Paid sick leave, which employees are entitled and how much they get

Which of your employees are entitled to paid sick leave? It is a question most small business owners answer by guesswork, usually only when an employee calls in sick and the payroll question lands on their desk. The answer turns on one classification: whether the employee is permanent, meaning full-time or part-time, or casual. Paid sick leave is the everyday name for paid personal/carer's leave, which is one of the National Employment Standards (NES) set out in the Fair Work Act 2009 (Cth). The NES applies to most private sector employers in Australia and sets a minimum floor that awards and enterprise agreements can build on but not undercut.

The core rules sit in Part 2-2 of the Fair Work Act 2009 (Cth). Under s 96, an employee other than during periods of casual employment is entitled to 10 days of paid personal/carer's leave for each year of service. The entitlement accrues progressively according to the employee's ordinary hours of work and accumulates from year to year. This article sets out the figure for each employee type, how the accrual works in practice, and the situations where the standard numbers do not apply.

Paid personal/carer's leave by employee type

The starting point is that paid personal/carer's leave is an entitlement of permanent employees, not casuals. s 95 states that the paid leave provisions apply to employees other than casual employees, and s 96 makes the same point by excluding periods of casual employment when counting years of service. Casuals instead receive a casual loading, which under most modern awards is 25% on top of the base hourly rate, to compensate for the absence of paid leave entitlements.

The leave can be taken in two situations under s 97: where the employee is not fit for work because of a personal illness or injury, and where the employee needs to provide care or support to a member of their immediate family or household who is ill, injured, or affected by an unexpected emergency. Immediate family includes a spouse or de facto partner, children, parents, grandparents, grandchildren and siblings, including step and adoptive relations and the equivalent relatives of a spouse. A household member is any person who lives with the employee, so the leave also covers caring for a flatmate or a dependent who is not a relative.

How the leave accrues and what you pay

The accrual mechanics matter more than the headline figure, because they decide how much leave an employee actually has on any given day. Under s 96, the entitlement accrues progressively during each year of service according to the employee's ordinary hours of work, and it accumulates from year to year. There is no cap and no use-it-or-lose-it rule: unused paid personal/carer's leave simply carries into the next year and sits on the employee's balance until it is needed.

When an employee takes paid personal/carer's leave, you must pay them at their base rate of pay for their ordinary hours in the period, as required by s 99. The base rate of pay is the rate for the employee's ordinary hours of work, which means it excludes overtime, penalty rates and loadings. An employee who works a shift with penalty rates does not get those penalties while on sick leave; they are paid at the rate their ordinary hours would normally attract.

Two practical requirements sit alongside the entitlement. Under s 107, the employee must give notice of the leave as soon as practicable, which can be after the leave has started, and must advise of the period of absence. If you ask, the employee must give evidence that would satisfy a reasonable person that the leave is for a permitted reason, such as a medical certificate. You can ask for evidence, but the test is reasonableness, so asking for a certificate for a single one-day absence may be difficult to justify, while a certificate for a third consecutive day is usually unremarkable.

Worked example: a part-time employee's annual entitlement

The pro-rata rule is easiest to see with actual numbers. Take a full-time employee who works 38 ordinary hours a week. Ten days of leave on that pattern is about 76 hours a year, which works out to roughly 1.46 hours of accrual per week. If the employee takes a sick day of 7.6 hours, the balance drops by that amount, and it keeps accruing while they work.

Now take a part-time employee who works 3 days a week at 7.6 hours a day, a total of 22.8 ordinary hours a week. Their entitlement is the full-time figure scaled by hours worked: 22.8 divided by 38, times 10 days, which comes to 6 days a year, or about 45.6 hours. That is the number you would see on their leave balance, and it accrues at roughly 0.88 hours per week. If they take a day off to care for a sick child, 7.6 hours comes off the balance and 38 hours remain.

A second example surfaces a less obvious point. A part-time employee who works 20 hours a week across 5 shorter days of 4 hours each accrues about 40 hours a year, which is 10 of their own 4-hour days. The accrual is measured in hours, not in a fixed number of calendar days, so the day count adjusts to the length of the employee's ordinary day. If their hours change partway through the year, the accrual simply tracks the new pattern from that point.

Edge cases and carve-outs

The standard figures stop applying in a handful of situations, and these are where employers most often get caught out.

• Casual who becomes permanent: Periods of casual employment do not count towards the 10-day entitlement under s 96. A casual who converts to permanent starts accruing paid personal/carer's leave from the conversion date, with no credit for their casual service, so their balance in the first year will be smaller than a colleague who has been permanent throughout.
• Cashing out sick leave: Paid personal/carer's leave cannot be cashed out unless the applicable modern award or enterprise agreement contains a cashing out term, and even then the employee must keep at least 15 days of accrued leave, each cash-out needs a separate written agreement, and the employee must be paid at least the full amount they would have received had they taken the leave. See s 101.
• Awards and agreements: A modern award or enterprise agreement cannot provide less than the NES, but it can provide more, such as additional days of leave or payment at a higher rate. Always check the applicable instrument before quoting the NES figures as the ceiling.
• Public holidays: If a period of paid personal/carer's leave includes a public holiday in the employee's work location, the employee is taken not to be on personal/carer's leave for that day, so it does not consume their balance. See s 98.
• Workers' compensation: An employee who is absent receiving workers' compensation is not entitled to take or accrue personal/carer's leave during that compensation period under s 130, so the two entitlements do not run at the same time.
• Leave runs out: Once paid personal/carer's leave is exhausted, an employee can ask to take annual leave at a time you agree, or take unpaid carer's leave. Casual employees are entitled to 2 days of unpaid carer's leave per occasion under s 102 and s 103, and permanent employees can use it when their paid balance is gone.

Dismissing an employee who is away sick: the temporary absence rule

Paid leave aside, the bigger risk for employers is dismissal during a long absence. Under s 352 of the Fair Work Act 2009 (Cth), an employer must not dismiss an employee because the employee is temporarily absent from work due to illness or injury of a kind prescribed by the Fair Work Regulations 2009. Regulation 3.01 prescribes the kinds of illness or injury: the absence is protected where the employee provides a medical certificate or statutory declaration within 24 hours of the absence starting, or within a longer period that is reasonable in the circumstances.

The protection stops applying once the absence is no longer temporary. Under regulation 3.01, an illness or injury is not a prescribed kind where the employee's absence extends for more than 3 months, or where the employee's total absences within a 12 month period exceed 3 months, and the employee is not on paid personal/carer's leave for the duration. The boundary is therefore not a single day count but a running tally of absences across the year, which is easy to misread in a business with one chronically ill employee and several shorter absences from other staff.

Dismissing an employee who is away sick also engages the general protections and unfair dismissal provisions, even where the temporary absence rule does not apply. The lawfulness of a termination in these circumstances depends on the employee's protected rights, the reason for the dismissal, and the procedural steps you took, so this is squarely a situation where advice should come before the decision.

When a lawyer should check your leave arrangements

A lawyer can help you confirm the figures that apply to your particular workforce, because the NES default is rarely the whole story. The areas where professional help is most valuable include identifying the correct modern award for each employee and whether it provides more generous leave or permits cashing out, checking an enterprise agreement's leave terms against the NES floor, and working through mixed service, such as an employee who has moved between casual and permanent engagement or transferred between related entities, where accrual calculations are easy to get wrong.

Legal advice is also warranted before any dismissal connected to illness or injury. The temporary absence rule, the general protections against adverse action, and the unfair dismissal regime each impose their own tests, and the evidence of the employee's absences and your decision-making process will be scrutinised if the dismissal is challenged in the Fair Work Commission. A lawyer can assess whether the absence has crossed the temporary threshold, whether you have complied with any award or agreement requirements, and how to manage the process defensibly.

The figure most employers misquote

If there is one variable that causes employers to quote the wrong number, it is the casual classification. It is common to assume that every employee is building up paid sick leave in the background, but a casual employee accrues none of it, and converting a casual to permanent starts the clock from zero. Checking who is genuinely casual, who is permanent, and what each one's balance actually shows is the first step before any payroll decision, and it is the assumption that gets businesses into trouble when an employee is away for a long period and the termination question arises.

The essential points to take away are these. Full-time permanent employees receive 10 days of paid personal/carer's leave per year, part-time permanent employees receive a pro-rata amount based on their ordinary hours, and casual employees receive no paid sick leave, only the casual loading and 2 days of unpaid carer's leave per occasion. The leave accrues progressively, carries over year to year, and is paid at the base rate of pay. Awards and agreements can only improve on these minimums, and any dismissal connected to illness or injury needs careful assessment against the temporary absence and general protections rules before it proceeds.