Sick leave payout: what happens to your balance when you leave
Personal leave accumulates year after year, then lapses when the job ends. Enter your salary and balance to see what it is worth while you are employed.
Paid personal and carer’s leave, commonly called sick leave, is not paid out when employment ends in Australia. Under the National Employment Standards a full-time employee accrues 10 days a year, the balance carries over from year to year without limit, and any amount left on the last day of employment lapses, whether the employee resigns, is dismissed or is made redundant. The only exceptions are where an award, enterprise agreement or contract expressly provides for payment of untaken personal leave on termination. A balance of 30 days is worth $9,808 to an employee on $85,000 if taken as leave, and nothing on termination. Annual leave and long service leave are treated differently: both must be paid out. Sick leave can still be used during a notice period, with evidence, and in limited cases cashed out while employment continues.
What your sick leave balance is worth
Paid out on termination under the NES
$0
| Value if taken as sick leave while employed | $8,173 |
| Accrual per year of service | 10 days |
| Paid out only if | Your award or agreement says so |
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What a balance is worth, and what is paid out
| Salary | One day of leave | 10 days (one year’s accrual) | A balance of 30 days | Paid on termination under the NES |
|---|---|---|---|---|
| $60,000 | $231 | $2,308 | $6,923 | $0 |
| $85,000 | $327 | $3,269 | $9,808 | $0 |
| $110,000 | $423 | $4,231 | $12,692 | $0 |
| $140,000 | $538 | $5,385 | $16,154 | $0 |
The value columns show what the leave pays if it is taken while you are employed, at your base rate for ordinary hours. The last column is the statutory position on termination.
How the balance builds
| Service | Accrued, full time | Typical balance |
|---|---|---|
| 1 year | 10 days | 6 days if 4 days a year were used |
| 3 years | 30 days | 18 days if 4 days a year were used |
| 5 years | 50 days | 30 days if 4 days a year were used |
| 10 years | 100 days | 60 days if 4 days a year were used |
Personal leave accrues progressively through the year according to ordinary hours worked, at the rate of 10 days a year for a full-time employee and pro rata for a part-timer. Casual employees do not accrue it. There is no cap on the balance and no expiry while the employment lasts, which is why long-serving employees often hold many weeks.
Why the law treats it differently from annual leave
Annual leave is an earned benefit, a deferred part of remuneration, so the Act requires it to be paid out. Personal leave is a form of insurance against illness and caring responsibilities: it exists to protect income when the need arises, and if the need never arises there is nothing to pay. The High Court confirmed in 2020, in Mondelez v AMWU, that the entitlement is measured as one tenth of ordinary hours in a fortnight per year of service, not as ten calendar days regardless of shift length.
When an agreement does pay it out
Some enterprise agreements, mostly long-standing ones in manufacturing, mining, construction and parts of the public sector, provide that some or all untaken sick leave is paid on termination, sometimes only on redundancy or retirement and sometimes capped at a number of weeks. A payout under such a clause is an employment termination payment for tax purposes, not leave, and is taxed accordingly; the termination payment tax calculator applies those rates. If your payslips show a personal leave balance and you are covered by an agreement, read its termination and redundancy clauses before your last day.
Using sick leave before you go
Leave may be taken only when you are not fit for work because of a personal illness or injury, or to care for a member of your immediate family or household who is ill, injured or facing an unexpected emergency. Taking it for any other reason, including to run down a balance before leaving, is misuse and can lead to the leave being refused or to disciplinary action. During a period of notice the same rules apply: genuine illness is covered, the employer may require evidence, and the notice period is not extended.
An employee who is ill when a redundancy takes effect is still made redundant on that date. Paid personal leave ends with the employment, and from then income protection insurance or a Centrelink payment is the fallback.
Transfer of business and portability
When a business is sold and employees transfer to the new owner, accrued personal leave must be recognised by the new employer: unlike annual leave, the buyer cannot refuse to recognise it. For employees who simply change jobs, the balance does not move, except within some public services and within schemes specific to an industry. This is one reason a move between related companies should be documented as a transfer of employment rather than a resignation and a new start.
Checking your final pay
A final payslip should show annual leave paid out and should not show a deduction or payment for personal leave. If personal leave was taken in advance of accrual, the employer may recover it only where you agreed in writing. The final pay calculator adds up the amounts that must be paid, and the final pay time limit guide covers when.