Phased return-to-work in Australia
Reviewed by Mellow Editorial Team, HR & payroll content team
A phased return-to-work is a structured arrangement where an employee recovering from illness, injury or other absence gradually rebuilds their hours or duties over an agreed period, rather than returning to full capacity all at once. Done properly, it protects the employee, reduces the risk of setbacks, and keeps your obligations as an employer on solid ground.
What triggers a phased return
The most common situations are:
- Work-related injury or illness — managed under your state or territory workers' compensation scheme. In most jurisdictions the treating doctor and a rehabilitation provider set the return-to-work plan, and you are legally required to provide suitable duties where reasonably practicable.
- Non-work illness or injury — covered under the employee's personal/carer's leave entitlements and general protections. There is no statutory phased-return framework here, but a gradual plan is still best practice and may be required as a reasonable adjustment under disability discrimination law.
- Mental health conditions — increasingly common and deserving of the same structured approach. A psychiatrist or GP can certify capacity in the same way a physio would for a physical injury.
- Parental leave return — not a traditional phased return, but flexible hours on return from parental leave are worth discussing proactively. Employees have a right to request flexible working arrangements under the National Employment Standards.
What a good plan looks like
A written return-to-work plan is the cornerstone. It does not need to be long, but it should cover:
- The start date and expected end date of the phased period
- Hours per day and days per week at each stage, with scheduled review points
- Any duties that are temporarily modified or excluded (for example, no heavy lifting, no client-facing calls in the first two weeks)
- Who is responsible for monitoring progress — usually the direct manager and HR
- How the employee will flag if the plan is not working
Keep the plan realistic. An employee returning after a serious mental health episode should not be jumping from zero to four days in a fortnight. Build in genuine milestones and treat them as checkpoints, not just formalities.
Medical clearance matters too. For physical injuries especially, confirm in writing that the treating practitioner has reviewed and supports each stage of the plan before the employee progresses.
Pay and entitlements during a phased return
This is where employers sometimes get caught out. The key principle: pay the employee for the hours they actually work at their contractual rate. Do not round up or make informal top-ups without understanding the implications.
- Workers' compensation top-ups — in a workers' comp context, the scheme insurer often pays a portion of the employee's wages and you pay the rest. The split depends on your state scheme and the employee's certified capacity. Get clear written confirmation from your insurer before processing pay.
- Superannuation — the Superannuation Guarantee applies to ordinary time earnings. If the employee is working reduced hours, super is calculated on what they actually earn during that period. Once the SG rate reaches 12% from 1 July 2026, that applies to those earnings too.
- Leave accruals — employees on a phased return continue to accrue annual leave and personal/carer's leave based on their ordinary hours worked during the plan. Their full entitlement of four weeks' annual leave under the National Employment Standards is calculated on their ordinary hours, which will be lower during a phased period.
- PAYG withholding — withhold tax in the normal way based on the wages paid each pay period. If the employee has a HECS/HELP debt, repayments continue on the banded scale applied to their annualised income.
- STP reporting — report each pay event through Single Touch Payroll as usual. There is nothing special about phased-return pay from an STP perspective; the amounts just reflect the reduced hours.
Your obligations around suitable duties
Under most workers' compensation schemes, the duty to provide suitable duties is substantive, not token. That means real work the employee can actually perform at their current capacity — not filing papers in a corner. Failing to make a genuine offer of suitable duties can affect your premium and, in some jurisdictions, constitutes a separate breach.
Outside workers' comp, the obligation flows from disability discrimination law and the general duty to maintain a safe workplace. Consult your state work health and safety regulator guidance if you are unsure where your obligations sit.
Common mistakes to avoid
Rushing the return — pressure from understaffing or deadlines is understandable, but pushing an employee back to full hours before they are ready often leads to a longer second absence.
Treating the plan informally — verbal agreements break down. Put everything in writing and have both parties sign it.
Ignoring the manager — the direct manager needs to understand the plan and be supported in implementing it. They should not be making on-the-spot decisions about whether the employee can take on extra tasks.
Forgetting to update the plan — if circumstances change, revise the document. Do not just let the original plan drift.
---
Run HR and payroll in Australia with Mellow
Mellow brings HR, payroll and 12 AI agents into one platform — built to handle Australia properly, with payroll included, from £4 per employee per month. The AI agents don't just answer questions; they generate contracts, run cost estimates and draft letters for you.
[Start a free trial →](/register)