A practical guide to managing sick leave for Australian SMEs

Unplanned absenteeism costs Australian businesses over $44 billion a year. That’s a massive sum, and it affects businesses of all sizes. This impact is particularly big for small businesses, where a single sick day can dent the whole team's productivity.

As a small business owner, managing sick leave can be burdensome. Without clear policies or a plan in place, even a short absence can leave you scrambling to cover shifts and keep things running smoothly.

In this guide, we explain everything you need to know about managing sick leave effectively, while keeping your operations running smoothly. We share how to avoid costly disruptions and stay compliant with Australian labour laws.

Note: The information provided in this article is accurate as of 06/12/2024. As paid leave entitlements are subject to change, please refer to the National Employment Standards and relevant Modern Awards for the most current information.

Types of sick leave and employee entitlements

Under the National Employment Standards (NES), most Australian employees have a right to paid sick leave (personal or carer's leave). This is in addition to annual leave. They can use their paid sick and carer's leave if:

• They're unfit for work because of a personal illness or injury. This can include mental health conditions and illness related to pregnancy.
• If they need to look after or support an immediate family member or household member who's ill, injured, or dealing with an unexpected emergency.

Sick and carer's leave allows employees to take time off to recover or provide care without losing income. It offers them financial and emotional support during difficult times.

Below, you can find sick leave entitlements:

• Full-time employees: Full-time workers have a right to 10 days of paid personal or carer’s leave per year. This leave accumulates over time and any unused days roll over into the following year.
• Part-time employees: The amount of paid sick or carer's leave they receive is proportionate to the employee's ordinary hours. For example, a part-time employee working three days a week would get six days of paid sick leave annually. Like full-time employees, unused leave rolls over.
• Casual employees: Casual workers don't have a right to paid sick and carer's leave. However, they can access up to two days of unpaid carer’s leave per occasion.

Key employer obligations

To manage sick leave as an employer, you need to meet specific legal obligations. Here’s what you need to know to stay compliant and minimise disruptions:

Paid leave access

You must ensure that full-time and part-time employees can access their paid personal leave and carer’s leave entitlements as they accrue.

Notice and evidence requirements

It's important to set clear expectations for notice periods. You can detail these expectations in employment contracts or your workplace policies. This ensures employees know exactly how and when to let you know if they're unable to work because of illness.

For short absences, a self-declaration may be sufficient evidence of illness. For longer absences (more than two consecutive days), or in cases of frequent absences, it's reasonable to request the employee to produce a medical certificate from a doctor. This ensures the process remains fair and transparent for both parties.

Record-keeping and confidentiality

Accurate record-keeping is important. You must document employee leave entitlements, leave taken, and leave balances and ensure that you maintain these records properly. You should handle any medical certificates or health-related information in a way that respects confidentiality and privacy requirements. Securely storing this information is essential to avoiding breaches of sensitive data.

Best practices for managing sick leave

Effective management of unpaid and paid sick leave can have a positive impact on the day-to-day running of your business. It can reduce operational disruptions and help you comply with legal obligations. Below, you can find some practical tips to help you get it right:

1. Develop clear policies

Having clear, documented sick leave policies is important. These should cover:

• Eligibility and entitlements: Make sure employees understand how much paid sick leave they’re entitled to. It's also important that they know how it accrues and when they can use it (e.g., for personal illness or carer responsibilities).
• Notification requirements: Detail how and when employees should notify you of their absence. This should include acceptable forms of communication (phone, email, text) and any deadlines for notification.
• Evidence for sick leave: Specify when a medical certificate or self-declaration is a requirement. This ensures that employees know what to provide for both short- and long-term absences.

Your policies should be easy to access. You can include them in employment contracts, and also make them available in an employee handbook or intranet.

2. Proactive communication

Early and open communication can help you manage sick leave. Encourage employees to let you know as soon as they're aware they’ll need time off. This can make it easier for you to adjust staffing and workloads.

Consider using technology to smooth out this process. This can include automated notifications or leave management software that facilitates employees logging their absences quickly and efficiently. These tools can also help you monitor sick leave and keep records up to date.

3. Balancing compassion and compliance

Being compassionate and supportive of your employees is just as important as complying with Australian employment laws. By finding a balance between your business needs and your employees' well-being, you can create a positive workplace culture.

• Employee well-being: Show understanding when employees are unwell or need time to care for family members. Flexibility can improve morale and loyalty.
• Review policies regularly: Ensure your sick leave policies stay up to date with changing legislation and reflect best practices. Regularly review and update these policies to ensure ongoing compliance.

Take the hassle out of managing sick leave with Rippling

Effective management of sick and carer's leave is important. It helps you maintain operational stability and avoid costly compliance implications. It's more challenging than it needs to be when you don't have a proper system in place. Tracking entitlements, managing documentation, and ensuring compliance can become unnecessarily overwhelming, especially for small businesses.

Rippling offers a streamlined solution to help you manage sick leave optimally. The platform allows you to track employees' sick and carer's leave balances automatically. This results in the accurate calculation and updating of their entitlements as they accrue or roll over.

Rippling also helps you store medical certificates and other documentation in one secure place, so you can easily comply with Australian privacy regulations. With built-in compliance tools, your administration burden reduces even more. With Rippling, you can stay up to date with legal requirements effortlessly, avoiding errors that could lead to penalties.

By putting the sick leave management process on autopilot, Rippling allows you to focus on running your business without worrying about the complexities of manual leave tracking.

Disclaimer: Rippling and its affiliates do not provide tax, accounting, or legal advice. This material has been prepared for informational purposes only, and is not intended to provide or be relied on for tax, accounting, or legal advice. You should consult your own tax, accounting, and legal advisors before engaging in any related activities or transactions.