's Health Records Act 2001 is the leading example and regulates health information held by organisations regardless of the federal exemption. You also remain subject to duties of confidentiality, your own privacy policies, and, where the exemption does not apply, the APPs, including the requirement in APP 3 that sensitive information be collected only with consent and only where reasonably necessary.

Good practice looks the same under every one of those regimes:

Collect only what you need to verify the absence or assess fitness for duty.
Keep medical certificates, assessment reports and notes of capacity discussions in a restricted file separate from general personnel records.
Limit access to the people who genuinely need to know.
Store records securely and destroy them when they are no longer needed.

Manage repeated and long-term absence fairly

The fourth duty is the one that carries the most legal risk: responding to patterns of absence, long-term illness and incapacity.

Start by talking to the employee early, before frustration builds on either side. Frequent short absences may reflect an underlying health condition, a caring arrangement, or a workplace factor such as rostering or workload that you can address. Keep file notes of these conversations and any agreed adjustments.

Where an employee has a disability or a chronic illness, anti-discrimination law shapes what you can do. Section 15 of the Disability Discrimination Act 1992 (Cth) makes it unlawful to discriminate against an employee on the ground of disability, including by dismissing them or subjecting them to a detriment, and s 21B provides that discrimination is only excused where avoiding it would impose an unjustifiable hardship. In practice this means asking what reasonable adjustments, temporary or permanent, would let the employee perform the inherent requirements of the role, whether that is changed duties, hours, equipment or timelines. The Fair Work Act reinforces this through s 351, which prohibits adverse action on grounds including physical or mental disability and carer's responsibilities.

There are also specific protections against dismissal. Under s 352, an employer must not dismiss an employee because they are temporarily absent from work due to illness or injury of a kind prescribed by the regulations. Dismissing for absence caused by illness, rather than for a genuine failure to follow reasonable process, is the mistake that most often turns into an unfair dismissal or general protections claim.

If a termination genuinely becomes necessary because the employee cannot meet the inherent requirements of the role now or in the foreseeable future, the process matters as much as the reason. The Fair Work Commission will assess whether the dismissal was harsh, unjust or unreasonable under s 385 of the Fair Work Act 2009 (Cth), weighing the factors in s 387: whether there was a valid reason related to capacity, whether the employee was notified of it, whether they had an opportunity to respond, and whether they could have a support person present. An employee who wants to challenge a dismissal must apply within 21 days under s 394, and the commission can order reinstatement or compensation.

What happens if you get it wrong

Non-compliance carries real cost, and the amounts are worth knowing before a dispute starts:

Civil penalties for NES breaches: Failing to pay leave entitlements or refusing to allow leave is a contravention of s 44 of the Fair Work Act 2009 (Cth). The maximum penalty is 60 penalty units per contravention for an individual and five times that for a body corporate, rising to ten times those amounts for serious contraventions under s 557A. Penalty units are indexed each year.
Unfair dismissal compensation: Where reinstatement is not appropriate, compensation is capped at the lesser of 26 weeks of the employee's remuneration or half the high income threshold immediately before dismissal, under s 392. The high income threshold is adjusted annually; the Fair Work Commission publishes the current figure.
General protections claims: Dismissing or disadvantaging an employee because they took, or proposed to take, leave is adverse action under ss 340 and 342, carrying penalties as well as compensation.
Discrimination complaints: A complaint under the Disability Discrimination Act 1992 (Cth) or a state equal opportunity law can proceed through the Australian Human Rights Commission or state tribunals, with remedies including damages.
Privacy penalties: For entities to which the Privacy Act 1988 (Cth) applies, a serious or repeated interference with privacy can attract penalties up to $2.5 million for a non-body corporate and up to $50 million, three times the benefit obtained, or 30 per cent of adjusted turnover for a body corporate under s 13G.
The record-keeping trap: Missing or inadequate records can shift the burden of proof onto you in proceedings, as noted above.

A practical compliance checklist

Run through the following for every absence and every leave request:

Confirm which leave applies to each absence and record the date, time and reason given.
Apply your evidence policy consistently, and keep a log of requests and what was provided.
Pay personal/carer's leave at the base rate for ordinary hours and track accruals correctly, including for part-time employees.
Remember casuals: no paid personal leave, but unpaid carer's leave and unpaid compassionate leave apply.
Keep medical information in a restricted file, limit access, and destroy records when they are no longer needed.
Check whether a modern award or enterprise agreement adds anything to the NES minimums.
Talk to the employee early about patterns of absence and keep file notes.
Consider reasonable adjustments before any decision based on capacity.
If dismissal is on the table, get current medical evidence, follow a genuine consultative process, and seek advice before acting.

When you need professional help

An employment lawyer can do more than fix problems after they arise. A practitioner can review your employment contracts and leave policies for consistency with the NES and your award, advise on whether a particular evidence request or fitness-for-work assessment is reasonable and lawful, help design a return-to-work or capacity management process that satisfies the consultation requirements, and represent you in a Fair Work Commission application, a general protections claim or a discrimination complaint. Termination on medical grounds in particular is a last resort that should not be taken without tailored advice on the specific medical evidence, the inherent requirements of the role and the reasonable adjustments already considered.

The absence duty employers most often trip over

The pattern that costs SMEs most is treating absence as a conduct problem when it is actually a capacity and wellbeing problem. An employee with a genuine illness is protected from dismissal for temporary absence, and a disability-related incapacity has to be worked through with adjustments before termination can be lawful. The threshold that catches businesses by surprise is the evidence rule: you can require evidence that satisfies a reasonable person, but only that, and only consistently. The cheapest protection available this week is to check your leave records and your policy side by side, confirm every absence is documented, and make sure one person owns the file. If the two do not line up, fix the records before they are tested.