With so much sickness in the community right now, it is no wonder employers and employees alike are becoming concerned about sick leave entitlements and exactly how far they will stretch.
With this in mind and to help people understand how sick leave works, we have responded to some of the key questions below. This also includes some commentary on the benefits for employers of exercising flexibility in this area and particular considerations they may wish to take into account.
Sick leave entitlements
Under the Holidays Act 2003, an employee is entitled to sick leave after completing six months’ current continuous service. Alternatively, they need to have worked an average of 10 hours a week over a period of six months and worked at least an hour a week or no less than 40 hours in every month during that time.
Once an employee has qualified for leave at the end of that six-month period, their entitlements is 10 days’ paid sick leave per year. Consequently, the first entitlement comes after six months and the next after 18 months, and so on. It is also important to note that sick leave is not pro-rated, so part-time employees have the same entitlement as those who work full-time.
In addition to this, there is the ability to carry over unused sick leave into the next 12-month period. This can be up to a maximum of 20 days’ total entitlement for the relevant 12-month period.
Any of this leave can be used both when the employee themselves is sick or injured and where their spouse, partner, child or other dependant is sick or injured.
When an employee does not have any sick leave available
There are many reasons why employees may not have any available sick leave entitlement. For example, lots of sickness in the community means using up sick leave. Other possibilities could be that the employee has not qualified for their six-month entitlement yet. Or perhaps they have used up their leave looking after young children who have been sick or off school due to COVID symptoms.
Where an employee has run out of sick leave, there at several options available at the employer’s discretion and if both parties agree.
The most straightforward option is for the employer and employee to agree for sick leave to be taken in advance. This might be the case where an employee has worked for four months and not yet reached their entitlement. If they both parties agree to this, the employee could use the sick leave that would become available at six months, which would simply be deducted from that future entitlement.
If the employee has annual leave available, either as an entitlement or because it has accrued, a second option is to use this – again, this will be dependent on both parties agreeing.
A final possibility is that they could simply agree that the period of sickness or injury will be taken as unpaid leave.
Of course, an employer does not have to agree to any of the above options. However, it is important to note that being flexible with any leave can be a key aspect of good employment relationships. This is always an important element of a successful business, but right now it is arguably more critical than ever. Businesses the world over are continuing to talk about the Great Resignation and New Zealand is particularly vulnerable – both because of the smaller pool of workers and because many people are considering opportunities overseas. Working conditions are also a factor, including employer flexibility – whether regarding sickness, hours, working from home, or anything else. Ultimately, employees have more options right now and many will question continuing to work for an employer if they do not consider they are being treated well.
The other consideration for employers is that flexibility around sick leave is really in its own best interests. In any case when someone is sick, they should be encouraged to take time to rest and recover. For an employee to do otherwise because they have no leave available means they will potentially be spreading sickness to their colleagues and also working at a lower capacity for longer.
How to manage sick leave
One of the ways that sick leave can create problems is in respect of the details or guidance provided to employees. As a starting point, employers should ensure that their employees are given clear information about what their entitlements actually are. In this respect, it is helpful for an employer to have a straightforward sickness policy (possibly within a small section of an employee handbook), so that employees understand any rules that apply.
One of the biggest issues in this respect relates to the employer’s notification requirements. Legally, if they are taking sick leave, an employee has to notify the employer as early as possible before they are due to start work. Alternatively, if that is not practicable, the employee must notify as soon as they can after that.
What the Holidays Act does not outline, though, is what that notification consists of. This can be an important consideration for employers because, for example, while in some industries a text or email will be acceptable, other employers will require a phone call. There can be legitimate practical and operational reasons for making this a requirement, and it may also be necessary for that notification call to be to a particular person. Unfortunately, problems frequently arise if reporting requirements are not properly understood – or sometimes simply because an employee consistently chooses not to follow them.
A further issue for employers is the matter of when and if to request a medical certificate.
The legal position is that an employer can require an employee to provide proof of sickness or injury after three consecutive calendar days. It can also request one before that if it meets the employee’s reasonable expenses (for example, the cost of the doctor’s appointment). The Holidays Act does not specify what proof means but says it may include a certificate from a health practitioner, which implies that other proof could be adequate.
However, whether an employer should seek a medical certificate will really depend on the circumstances – and potentially the employee concerned. Many employers are happy to take their employee’s word that they are unwell and will not require any form of proof. However, where sick leave is prolonged, or there are concerns with abuse or misuse of sick leave in a workplace – or in respect of the individual employee – an employer is more likely to consider that proof (and usually in the form of a medical certificate) is required.
Optional to offer a more generous sick leave allowance
The sick leave entitlements described above are simply the minimum statutory entitlement – employers can always offer more sick leave if they choose to. Whether or not an employer should do this may depend on the circumstances of the particular business or the nature of the employment relationship, and there are certainly different perspectives on this issue.
For example, the concern often voiced around the idea of introducing a policy of unlimited sick leave is that it will be abused. Conversely, some employers have tried to discourage employees from taking too much sick leave by paying out untaken leave at the end of the employment relationship – something an employer is not legally required to do and which is therefore not the norm.
In fact, although there will always be individual employees who abuse sick leave entitlements, the more likely issue often relates to employees not taking sick leave at all, or only rarely and at a minimum level. This creates the problem of sick employees who do not take the opportunity to rest and recover fully. In all likelihood, introducing a generous sick leave policy will not change this. It is company culture that usually dictates both whether an employee abuses sick leave or if they hesitate to take sick leave at all; therefore, it generally needs to be addressed at a company culture level.
On a separate note, providing extended entitlements can add real value in an employment relationship even if the need to use them does not arise. Simply knowing that they are available can give peace of mind to employees regarding what would happen if they were ever impacted by a serious illness or significant injury. By itself, this can assist both in recruitment and employee retention.
Sick leave…or ‘working from home’?
The issue with people working from home when they should really be off sick is potentially also a problem. To an extent, this is a product of COVID and people being required to isolate when they are a close contact, or when they are well enough to work but still testing positive or within the isolation period. And from both an employer and an employee’s point of view, there is no issue with this necessarily – just as working from home can be a good option when an employee is nursing a mild cold or has a sick child who does not need their attention, just their presence.
However, issues arise when an employee is really too sick to work but feels obliged to – perhaps because there are tasks outstanding or, as discussed above, because of the culture. Sometimes, it can simply be due to a personal work ethic that results in an employee feeling too essential to the business or too busy to take leave.
Regardless of the reasons, to an extent it falls to the employer to prevent this from happening. As noted above, if an employer is aware that an employee is sick, they should encourage them to take sick leave, rather than work from home.
An employer can also avoid creating a no sick leave culture by having good policies which recognise the importance of employee wellbeing. Also, by ensuring as far as possible that employees are well-resourced and supported so that they do not feel totally indispensable and are comfortable taking sick leave when the need arises.
For advice regarding any of the above or other issues you may have arising from sick leave, or for specialist advice on any employment matters, please contact a member of our employment team.
Thank you to Helen Pryde for preparing this article.
Disclaimer: The content of this article is general in nature and not intended as a substitute for specific professional advice on any matter and should not be relied upon for that purpose.