How Much Sick Leave is Your Employee Entitled To?

As a business owner, you would naturally understand the ins and outs of running a successful enterprise. From managing your budget to hiring the right staff, I’m sure you're well-versed in the intricacies of the business world. 

But even the most seasoned employers can sometimes overlook one crucial aspect of their operation: sick leave. 

We're all human and susceptible to illness, and when it comes to managing your workforce, how you handle sick leave can make a big difference.

Not only can it impact employee morale, but it can also affect your business's overall productivity and success. 

However, ensuring that you're meeting your legal obligations under the Holidays Act can be overwhelming, especially with the recent changes doubling down on how much leave employers should give their employees.

So, in this blog post, we're here to help you navigate the world of sick leave in New Zealand. We'll cover everything from your legal obligations to how sick leave impacts your payroll process, so you can feel confident in your ability to manage your workforce and keep your business running smoothly.

This paid time off is a legal obligation for employers, and it's essential to understand how much leave your employees are entitled to. 

Here are some key points for employers to keep in mind regarding their sick leave obligations:

• Employees are entitled to ten days sick leave per year under the Holidays Act 2003, which was increased from five days in 2021.
• Sick leave entitlements are not prorated, so even part-time employees who work only a few days a week are entitled to 10 days of sick leave each year.
• Employees can carry over up to 10 days of unused sick leave each year and accumulate a maximum of 20 days.
• To be eligible for the sick leave entitlement, employees must have worked for the same employer for at least six months continuously, or a total of six months, with at least an average of 10 hours per week and at least one hour every week or 40 hours in every month.
• Employers should keep records of their employees' sick leave entitlements and usage.
• If an employee has exhausted their sick leave entitlements, they may be entitled to additional leave under their employment agreement or as a discretionary benefit from their employer.
• Employers can’t deduct pay from an employee's sick leave entitlements, and employees are entitled to use their sick leave entitlements even if they have other forms of leave available, such as annual leave.

Employers must ensure that their sick leave policies and procedures comply with New Zealand employment law and provide clear guidance to their employees on applying for sick leave and what documentation may be required.

Example

Maria is a restaurant owner in Wellington, New Zealand, and employs 15 staff members. One of her employees, James, has been feeling unwell and informs her that he needs to take sick leave for a week. 

As James has been with the company for more than 12 months, Maria explains his sick leave entitlements, which include a minimum of 10 days sick leave per year. She assures James that his pay will not be affected during his absence and that his work will be covered by his colleagues.

During James' absence, Maria maintains regular contact with him, checking on his health and well-being and offering any necessary support. She also ensures that his pay is not affected and that he is not disadvantaged in any way due to his absence.

When James returns to work, Maria arranges a meeting with him to discuss his return to work and any necessary support or accommodations. She offers him a phased return to work, allowing him to gradually increase his workload and adjust to his routine after his illness.

Throughout the entire process, Maria ensures that she meets her obligations as an employer. She provides James with sick leave entitlements and pays him his normal rate of pay during his absence. She also ensures that his work is covered and that he is not disadvantaged in any way as a result of his absence.

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However, employers should know that employees can take sick leave in advance, provided both parties agree. 

Alternatively, an employee may take scheduled annual holidays instead of sick leave, but this is also subject to the employment agreements in place.

If an employee doesn’t have any sick leave or annual leave left, they can take unpaid sick leave, but this may have financial implications for the employee, so employers should understand their situation and try to find a solution that works for both parties.

Importantly, whatever agreement you come to, it shouldn’t give the employee less benefits than what the Holidays Act proposes. 

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If the employee falls ill on a day they were not scheduled to work or are on an unpaid leave period, they would not be entitled to payment for sick leave.

Here are some different scenarios that may impact how you pay your employees for their minimum sick leave entitlements: 

Scenario 1: 

Emma works at XYZ Inc. and is rostered to work from Monday to Wednesday, eight hours a day. If she falls sick on Tuesday and takes a sick leave day, her employer should pay Emma her relevant daily pay for that day, which is eight hours.

Scenario 2: 

Tom works as a chef in a restaurant and usually works four days a week, nine hours a day, with an hour for lunch. However, on busy days, Tom is asked to work overtime, which is paid at a higher rate. If Tom fell sick on a day he was scheduled to work overtime, his employer should pay him his relevant daily pay for that day, including the overtime rate he would have received if he had worked.

Scenario 3:

Rachel is employed as a receptionist and works 7.5 hours a day, Monday to Friday. Her employment agreement states that she is entitled to an hour-long lunch break, but her employer has agreed that she can take a 30-minute lunch break instead and receive an extra half-hour payment. If Rachel falls sick on a day she was scheduled to work, her sick leave payment should include the extra half-hour payment, even though it is not stated in her employment agreement.

Scenario 4: 

Michael is a delivery driver and has an irregular work pattern due to the nature of his job. His employment agreement states that he is expected to work 40 hours per week, but his shifts can fall on any day of the week. If Michael falls sick on a day he was expected to work, he should be paid his relevant daily pay or average daily pay for that day, depending on his agreement with his employer.

You should make payment for sick leave as part of the normal pay cycle, which may be weekly, fortnightly or monthly, depending on your payroll policy.

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Essentially, the software automates the entire process, saving time and reducing errors, making it faster and more accurate. 

You can use it to calculate the number of sick leave hours available to an employee and the amount of pay they should receive when they request sick leave. It can also consider overtime, allowances, and the employee's relevant daily pay to ensure the correct payment. 

In addition, the software can keep track of sick leave entitlements and usage, which can be easily accessed by employers. This allows them to manage sick leave requests efficiently and ensure that employees receive their legal entitlements. 

Overall, payroll software, such as Employment Hero Payroll. provides a more streamlined, accurate and efficient way of managing sick leave, saving time, and reducing the risk of errors.

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