An HR Manager’s guide to paid Annual and Sick/Personal Leave

Going to work and making a living forms a large portion of our day to day lives. We spend our mornings getting ready, the bulk of our days actually working, the evenings unwinding – only to rinse and repeat the following day.

Here in Australia, we’re lucky to live in a culture that understands that as important as it is to work each day, it’s also important to be able to take time off without any sort of pressure.

Whether it be to take a break, go on a holiday, recover from sickness or injury, or provide care for a loved one, the Australian workforce allows for employees to take time off without having to sacrifice their wages in order to do so.

But, there are guidelines and limitations to Australian annual and sick leave entitlements, and as an HR manager or employer, understanding what those limitations are can help ensure that your employees receive the leave that they’re entitled to in a lawful, fair and transparent manner.

The Fair Work Act 2009

The laws about Australian leave entitlements as they currently stand were legislated by the Rudd government in 2009 and are part of the Fair Work Act 2009 – the law that governs Australian workplaces.

The Act is administered by a government body called the Fair Work Commission (FWC), which operates as a tribunal that hears cases and declares rulings. When a claim is made that an employer has breached the Act, the Fair Work Ombudsman (FWO) is the organisation that investigates the allegation and initiates legal proceedings when necessary. 

Employers are allowed to increase their employees’ leave entitlements at their own discretion, but at the very least, they must always adhere to the minimum requirements that are set out in the legislation. Those minimum requirements are called the National Employment Standards (NES).

Keeping up with the changes and updates to the Fair Work Act can be quite difficult. The Act is a 542-page document with endless legislative jargon that gets reviewed by the FWC all the time.

But, as difficult to navigate as it might be, mistakes can turn out to be quite costly for Australian employers on a number of fronts, so it’s important to stay on top of the law’s movements.

To make your life a little easier, we’ve pulled together an overview of some of the laws and details pertaining to two of the more common leave entitlements, and some pointers on where to look for additional information.

1.    Annual Leave

Everyone in the workforce needs the chance to take a holiday, and annual leave is an entitlement designed to allow employees to take some time to separate from work and do their own thing.

As a rule of thumb, employees are entitled to four weeks (meaning, 20 workdays) of annual leave per year. The leave is calculated based on the number of hours the employee works and starts to accrue from day one of employment.

Annual leave doesn’t dry up either – so if an employee doesn’t take their full four weeks off during the year, the balance rolls over into the next year and can be used at the employee’s discretion.

Denying an annual leave request

An employee is entitled to use their annual leave from the moment they accrue it. There are no minimums or maximums – the employee can use up the leave that they have at their own discretion.

The employee needs to submit a request to use their leave, and it is within the employer’s right to refuse their request – but only when it is “reasonable” to do so.

While there are no legislative guidelines that explain the definition of “reasonable”, The FWC defines the term in this case to mean “genuine, sound business reasons”.

Businesses are diverse. Ultimately, each workplace will have its own busy times and quiet periods, and each employee’s individual contribution impacts their business in its own way as well.

This diversity makes it impossible to create generic rules about when it would be appropriate for an employer to refuse a leave request. So instead of regulating it, the government has left it up to each employer and employee to agree on fair annual leave terms.

As an employer or HR manager, here are the things that need to be factored in when considering turning down an annual leave request:

• The time of year in which the leave is being requested for
• How much notice the employee has given for this leave request
• The financial and operational impact that this leave will have on the business

If after careful consideration, you believe that it is reasonable to request that the employee alter their leave requests, you are entitled to do.

Accrual of ‘excessive’ leave

While an employee can save up more leave than 4 weeks and use it at their own discretion, if an employee accrues an “excessive” amount of leave without using it, there are instances where the employer can direct the employee to take time off and reduce their leave balance.

How “excessive leave” is measured and the protocol that an employer needs to follow in order to direct leave can vary – depending on the industry (or in government terms, award) that the business falls under.

Generally speaking though, once an employee reaches 8 weeks of accrued annual leave (or ten weeks for a shift-worker), their balance is considered to have reached ‘excessive’ status.

On the FWO website, there are very clear instructions for employers who choose to direct employees to reduce their leave balances. There’s even a template to direct people as to how to go about the entire process – so if such a situation arises in your workplace, head over to the website, check your award, and follow the suggested steps forward.

2.    Sick and Personal/Carer’s Leave

Getting ill, sustaining an injury, or needing to care for a sick family member is something that happens to everyone, and when it does it can be very difficult to get any sort of work done – which is why sick and personal/carer’s leave is such a valuable entitlement for Australian employees.

Australian employees are entitled to receive 10 days of paid sick and carer’s leave (collectively) per year, and just like with annual leave, whatever leave hasn’t been used in one year carries forward into the next.

Sick leave covers the need for an employee to take time off from work to recover from an illness or injury that prevents them from doing their daily activities and was out of their control.

Carer’s leave follows the same guidelines as sick leave, but it applies to employees who have an immediate family member or someone they live with who is unwell or injured and in need of support.

For the purpose of carer’s leave, the definition of immediate family members includes the following people:

• Spouse or former spouse
• De Facto partner or former de facto partner
• Child
• Parent
• Grandparent
• Grandchild
• Sibling
• Child, parent grandparent, grandchild or sibling of the employee’s spouse or de facto partner (or former spouse or de facto partner)

This definition of immediate family members applies to step-relations as well, and carer’s leave applies to housemates too.

Calculating sick leave – Mondelez decision

Up until mid-2019, sick leave had been calculated in the same way as annual leave in the sense that it accumulated based on the hours worked averaged across a 5 day work week. Meaning, if someone works a 36 hour work week, they’d be entitled to 72 hours of paid sick/carer’s leave per year – equalling 10 days.    

However, after a court case between a company called Mondelez Australia and the Australian Manufacturers Workers Union (AMWU), the Full Federal Court of Australia handed down a decision that sick and carer’s leave needs to be calculated differently.

Mondelez Pty Ltd, an Australian manufacturing company, had a group of shift workers who worked 36 hour weeks, but did so in three 12 hour shifts. The company had drawn up an agreement with these shift workers that it would offer them 96 hours of paid sick-leave, increasing their entitlement by 24 hours in recognition of their long shifts.

The AMWU got wind of this and argued that these 96 hours were in fact less than these shift worker’s legal entitlements. They argued that since a ‘workday’ for these shift workers was 12 hours long, they were entitled to be paid for ten 12-hour workdays – increasing their entitlement to 120 hours of paid leave.

The majority of the Full Federal Court sided with the rationale of the AMWU, and ruled that going forward, sick leave be calculated based on each individual’s respective workday, rather than how it would be averaged across a standard 5 day work week.

In December 2019, the case was appealed to the High Court, which means that this ruling may still change. In the meantime, the current state of law is the decision that was handed down by the Full Federal Court.

Asking your employees for evidence

Employers are entitled to request that their employees provide evidence to substantiate their absence, even if the employee only takes off a portion of a day.

There are no hard and fast rules when it comes to what evidence an employee needs to present, but it is expected that the evidence would be convincing for a reasonable person.

The best form of evidence is a medical certificate. If the employee is only sick for one day and didn’t manage to go visit the doctor, if the employer requests proof of illness, a statutory declaration would suffice.

It’s important for employers to be aware that requesting evidence is okay, but prying is not. The FWO expressly prohibits employers from demanding to attend a doctor’s appointment with the employee, or even calling the doctor’s office to fact check the employee's story.

Elective surgery or medical appointments are not included in sick leave unless they relate to an injury or illness that stops the person from working.

Leave is an entitlement – not a benefit

Whether it be for a holiday, a break, to recover from illness or to care for a family member, taking leave is never to be looked at by employers as a ‘benefit’ or a ‘favour’ – and as such, the time that is being taken off needs to be treated with the respect it deserves.

Read: Understanding the difference between benefits and fair pay

In the work culture of today, many people have a difficult time separating themselves from their work. They get emails on their phones, they bring their laptops home, and they’re constantly connected to their workplace.

Unfortunately, this ‘always be connected’ mentality has led to the expectation in many workplaces that employees need to be available around the clock and are answerable to their superiors 24/7.

This culture can very quickly lead to personal challenges like anxiety and burnout and can take a toll on relationships as well.

Read: Understanding burnout in the workplace

When it comes to employees taking their leave entitlements, it is extremely important for managers (and colleagues) to let the employee take their time off in an undisturbed fashion.

The reason why annual and sick leave exists is so employees can have the tools that they need to live healthy and comfortable lives all the while protecting their livelihoods – and it is the role of an employer or HR manager to uphold that standard and give their employees the space that they’re entitled to.

If an employee wants to answer emails or check in with work while they’re on leave – that’s their prerogative. But as an HR manager, creating a culture where time off is respected is key in running healthy and sustainable workplaces.