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How Much Sick Leave Are Employees Entitled To?

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If you employ staff in New Zealand, it is crucial to understand your employer obligations regarding employee entitlements.  Notably, on 24 July 2021, the minimum sick leave entitlement increased to 10 days. Consequently, you must provide employees with their lawful entitlements to avoid a dispute down the line. This article will list some of your essential obligations and rights as an employer when dealing with sick leave entitlements in New Zealand. 

What is Sick Leave?

Sick leave is paid time off work if an employee or their dependents (spouse, partner or dependent child) falls ill or gets injured. As an employer, you have a legal obligation in New Zealand to pay for ten days of sick leave each year, depending on how long your employee has worked for you. The law entitles all permanent or fixed-term employees in New Zealand, whether they are full or part-time, to this leave once they have worked for you for:

  • six months continuously; or 
  • an average of ten hours per week, and at least one hour every week or forty hours every month.

Employees are able to have an additional five days of sick leave per year upon their next entitlement date. This is either:

  • after being employed for six months; or
  • on their leave entitlement anniversary, which is generally 12 months after they were entitled to leave.

Who is Entitled to Sick Leave?

Sick leave entitlements do not apply to all employees. If you have any permanent or fixed-term employees, they are all eligible for sick leave. However, whether casual employees qualify for leave can be a bit more confusing. Typically you pay casual employees 8% on top of their regular pay to include their leave entitlements. However, the law generally entitles a casual employee to sick leave for the 12-month period from when they have continuously worked for more than 6 months. completed 6 months of continuous work.

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What Are the Rules Regarding Sick Leave?

You can use accounting or payroll software to calculate your employees’ leave entitlements automatically. However, you must include the correct amount of leave in your employment contracts. Accordingly: 

  • employees are only entitled to receive sick pay if they were supposed to work on that day;
  • you can pay leave in your regular pay cycle;
  • you cannot prorate these leave entitlements;
  • if an employee works for part of the day because they are unwell, you can either count this as a whole day or deduct a half-day of leave; 
  • you can put a system in place for your employees to communicate with you as soon as possible when they need to take leave;
  • you can agree to increase your employees’ leave entitlements in their employment agreement;
  • if your employee has run out of leave, you can advance their future entitlements, allow them to take unpaid or utilise their annual leave;
  • you may enable your employee to use sick leave during annual holidays, and you can request medical proof before allowing the change; 
  • employees should receive their relevant daily pay (in some instances a half-day rather than a full day) or their average daily pay, including overtime if applicable;
  • you need to carry over any unused sick leave balance for up to a maximum of 20 days per year; and
  • you can enable your employees to take time off work to attend a doctor’s appointment, but you are not legally required to do so unless agreed in the employment agreement.
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Can You Request Medical Proof?

You can ask your employee to provide you with a medical certificate as proof of their illness or injury: 

  • once they have been away from work for more than three consecutive days; or 
  • earlier than three days if you pay for their doctor’s appointment. 

You cannot force your employee to have a medical examination or tell them which doctor they have to visit. However, if they refuse to provide a medical certificate, then you do not have to pay for their sick leave. 

Can Employers Deny Employees Sick Leave?

If your employee has exhausted all their sick leave entitlements, then you can deny your employee sick leave. However, your employee may request to use their accrued annual leave to cover the time they may take off. 

You should not unreasonably deny employees time off if they suffer from a genuine illness. For example, general doctor’s visits are not covered. However, if the employee has a pre-booked surgery, the law entitles the employee to use their sick leave.  

Additionally, although sick leave covers immediate family, the Employment Relations Act does not cover pets as part of “immediate family”. Therefore, if your employee must take time off to tend to their unwell pet, then you can agree for annual leave or unpaid leave to be taken as another option

Do You Have to Pay Sick Leave on Top of ACC Compensation?

When your employee has an accident or injury, whether it is work-related or not, your obligations will be slightly different. In New Zealand, any person injured in an accident receives Accident Compensation Corporation (ACC) payments. As an employer, you:

  • do not have to pay your employee if they are receiving ACC payments; 
  • cannot make your employee take sick or annual leave if they are receiving ACC compensation; and
  • can agree to top up their ACC payments to 100% by using one day of the employee’s sick leave for every five days’ leave taken.

Key Takeaways 

As an employer, you are required by New Zealand law to provide paid time off work to your employees if they cannot come to work due to an illness or injury for a maximum of ten days a year unless you agree to additional days in your employment agreement. Your employees, including part-time and fixed-term workers, have to meet specific criteria to be eligible.

If you need help providing employee entitlements, our experienced employment lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 0800 005 570 or visit our membership page.

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