Can employers in New Zealand refuse sick leave?

Here's what an employer must consider if they suspect employees of misusing their sick leaves

Can employers in New Zealand refuse sick leave?

There will inevitably be times when an employee just doesn’t feel well enough to work and needs to go on sick leave. But what if employees use their sick leave allotment for reasons other than illness? Can an employer then refuse their request to take a sick leave?

Below, we look at what qualifies as a sick leave and what an employer must consider if they suspect employees of misusing their sick leaves.

Read more: How to manage staff’s work-life balance challenges

Sick leave in NZ

According to the Ministry of Business, Innovation & Employment (MBIE), sick leave is paid time off that can be used when an employee is unwell, injured, or when a dependant they care for is unwell, making them unable to attend work.

Sick leave across New Zealand is covered by the Holidays Act of 2003, which states that all employees are entitled to sick leave once they have been with the company for a continuous six months or have worked with the company for a total of six months with an average of 10 hours per week, and at least one hour in every week or 40 hours in every month.

Additionally, parliament recently passed the Holidays (Increasing Sick Leave) Amendment Bill in 2021, which increases the minimum employee sick leave entitlement from five days to 10 days per year. Unused sick leave credits at the end of the 12-month period can be carried over for next year’s entitlement. Meanwhile, the maximum amount of unused sick leave that an employee can be entitled to will remain 20 days.  

Can an employer reject a sick leave request?

While there is no definite law regarding employers rejecting a sick leave request, there are certain considerations employers must consider when handling sick leaves.

Employees are allowed to accumulate a maximum of 20 days of sick leave under the Holidays Act 2003. The employer and employee can agree on the number of sick leaves allowed through the employment agreement or through workplace policies.

If the employee has used up all their sick leave, the employer can allow them to use sick leave in advance, a leave from their annual holiday leave, or take unpaid leave.

Can an injury be covered by Accident Compensation Corporation payments?

When employees get into an accident or are injured, it may be covered by the Accident Compensation Corporation (ACC) scheme.

If it was an injury at work, the employee does not need to take sick leave. When the injury is registered and acknowledged by ACC, the employer must pay the employee at least 80% of their regular wages for the first week off work.

However, if employees are injured outside work, they may file for sick, annual, or leave without pay for the first week off work. After the first week, ACC will pay the employees 80% of their usual salary while off work. Employers have no obligation to pay the employees while they are on ACC but may need to make salary contributions if employees return to work on a temporary part-time basis.

Is a medical examination needed for every sick leave?

An employer cannot force an employee to provide medical examination results when they go on sick leave unless stated otherwise in the employment agreement. But if an employer has reason to think that an employee is seriously unwell or is taking non-genuine sick leave for three or more consecutive days, they may ask the employee to prove that they were ill. In some circumstances, an employer can ask for proof of illness or injury for less than three days of leave, but the employer must agree to pay for the doctor’s fees. Proof of sickness or injury could be a medical certificate or note from a doctor saying that the employee or the dependant is sick or injured.

Additionally, if the employee has an existing medical condition that they failed to disclose upon employment, it may be grounds for ending the employment relationship due to misinterpretation. If it was a recently acquired medical condition and it is affecting the ability of the employee to fulfil their job responsibilities, then employment can be terminated for medical incapacity. The employment agreement will usually have a clause and process regarding medical incapacity. 

The medical incapacity process requires the employer to conduct a fair investigation into the employee’s medical condition before taking any action on their employment. It is important for both employers and employees to know that the investigation is not a disciplinary investigation. Employers should also be informed of the legal complexities of dismissing an employee based on medical incapacity and should seek advice first.

Read more: Can I sue my employer for emotional distress?

How to handle an employee abusing sick leave

If an employer, after conducting a fair investigation and collecting proof, found that an employee “pulled a sickie” for an alarmingly long period or multiple periods that it affects their work, it could be grounds for dismissing the employee for serious misconduct.

Dismissing an employee is the last resort employers should consider. While it may be hard to avoid, employers can minimise the incidents of employees using sick leave for other reasons. Listed below are some ways to handle the misuse.

  1. Set clear policies and boundaries on sick leave

Employers should set clear sickness absence policies in the employees’ handbook and employment agreements. Identifying specific terms and conditions such as the allowed amount of leave credits, the process for unused leave credits, valid reasons for sick leave and penalties for misuse of the leave can help employees stay aware of the company’s policies. It is best to consult with an employment law expert to ensure the policies are not discriminating against employees with disabilities.

Employers could also regularly remind employees of the policies or updates through memos, email, or meetings. Again, this shows how companies are monitoring sickness absence and taking it as a serious matter.

  1. Document absences to identify sick leave misuse

Recording absences of all employees, whether filed under sick leave or any other leave, is a great practice to keep track of any misuse or abuse of leaves and absences. It also serves as proof for any case involving an employee, such as performance review and workplace productivity assessments.

  1. Maintain contact and conduct a return-to-work interview

Employers who maintain appropriate contact with a sick employee while they’re on sick leave can help reassure employers there is no misuse happening and make employees feel cared for by their managers without feeling like they are being micromanaged. This also reminds people who misuse sick leave that the company is serious about absenteeism and leave credit usage.

Conducting a quick return-to-work interview with an employee when they are back to work can help with documenting activities affecting the workplace and employees. It also ensures managers that the employee is well enough to come back to work and will not infect co-workers if they report in-office.

Sudden absences from employees due to sickness can disrupt the flow of work in the team. Nevertheless, employers should stay prepared for these absences. It is better to allow sick leave to protect the employee and others than to make them go to work and incur higher costs from infections and damaging work relations with the staff.

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