Can annual leave be turned into sick leave?


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.

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Joanna
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Joanna

Is my employer allowed to use my annual leave when my sick days run out without my knowledge?

Catherine Cahill
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Catherine Cahill

When I have written Leave Policies for employers I always go through these scenarios, explain what the letter of the law is, and then discuss what other options the employer might reasonably include in their Policy. I agree with most of the comments above, if a person provides proof of illness when on annual leave, then sick leave may be substituted for annual leave. This is such a long standing practice, that to refuse this to an employee and invite unhappiness – if not litigation, seems like a provocative way to manage the situation. Whether or not a person can… Read more »

Karen Broadhurst
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Karen Broadhurst

What happens when you have paid them annual leave at a higher rate than their standard. Are you allowed to deduct the difference from their pay when crediting back their annual leave?

Norman
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Norman

Hi there, so as an employer, if a member of my staff calls sick the day before their holiday, all of the subsequent holiday is then transferred into sickness instead of holiday? Does an employee need to prove they are well enough to then take holiday? It’s a common thing where people call the sick the day before a holiday starts as they can’t be bothered to attend work for that one day

Irene
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Irene

I have a different situation where we are asked to do a work related course on a day that I normally would work and we have to take it as annual leave. It is for 3 days – is that allowed?

More on HRM

Can annual leave be turned into sick leave?


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.

25
Leave a reply

avatar
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  Subscribe to receive comments  
Notify me of
Joanna
Guest
Joanna

Is my employer allowed to use my annual leave when my sick days run out without my knowledge?

Catherine Cahill
Guest
Catherine Cahill

When I have written Leave Policies for employers I always go through these scenarios, explain what the letter of the law is, and then discuss what other options the employer might reasonably include in their Policy. I agree with most of the comments above, if a person provides proof of illness when on annual leave, then sick leave may be substituted for annual leave. This is such a long standing practice, that to refuse this to an employee and invite unhappiness – if not litigation, seems like a provocative way to manage the situation. Whether or not a person can… Read more »

Karen Broadhurst
Guest
Karen Broadhurst

What happens when you have paid them annual leave at a higher rate than their standard. Are you allowed to deduct the difference from their pay when crediting back their annual leave?

Norman
Guest
Norman

Hi there, so as an employer, if a member of my staff calls sick the day before their holiday, all of the subsequent holiday is then transferred into sickness instead of holiday? Does an employee need to prove they are well enough to then take holiday? It’s a common thing where people call the sick the day before a holiday starts as they can’t be bothered to attend work for that one day

Irene
Guest
Irene

I have a different situation where we are asked to do a work related course on a day that I normally would work and we have to take it as annual leave. It is for 3 days – is that allowed?

More on HRM