If an employee falls sick when they are on annual leave, is the employer obliged to re-credit the employee’s annual leave accrual for the days on which the employee is sick?
Section 89(2) of the Fair Work Act 2009 (Cth) (FW Act) states:
“If the period during which an employee takes paid annual leave includes a period of any other leave (other than unpaid parental leave) under this Part, or a period of absence from employment under Division 8 (which deals with community service leave), the employee is taken not to be on paid annual leave.”
Therefore, if an employee takes personal/carer’s leave under Part 2.1 of the FW Act, they are understood not to be on paid annual leave.
Many employers interpret s 89(2) as entitling an employee, who falls sick during a period of pre-arranged annual leave, to have their annual leave accrual re-credited for the days on which the employee is sick. However, I don’t think it’s that simple.
A sick employee’s entitlement to take paid personal/carer’s leave under Part 2.1 of the FW Act requires the following conditions to be satisfied:
- the leave must be taken because the employee is not fit for work because of a personal illness or personal injury, affecting the employee (s 97(a)), and
- the employee must provide at the request of the employer evidence that would satisfy a reasonable person that the employee is taking leave on that day because the employee is not fit for work because of a personal illness or personal injury, affecting the employee.
In my view, if an employee falls ill on a day of annual leave, they are not taking leave on that day because they are unfit for work. A reasonable employer could not be satisfied the employee is absent from work that day for that reason, even if they receive a medical certificate stating the employee is ill. The employee is absent from work on that day because they are taking annual leave. They might have fallen ill on that day, but the illness is not the reason for their absence from work.
In other words, the purpose of s 89(2) is to prevent an employer treating a period of work absence as annual leave when the employee is entitled to be absent for that period on personal/carer’s leave. This is consistent with the explanatory memorandum to the Fair Work Bill, which states that when an employee is sick and takes paid sick leave for the period of their illness, s 89(2) operates so that the employee’s annual leave accrual will not be reduced by that day or period. The purpose of s 89(2) is not to entitle an employee, who falls sick during pre-arranged annual leave, to have their accrual re-credited for annual leave days on which they are sick.
That may well be good HR practice – however, the FW Act does not give rise to this entitlement.
AHRI members can access the leave section of the AHRI:ASSIST website for more information.