When people talk about a “sick pay guarantee”, they are usually asking a practical question: if a worker is ill, will they still be paid, and what must the business do?
In Australia, “sick pay guarantee” is not the usual legal term. For most employees in the national workplace relations system, the relevant minimum entitlement is paid personal/carer’s leave, commonly called sick leave. Understanding the distinction matters because entitlements differ for permanent employees, casuals, contractors, company directors and sole traders.
For employers, getting this wrong can create underpayment, record-keeping and employee-relations risks. For workers, it can mean missing an entitlement or misunderstanding what happens when leave runs out.
What “sick pay” means under Australian workplace law
Paid personal/carer’s leave is part of the National Employment Standards. It is a minimum safety net, meaning an employment contract, modern award, enterprise agreement or workplace policy cannot provide less favourable conditions than the legal minimum.
The entitlement covers two related situations:
- an employee is not fit for work because of their own personal illness or injury; or
- an employee needs to care for or support an immediate family or household member who is ill, injured or affected by an unexpected emergency.
This is why the formal term is personal/carer’s leave rather than simply sick leave. A worker may use the same accrued balance when they are personally unwell or when they need to care for an eligible person.
A contract or workplace policy can offer more generous leave, such as additional wellbeing days, paid medical appointment leave or separate carer’s leave. However, those extra benefits should be clearly documented so payroll staff and employees understand how they interact with the minimum entitlement.
It is also important not to confuse paid personal/carer’s leave with:
- annual leave;
- compassionate leave;
- paid family and domestic violence leave;
- workers compensation payments;
- income protection insurance benefits; or
- unpaid time away from work.
Each category has different eligibility rules, payment treatment and record-keeping requirements.
Who receives paid personal/carer’s leave?
Full-time and part-time employees are generally entitled to paid personal/carer’s leave. The entitlement accrues progressively according to the employee’s ordinary hours of work and carries over from year to year if it is not used.
The National Employment Standards provide an entitlement of 10 days of paid personal/carer’s leave for each year of service. In practice, payroll systems usually track the entitlement in hours, which is particularly important for part-time staff and employees whose ordinary working patterns vary.
A full-time employee will generally build leave over the year based on their ordinary hours. A part-time employee also receives the entitlement on a pro rata basis through the accrual method, rather than receiving an arbitrary number of calendar days.
Casual employees do not receive paid personal/carer’s leave under the National Employment Standards. Their casual rate is generally intended to reflect the absence of certain paid leave benefits. However, casual employees can access unpaid carer’s leave in eligible circumstances.
Contractors are not automatically entitled to paid personal/carer’s leave simply because they work regularly for one client. A genuine independent contractor operates a business and manages their own time away from work. However, the label used in a contract is not always decisive. If a person is treated in practice as an employee, the business should obtain advice about the true nature of the arrangement.
Sole traders are not employees of their own sole trader business. They do not accrue statutory paid sick leave for themselves. If they cannot work because of illness or injury, their income may stop unless they have built financial reserves, arranged business continuity support, or hold suitable insurance.
Company owners need to separate their ownership role from any employment role. A director who is also genuinely employed by the company may have employee entitlements, depending on the employment arrangement and the workplace laws that apply. A director drawing money from the company without an employment relationship should not assume they have employee leave entitlements.
How leave accrues, is taken and is paid
Paid personal/carer’s leave starts accruing from an eligible employee’s first day of employment. It builds up progressively and unused leave rolls over from one year to the next.
There is no requirement for an employee to wait until they have completed a particular probationary period before accessing accrued leave. The key issue is whether they have enough leave accrued when they need it, and whether they meet applicable notice and evidence requirements.
When an employee takes paid personal/carer’s leave, they must be paid their base rate of pay for the ordinary hours they would have worked during the leave period. This does not necessarily mean every component of their usual payslip will apply.
Generally, the base rate does not include separately identifiable amounts such as:
- overtime payments;
- incentive-based bonuses;
- allowances;
- loadings; or
- penalty rates.
An award, enterprise agreement or contract may provide more favourable payment arrangements. Employers should therefore check the industrial instrument that applies to the employee instead of relying only on a standard employment contract.
An employee can generally use as much accrued paid personal/carer’s leave as they have available, provided the absence is for an eligible reason. If they only need part of a day off, leave may be taken for the relevant hours rather than necessarily for a full day.
Public holidays are treated differently. If a public holiday falls during an employee’s absence, the employee is generally not taken to be on paid personal/carer’s leave for that public holiday.
Unused personal/carer’s leave is different from annual leave because it is generally not paid out when employment ends. It is intended as income protection during employment, not as a termination benefit.
Notice, evidence and a fair workplace process
Employees should notify their employer as soon as practicable when they need to take personal or carer’s leave. Notice may be given after the leave has started if that is reasonable in the circumstances, but the employee should advise the expected length of the absence where possible.
An employer can ask an employee for evidence that would satisfy a reasonable person that the leave was taken for a valid reason. This can be requested even for a short absence.
Appropriate evidence may include:
- a medical certificate;
- a statutory declaration;
- documentation from a health practitioner; or
- other material that reasonably supports the reason for the absence.
There are no universal rules requiring a medical certificate for every absence. However, an award, enterprise agreement, employment contract or workplace policy may set out evidence expectations. Any request should be reasonable in the circumstances.
For example, a business may have a policy requiring evidence for absences adjoining a public holiday, after a specified number of consecutive days, or where there is a repeated pattern of unplanned absences. The policy should be applied consistently and should not override the employee’s minimum legal entitlements.
Employers should avoid asking for unnecessary private medical details. The business normally needs enough information to confirm the employee was unable to work or needed to provide care, not a full explanation of their diagnosis or treatment.
A practical process is to have employees:
- notify their manager or designated contact promptly;
- state whether the absence is personal leave or carer’s leave;
- give an expected return date where possible;
- provide evidence if requested; and
- keep the employer updated if the absence becomes longer than expected.
Clear procedures reduce confusion when an employee is unwell and help managers respond consistently.
What happens when paid leave runs out?
An employee cannot continue receiving paid personal/carer’s leave once their accrued balance has been exhausted, unless their award, agreement, contract or employer policy provides an additional paid entitlement.
A permanent employee with no paid personal/carer’s leave left may be able to access unpaid carer’s leave when they need to care for or support an eligible immediate family or household member. The National Employment Standards provide two days of unpaid carer’s leave for each eligible occasion.
Casual employees may also access unpaid carer’s leave in these circumstances. However, casual employees do not have a National Employment Standards entitlement to paid sick leave for their own illness or injury.
Where a worker is absent because of a workplace injury or work-related illness, workers compensation may be relevant. Workers compensation is governed by state and territory laws, and the rules, insurers, claims processes and payment arrangements differ across Australia. Employers should not assume that workers compensation, paid personal leave and ordinary payroll treatment operate in the same way.
Long-term illness or injury requires particular care. Employers should not treat the exhaustion of sick leave as an automatic reason to end employment. Employees may have protections from dismissal for certain temporary absences due to illness or injury, and other protections can arise under unfair dismissal, general protections, discrimination, workers compensation and workplace health and safety laws.
The employment, medical and operational issues can become complex quickly. Before making decisions about a long absence, modified duties, capacity to perform the role or possible termination, an employer should obtain workplace relations and legal advice tailored to the circumstances.
Payroll, superannuation and record-keeping considerations for employers
For a small business, sick pay compliance is not just an HR issue. It also depends on accurate payroll setup, current leave balances and reliable employee records.
A sound process should include the following.
Classify workers correctly. Confirm whether each person is an employee, casual employee, contractor, director or sole trader. Incorrect classification can affect leave, pay as you go withholding, superannuation and other obligations.
Set up leave accruals correctly. Personal/carer’s leave should accrue based on the employee’s ordinary hours and be carried forward where required.
Apply the right pay basis. When leave is taken, calculate payment using the employee’s base rate for the ordinary hours they would have worked, while also checking any more generous award or agreement terms.
Maintain accurate leave records. Keep records of leave accrued, leave taken and leave remaining. Employees should be able to understand their leave position from their payslip or payroll information.
Consider superannuation treatment. Paid personal leave for ordinary hours should be considered when calculating superannuation obligations. The payroll setup should be reviewed to ensure paid leave is treated correctly.
Report payroll information accurately. Businesses using payroll software should ensure leave categories and employee payment information are configured appropriately for their reporting and record-keeping obligations.
Review workplace policies. A policy should support the law and applicable award or agreement. It should explain notification channels, evidence expectations, privacy handling and who can approve leave.
A common problem is assuming that an employee’s annual salary removes the need to track personal leave. It does not. Salaried employees can still have leave entitlements, and the business must be able to demonstrate that leave has been correctly accrued, approved and paid.
A practical example for a small business
Consider a small professional services business with a part-time administration employee who works regular ordinary hours across several days each week.
The employee wakes up unwell and notifies their manager before their scheduled start time. They advise that they expect to be away for one day. The business checks the employee’s accrued personal/carer’s leave balance, records the absence in payroll and pays the employee for the ordinary hours they were rostered to work that day.
Later in the year, the employee needs time off to care for a child who is ill. Provided the child is an eligible immediate family member and the employee has enough accrued leave, the same personal/carer’s leave balance can be used.
If the employee has no paid balance remaining, the business should consider whether unpaid carer’s leave is available. It should not simply record the absence as annual leave unless the employee agrees to use annual leave or another lawful basis applies.
This example shows why the phrase “sick leave” can be too narrow. The leave balance protects employees when they are personally unwell, but it can also support them when family or household care responsibilities arise.
The takeaway for workers, sole traders and business owners
Australia does not use “sick pay guarantee” as the main legal label. For eligible permanent employees, the core entitlement is paid personal/carer’s leave. It accrues over time, can be used for personal illness or injury and for eligible caring responsibilities, and is generally paid at the employee’s base rate for ordinary hours.
Casual workers, contractors and sole traders should not assume they receive the same protection. Their position depends on the nature of their engagement, while business owners need to ensure worker classifications, leave balances, payroll settings and workplace policies are accurate.
This article is general information only and is not personal financial, tax, legal or workplace relations advice. Employment entitlements can depend on the applicable award, enterprise agreement, contract, state or territory laws and individual circumstances. Speak with a registered tax agent or accountant, such as, and obtain workplace relations advice where appropriate, to understand the right approach for your situation.