Employment law and sickness entitlements at work

Sickness absence is a fact of working life. But for employers, navigating what’s legally required when an employee is off sick isn’t always straightforward.

Australian employment law sets out clear rules on sick pay, employee rights, and your responsibilities—getting it wrong can lead to costly claims.

This guide breaks down the legal essentials of managing sick leave, so you can keep your business compliant, and your employees supported.

Sick Leave Entitlement: What are employees legally entitled to?

In Australia, all employees have the right to take sick leave, but what they’re entitled to in terms of sick pay depends the law, on their contract and length of absence.

Here’s a quick breakdown:

• There’s no legal limit on the amount of sick leave an employee is entitled to

• Sickness lasting longer than 4 weeks is considered long term sickness

• Employees are entitled to Sick Pay if they meet eligibility criteria ie. as long as they are not casual workers

• You cannot force an employee to work while sick

Sick Pay explained

In Australia, employees are entitled to the National Employment Standards (NES) Sick Leave minimum if they meet eligibility criteria, but some businesses offer additional Sick Pay as an added benefit.

It’s up to you if you want to offer more than the standard NES entitlements.

• Full-time employees are entitled to 10 days of paid personal/carer's leave per year.

• Part-time employees receive a pro rata amount based on their ordinary hours.

• If you offer enhanced sick pay, make sure it’s clear in your contract or policy.

Additional Sick Pay - Optional

Employers in Australia can offer more paid sick leave than the minimum requirements set by the Fair Work Act 2009. They can increase entitlements beyond the minimum through their own discretion, according to Fair Work Ombudsman. The extra leave must be stated in a contract, agreement, or enterprise agreement.

Self-certification and fit notes

Employees can self-certify for the 2-3 days of sick leave. After that, they’ll need a fit note from a healthcare professional. Fit notes may say:

• The employee is not fit for work, or

• They may be fit for work with some adjustments (e.g. fewer hours or lighter duties)

Disability and long-term sickness

If an employee has a physical or mental impairment that has a substantial and long-term adverse effect on their ability to do normal daily activities, they may meet the legal definition of disabled under the Disability Discrimination Act 1992.

Your legal duties as an employer:

• Avoid discrimination arising from disability

• Make reasonable adjustments to remove or reduce disadvantage (e.g. phased returns, adjusted duties)

Keep sickness records confidential

Employers have a legal and ethical obligation to keep employee sickness records confidential. The Privacy Act 1988 requires employers to handle personal information, including health information, in a confidential manner. Employers should not disclose this information to others without the employee's consent, unless required by law or in specific circumstances like ensuring workplace health and safety.

Can you dismiss an employee for sickness?

The Fair Work Act prohibits employers from dismissing employees solely because they are temporarily absent due to illness or injury, provided the absence is supported by reasonable medical evidence and doesn't exceed certain limits. However, there are exceptions to this protection, such as when the absence is for more than three months, or three months within a 12-month period, and the employee is not on paid leave during that time. However, you can possibly terminate an employee while they are absent, eg. due to redundancies.

After three months of sick leave over the last 12 months, an employee may no longer be protected from dismissal if they are on unpaid leave at the time and they are not receiving workers compensation.

If their sickness is linked to a disability, there’s extra risk, any misstep could lead to a disability discrimination or unfair dismissal claim. Employment tribunals will assess whether you acted reasonably in all circumstances, so seeking employment relations advice is highly recommended before acting.

Can an employee change their annual leave to sick leave?

Yes, an employee can generally change their annual leave to sick leave if they become sick or injured while on annual leave. This is because the Fair Work Act 2009 states that if an employee is on annual leave and becomes sick or injured, they are not considered to be on annual leave during that time. The employee can then utilize their paid sick or carer's leave entitlement instead. 

Under the Fair Work Act 2009 employees:

• Continue to accrue holiday while off sick

• Can reschedule annual leave if they fall sick during a booked holiday

So yes, if your employee is on annual leave and becomes sick, they can change their leave to sick leave. However,  you can’t make them use annual leave while they’re sick unless they request it.

Practical steps to ensure compliance

To stay legally compliant, you should:

• Have a written sick leave policy detailing your sick leave procedures.

• Include contractual sick pay terms in employment contracts or offer letters.

• Train managers on absence handling, non-discrimination, and fair disciplinary processes.

• Document everything – fit notes, consultations, reasonable adjustments, etc.

• Conduct return-to-work interviews to identify any recurring issues, support needs, or risks.

• Engage occupational health services for long-term or complex cases.

• Seek legal advice if considering dismissal due to sickness or you have any doubts.

Get help with sickness employment laws from BrightHR

Sick leave isn’t something you can just make up as you go. There are real legal responsibilities involved. When people are unwell, they need time, support, and a bit of understanding.

But as an employer, you need structure too. Having clear processes, understanding the law, and treating people fairly (and consistently) helps you stay out of legal trouble and create a workplace people actually want to be part of.

BrightHR offers a direct line to employment relations specialists who are available 24/7 to help you maintain compliance.

Staying informed and implementing a paid sick leave policy, safeguards both your employees' wellbeing and your business's reputation.