Statutory sick pay in Australia: the employer process
Reviewed by Mellow Editorial Team, HR & payroll content team
There is no statutory sick pay scheme in Australia in the way the UK, for example, operates one. Instead, employers fund paid personal leave (sick leave) directly, and the entitlement flows from the National Employment Standards (NES) and the relevant award or enterprise agreement.
What the law actually requires
Full-time and part-time employees accumulate paid personal/carer's leave under the NES. The standard entitlement is 10 days per year for a full-time employee, with part-time employees receiving a pro-rata amount based on their ordinary hours. Casual employees do not accrue paid personal leave — they receive a casual loading instead.
Leave accumulates progressively throughout the year and carries over if unused. There is no cap on the total amount that can accumulate, though some awards or agreements set out specific conditions around accumulation and cashing out.
The leave covers both personal illness or injury and caring responsibilities for an immediate family or household member. When an employee takes personal leave, you pay them at their base rate of ordinary time earnings for the hours they would otherwise have worked.
The documentation process
You can require an employee to give notice as soon as practicable — ideally before their shift starts, or as soon as reasonable given the circumstances. You can also require them to produce evidence that would satisfy a reasonable person that the leave was genuinely taken.
The most common evidence is a medical certificate from a registered health practitioner. A statutory declaration is also acceptable where obtaining a certificate was not practical. You cannot prescribe that only one form of evidence is acceptable in all circumstances, but you can and should set a clear policy that states what you expect and when.
Keep a record of personal leave taken against each employee's accrual balance. This is a legal obligation under the Fair Work Act — leave balances must be visible to employees, and the records must be retained for seven years.
Running it through payroll
When an employee is on paid personal leave, the pay run looks the same as a normal pay period from a gross-payment standpoint. You pay ordinary time earnings for those hours, withhold PAYG income tax at the applicable progressive rate, and apply the 2% Medicare levy through the withholding calculation.
If the employee has an active HECS/HELP debt, repayment withholding continues on the banded scale as normal — personal leave payments are ordinary income for that purpose.
Superannuation Guarantee applies to personal leave payments because the leave forms part of ordinary time earnings. From 2026 the SG rate is 12%, paid to the employee's complying fund. The payment timing rules are the same as for any other OTE payment.
Each pay event, including any period that contains personal leave, must be reported to the ATO via Single Touch Payroll at or before the time the employee is paid. There is no separate reporting code for sick leave in STP Phase 2 beyond correctly classifying the payment type in your payroll software. The end-of-year STP finalisation deadline is 14 July.
When an employee exhausts their balance
Once accrued paid personal leave runs out, any further absence is either taken as unpaid leave or, with agreement, drawn against annual leave. Annual leave under the NES provides four weeks per year for full-time employees, and some awards allow employees to take annual leave in advance or to substitute it for personal leave by mutual agreement.
You are not required to pay an employee who has no leave balance and is simply absent. However, be careful before moving to manage the absence as misconduct — extended illness may engage protections under the Fair Work Act's general protections provisions or, depending on the length of absence, the unfair dismissal jurisdiction. Taking adverse action against an employee because they exercised a workplace right (including taking personal leave) is unlawful.
Record-keeping and practical compliance
A clean process looks like this: the employee notifies you, provides evidence within the timeframe your policy sets, you approve and record the leave against their balance, and you process the payment in the next pay run with STP lodgement at pay time.
Review leave balances periodically. Very large accumulated balances can represent a significant liability on your books, and some modern awards contain provisions allowing — or requiring — employers to direct employees to take leave if the balance exceeds a specified threshold. Check the applicable award for your industry.
If you operate across multiple states or engage employees under different awards, the NES entitlement is the floor — an award or enterprise agreement can provide more but cannot provide less. Where an employment contract is more generous than the NES, the contract prevails on that point.
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