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Increased Sick Leave | What this change means for Employers

Updated: Jul 8, 2021

From 24 July 2021, the minimum employee sick leave entitlement will increase from five days to 10 days each year.

What is changing?

An employee will become entitled to 10 days paid sick leave after six months’ continuous employment and a further 10 days’ paid sick leave for each subsequent completed 12 months’ continuous service.

How does this impact existing employees?

For existing employees, the entitlement arises when they next become entitled to sick leave for a 12-month period. An employee may carry over up to 10 days’ sick leave and the current maximum days’ sick leave which can be accrued from year to year remains at 20 days. You can still offer enhanced paid sick leave over and above the statutory minimum, including allowing an employee to carry over an enhanced amount, on a discretionary basis, or as an additional contractual benefit.

What do I need to do, and by when?

You have until 24 July 2021 to make any necessary changes. We have outlined a few steps you can consider for a smooth transition:

Communicate | get in touch with your employees to let them know about this change.

Payroll | check that your payroll systems (or provider) are updated to account for the increased entitlement.

Policies | review any policies which refer to the statutory minimum sick leave entitlement or your current enhanced entitlement and amend accordingly.

Employment Agreements | depending on your Individual Employment Agreements (IEA), you may need to update your IEA clause for both new hires, and for existing employees. Below is a simple Q&A to help with what action you may need to take in relation to IEA’s.

IEA Question & Answer

1. Question: Our IEA’s are aligned to the minimum statutory requirement, what does this change mean for us?

Answer: In line with best practice, IEA’s in place which refers to the statutory minimum sick leave entitlement should be updated to reflect the increased entitlement. You will need to update all new IEA’s, and update current agreements through a ‘variation’ to the IEA. Of note, if you chose to not update your agreements, the increased entitlement of 10 days still applies as a matter of law.

2. Question: For our current employees who receive the statutory minimum requirement already, when does this change take effect?

Answer: For current employees, they will now receive 10 days on their next entitlement date. It is important to remember that employees will become eligible for the extra sick leave at different times over the next year, in line with their sick leave entitlement anniversary date.

Their next entitlement date is either:

a. the date they first became entitled to sick leave (after working with you for six months);

b. or 12 months after they were last entitled to sick leave.

3. Question: For any new hires, when does this change take effect?

Answer: For new hires, the impact of this change depends on when they were first employed.

Three scenarios are outlined below:

a. For all new hires employed from 24 July 2021 onwards, these employees will become entitled to 10 days’ paid sick leave after six months of continuous employment, unless you have a more beneficial provision that provides for sick leave to be taken upon commencement.

b. For all recent new hires hired before 24 July 2021, two different scenarios exist, illustrated through an example:

i. Employee 1 started with you on 17 Jan 2021. They become entitled to sick leave six months later, on 17 July 2021. Because the sick leave changes don’t come into force until 24 July 2021, this employee is only entitled to receive 5 days of sick leave. On their next sick leave entitlement anniversary date, 17 July 2022, they will receive 10 days of sick leave instead of five.

i. Employee 2 started with you on 10 March 2021. Their sick leave entitlement anniversary is 10 September 2021. As this is after the sick leave changes come into effect, on 10 September 2021 they will receive 10 days sick leave.

4. Question: Our IEA’s offer a more beneficial amount of sick leave. What do we need to do?

Answer: Many employers already offer 10 days’ sick leave, as an enhanced contractual benefit. If you do, you may want to consider whether you continue to offer enhanced sick leave entitlements over and above the statutory minimum, but there is no obligation to do so. So long as all parts of your offering are enhanced, you may not need to do anything to your current IEA. However, it’s important that you review your offering and how it is worded as you may need to make changes on that basis.

It is recommended that you take a look at your current IEA's, policies, and the potential need to add a ‘variation’ to your IEA to address the changes.

If you have any questions on the above or would like help updating your Individual Employment Agreements (IEA), a variation to your IEA, or with any communications with your employees, please get in touch with Karen.

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