Question: If an employee has exhausted their paid sick leave entitlements and wants to be paid annual leave, does an employer have to pay this?
This question was recently answered by our workplace advice line.
Answer: Generally, yes, because an employer cannot unreasonably refuse a request for annual leave to be taken. However, there are some circumstances where an employer is not obligated to pay it.
Sick leave explained
Sick leave falls under the umbrella of personal/carer’s leave entitlements that come from the National Employment Standards (NES) within the Fair Work Act 2009 (Cth) (‘Act’).
The entitlement allows an employee to take time off work either due to a personal illness or injury, or to provide care or support to a member of their immediate family or household who is sick, injured, or dealing with an emergency.
Full-time employees are entitled to 10 paid days per year to be used for either sick leave or carer’s leave. Part-time employees are entitled to a pro-rata amount. Evidence and notice requirements set out in the NES must be followed to be entitled to payment for sick or carer’s leave. Casual employees have no entitlement to paid sick or carer’s leave.
Unpaid leave
Under the NES, where a permanent employee (full-time or part-time) requires time off work for a carer’s leave reason that is for a period beyond their available balance, they will have two days of unpaid carer’s leave available to them per permissible occasion. Casual employees have the same entitlement for unpaid carer’s leave.
Technically, there is no such thing as ‘unpaid sick leave’ under the NES despite being an accepted and commonly used term. Where a permanent employee requires time off work due to a personal illness or injury and has exhausted their paid sick leave, they are considered on unpaid leave (also known as leave without pay). Where a casual employee requires time off work for the same reason, they are simply unavailable for work.
Requests to be paid annual leave when sick leave is exhausted
Annual leave is an NES entitlement for when an employee wants to take time off work while being paid, usually for a holiday or other leisure purposes. Permanent employees get four weeks of annual leave based on their ordinary hours of work. Casual employees are not entitled to annual leave so the rest of the article is only relevant for permanent employees.
Permanent employees who have exhausted their paid sick or carer’s leave entitlements and still need to be absent from work may prefer to be paid their annual leave instead of receiving no payment for their absence. Some employees will accept that this period of absence will be unpaid and prefer to keep their balance of annual leave to use when they are not dealing with an illness or injury.
According to the NES, annual leave is to be taken by mutual agreement between an employer and employee. However, it is important to understand that an employer cannot unreasonably refuse to agree to a request by an employee to take annual leave.
If an employee who is absent for a reason falling under sick or carer’s leave wants to be paid their annual leave instead of being on unpaid leave, a refusal by an employer is likely to be considered unreasonable, breaching the NES. This is because refusing the request to take annual leave in this circumstance where the employee will be absent anyway, is effectively refusing payment for annual leave to the employee.
Equally, it is worth noting that it is reasonable for an employer to request supporting evidence in the same scenario. If an employee fails to provide evidence that their absence is for a reason falling under sick or carer’s leave, an employer’s refusal of the request for annual leave may be considered a reasonable refusal.
The bottom line: Requests from employees who want their annual leave paid to them because they have exhausted their sick leave need to be carefully considered by employers.
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Disclaimer: While all due care has been taken in the preparation of this information, it is believed to be accurate but no warranty of accuracy or reliability is given and no liability is accepted for errors or omissions or loss or damage suffered as a result of a person acting in reliance thereon. This information is not legal advice. If a legal opinion is sought please contact your legal advisor.