Navigating the end of an employment relationship isn’t always straightforward. A common question for Australian employers is what happens if an employee takes sick leave during their notice period - whether they’ve resigned, been made redundant, or are working out notice after dismissal.
The short answer: the usual sick leave rules continue to apply during notice. But there are important nuances around evidence, pay, deductions, and whether notice can be extended. Getting these details right helps you stay compliant with the National Employment Standards (NES), the Fair Work Act, and any applicable modern awards or enterprise agreements.
In this guide, we’ll break down what you can and can’t do, when sick leave is paid, how evidence works, and practical steps to manage the situation fairly and lawfully.
What Counts As Sick Leave During a Notice Period?
The notice period is the time between when an employee or you give notice that employment will end and the actual end date. During this period, normal entitlements and obligations continue - including personal/carer’s leave (commonly called sick leave) under the NES for permanent employees.
If an employee is genuinely ill and unable to work during their notice period, they can access accrued paid personal leave, provided they follow your usual notification and evidence requirements. If they don’t have any accrued paid personal leave left, the time off will generally be unpaid unless an award, enterprise agreement, contract, or policy says otherwise. Unused paid personal leave is not cashed out on termination (it simply ends when employment ends).
If you choose payment in lieu of notice (you pay out the notice instead of having the employee work it), the employment ends immediately and there is no notice period to “work through” - so sick leave does not arise during that paid-out period.
Do Employees Get Paid If They’re Sick During Notice?
Yes - if the employee has accrued paid personal leave available and provides reasonable evidence when asked. Paid personal leave is paid at the employee’s base rate for their ordinary hours (no penalties or loadings unless your instrument provides for it).
If they’ve run out of paid personal leave, the absence is typically unpaid. In some cases, employees may access unpaid carer’s leave if they need to care for an immediate family or household member who is ill, or you may allow other forms of leave according to your policies. If this becomes a pattern or you’re unsure how to handle gaps in entitlements, it’s sensible to review your approach alongside your policies on managing sick leave when entitlements run out.
Keep in mind that sick leave taken during notice generally does not extend the notice period. In most cases, the original end date remains the end date, unless a specific award, enterprise agreement or contract clause provides otherwise.
Evidence, Deductions and Extensions: What Are Your Rights?
What Evidence Can You Ask For?
You can ask for “reasonable evidence” that would satisfy a reasonable person the leave is taken because of illness or injury. That usually means a medical certificate or a statutory declaration. You don’t need to know the specific medical condition - only that the employee was unfit for work on the day(s) in question. For clarity on setting expectations with staff and managers, it’s worth revisiting when you can lawfully ask for medical proof by checking your processes against guidance on requesting medical certificates.
Apply your evidence requirements consistently across your workforce, and align them with your workplace policy and any applicable industrial instrument. Inconsistent treatment can create risk.
Can You Extend the Notice Period Because of Sick Leave?
Generally, no. Days taken as sick leave count as part of the notice period, and the employment ends on the original date. Only if an applicable award, enterprise agreement, or employment contract expressly provides for extending notice due to illness would that occur - and such clauses are uncommon.
Can You Withhold Wages or “Not Pay Notice” If Evidence Isn’t Provided?
Be careful here. You can treat an absence as unpaid leave if reasonable evidence was requested and not provided. However, withholding wages or “not paying notice” is different to treating a particular day as unpaid - and deductions from pay are only lawful if they are authorised by law, an industrial instrument, or a written agreement that complies with the Fair Work Act and does not benefit you directly (unless permitted).
There is a distinct scenario where an employee resigns but fails to give the required notice: some awards or enterprise agreements permit an employer to deduct up to the amount the employee would have earned for the shortfall in notice. This is not automatic; you must have a clear legal basis and apply it lawfully. Review your instrument, your contract, and general guidance on withholding pay from employees before making any deduction.
Does It Matter Who Ended the Employment?
- Employee resignation with notice: The employee can access accrued paid personal leave if sick during the notice period (with evidence if requested). If they don’t give the full required notice and your instrument allows a deduction, you may be able to deduct an amount for the notice shortfall - this is separate from sick leave taken during a properly served notice period.
- Employer-initiated termination with notice: If the employee works out the notice, they can access accrued paid personal leave if unwell (with evidence if requested). If you choose to pay in lieu, the employment ends immediately and personal leave does not apply during the paid-out period.
Practical Scenarios and How To Respond
1) The Resigning Employee Calls In Sick Repeatedly
Stay calm and process each absence according to your policy. Ask for evidence for each sick day during the notice period. Confirm in writing whether the day is treated as paid personal leave (if accrued and evidence provided) or unpaid leave (if no accrual or no evidence). Avoid blanket assumptions about misuse - rely on consistent evidence standards and your policy. If patterns look suspicious, you can escalate to a fair and procedurally sound process, but tread carefully.
2) You’ve Issued Notice And the Employee Is Off Sick
Same rules apply. If the employee is unfit for work, and they have accrued personal leave, it’s paid (with evidence if requested). If they exhaust their accrual, further time away will typically be unpaid unless your instrument provides otherwise. The notice period usually won’t be extended.
3) You Want to Move to Payment in Lieu of Notice
You can decide to pay the employee instead of having them work their notice. If you do, the employment ends straight away. There is no “sick leave during notice” because the notice is no longer being worked - it’s paid out. For the mechanics, timing and entitlements, check your approach against payment in lieu of notice.
4) The Employee Can’t Provide a Certificate In Time
Set a reasonable timeframe. If the employee later provides valid evidence for the relevant days, treat it as paid personal leave if accrual was available. If evidence is not provided after a reasonable opportunity, you can treat the absence as unpaid (and address any conduct concerns through your performance or conduct process). Document every step and communicate outcomes clearly.
5) The Employee Is Cleared to Return Before the End Date
Once fit for work, the employee should return to their ordinary duties for the rest of their notice. If there were fitness-for-work concerns, you can ask for appropriate confirmation they’re safe to return, aligned with guidance on medical clearance to return to work.
Legal Risks To Watch: Unfair Dismissal, Adverse Action and Discrimination
Ending employment while someone is on sick leave requires care. Employees are protected from adverse action for exercising workplace rights (including taking personal leave). If a dismissal is contested, the Fair Work Commission will look at whether the dismissal was harsh, unjust or unreasonable - see the considerations in section 387 of the Fair Work Act.
Also consider any work health and safety obligations if the illness or injury is work-related, and ensure you’re not breaching anti-discrimination laws. Where the situation is complex (e.g. extended illness, performance concerns intertwined with health issues), it’s wise to seek advice before making decisions.
Steps To Stay Compliant (And Make It Easier Next Time)
- Lock down your documents. Ensure your Employment Contract and workplace policies clearly set out evidence requirements, notification rules, and how leave is treated in a notice period. Consistency starts on paper.
- Train your managers. Provide simple scripts and checklists so supervisors respond lawfully, request the right evidence, and avoid ad hoc decisions.
- Respond in writing. When a sick day is claimed during notice, reply promptly confirming what evidence is required, when it’s due, and how pay will be handled (paid personal leave vs unpaid leave).
- Check your industrial instrument. Before assuming any deduction or extension of notice, review the relevant award or enterprise agreement and your contract. For deductions or short notice, align with the law and practical guidance on withholding pay.
- Calculate final pay correctly. Make sure your payroll captures all ordinary wages, paid personal leave taken (if any), and statutory entitlements on termination. A quick review against a final pay checklist helps avoid errors.
- Use records to reduce disputes. Keep copies of certificates, declarations, your emails or letters to the employee, and payroll entries. Clear records are your best defence if the situation is later challenged.
- Know when to seek help. If you’re dealing with suspected misuse, overlapping performance issues, or a potential adverse action risk, get tailored advice early. It can save significant time and cost.
Common Employer Questions
Can employees take sick leave after they resign?
Yes. If they are genuinely unwell, they can access any accrued paid personal leave during the notice period. Usual evidence and notification rules apply.
Does sick leave extend the notice period?
Usually no. Sick leave days count within the existing notice period and the original end date stands, unless an award, enterprise agreement or contract expressly says otherwise.
Do we have to pay for sick leave days during notice?
If the employee has accrued paid personal leave and provides reasonable evidence when requested, those days are paid at the base rate for ordinary hours. If no accrual remains, the time off is typically unpaid.
Can we deduct pay if the employee doesn’t give full notice?
Only if an award, enterprise agreement or other lawful basis clearly permits it - and even then, there are limits. This is different from treating a particular absence as unpaid due to lack of evidence. Review your instrument and contract before making any deduction.
Is unused sick leave paid out at the end?
No. Under the NES, unused paid personal leave is not paid out on termination. For context on how personal leave works more broadly, see what happens to unused sick leave in Australia.
What if the employee refuses to work their notice?
If an employee doesn’t work their notice and there’s no payment in lieu from your side, check your instrument and contract for any permitted deductions and your options. A structured approach aligned with employees not working their notice helps you respond lawfully.
Key Takeaways
- Sick leave rules continue during a notice period: if the employee is genuinely unwell and has accrued paid personal leave (with reasonable evidence), those days are paid.
- In most cases, sick leave does not extend the notice period; the original end date stays the same unless an instrument or contract clearly says otherwise.
- Only treat an absence as unpaid when evidence is reasonably requested and not provided, or when the employee has no accrued paid personal leave left.
- Be cautious with deductions or “not paying notice” - you need a clear lawful basis, such as specific award provisions for a resignation shortfall.
- If you pay in lieu of notice, employment ends immediately and personal leave does not apply during the paid-out period.
- Strong Employment Contracts and clear workplace policies set expectations early and reduce disputes.
- Document your decisions and seek advice early where there are risks (e.g. potential unfair dismissal or adverse action concerns).
If you’d like a consultation on managing sick leave during an employee’s notice period - or need help updating your contracts and policies - you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.
