Sick Leave is paid time off work that can be taken if an employee or other person who depends on them is sick or injured.
Check out the sections below to learn how Sick Leave works:
- Entitlement to Sick Leave
- Accruing Sick Leave
- Sick Leave Balances
- Requesting Sick Leave
- Paying Sick Leave
- Frequently Asked Questions
All employees, including part-time and intermittent/irregular employees (often referred to as 'casuals'), are entitled to 10 days' Sick Leave per year if they meet the following criteria:
- they have six months’ current continuous employment with the same employer, or
- they have worked for the employer for six months for:
- an average of 10 hours per week, and
- at least one hour in every week or 40 hours in every month.
PayHero can automatically check these criteria for your employees if you enable the Automatic Extension of Sick Anniversary setting for your account.
Sick leave entitlements are not pro-rated in any way. For example, even if part-time employees only work three days a week, they still get 10 days’ Sick Leave each year.
Employees may carry over unused Sick Leave from one entitlement year to the next. By default the maximum entitlement that can accrue is 20 days, but this can be increased if desired.
MBIE has more information on employee entitlement to Sick Leave here.
When an employee's Sick Leave anniversary date is included in a pay, their annual entitlement to Sick Leave will be accrued. This can be seen in the 'Leave Accrued' section of the employee's pay:
Important: note that the leave balance won't be updated to reflect their new entitlement until the pay containing their anniversary has been Sent.
An employee's Sick Leave anniversary date will be either:
- after reaching their first 6 months of continuous employment, or
- on their Sick Leave entitlement anniversary (12 months after they were last entitled to Sick Leave).
Sick Leave balances can be viewed by navigating to the employee's Leave tab and scrolling down to the Sick Leave section.
The balances displayed are:
Available - The amount of sick leave currently available to the employee. This is the number of days that have become due from crossing sick anniversaries, less any sick leave taken.
Annual Entitlement - The minimum entitlement for an employee is 10 days annually. If the employment agreement provides more than 10 days, the amount can be entered here.
Maximum Entitlement - The maximum number of days of sick leave that can accrue. Unused sick leave can be accrued up to a maximum of 20 days under the Holidays Act. This amount can be higher if agreed, in which case the new amount can be entered here.
Next Sick Anniversary - This anniversary is set to 6 months after an employee's start date by default. If the employee has been employed for more than 6 months, the next sick leave anniversary displayed will be 12 months after the initial 6-month anniversary. If the Automatic Extension of Sick Anniversary setting is in use, the employee's anniversary may be extended by the length of any pays in which they did not meet the entitlement criteria.
To view the history of when Sick Leave was accrued (or taken), download the employee's Other Leave History Report.
Each line in this report shows when one of the employee's balances changed. The Action column will indicate 'Pay' for changes that occurred as the result of a pay being processed, while lines showing 'Edit' are the result of manual changes to the employee's record.
The Sick Leave details displayed are:
Sick Days Due - The total Sick Leave days due to the employee at the time of the change. If this value changes from one line to the next, you can expect to see a corresponding Taken value in the next column, or the Next Sick Anniversary rolling over (unless the line is an 'Edit' line, in which case the balance was manually edited).
Sick Days Taken - For 'Pay' actions, this is the total of sick leave days taken in the pay.
You can add Sick Leave requests for your employees via the Leave tab. See more details on creating requests in the following article: Leave Requests.
If your employees have been invited to use PayHero, they'll be able to submit their own leave requests, as seen here: Leave for Employees. These will appear in the Leave calendar to be actioned by a Team Manager or Administrator.
In the Leave Request pop-up, set the Leave Type dropdown to Sick Leave and specify the details for the request.
The fields displayed will include:
Requested - This field displays the total requested days of leave, based on the selected 'Start' and 'End' date of the request. This will be calculated based on the employee's normal working days. For example, if they request leave from Monday - Sunday, but only work Monday - Friday, leave will be recorded as 5 days, not 7. You can learn more about how PayHero determines the working days for different types of employees here: Otherwise Working Days.
Leave requests for a single day will always count as 1 day of leave, regardless of whether it's a normal working day for the employee. If this is not a normal work day for the employee, consider whether they should be paid for that day of leave before approving the request.
Leave Available - The employee's current total balance of Sick Leave available. Ensure this balance is sufficient to cover the 'Requested' days, or that you're happy for the employee's balance to become negative if they are taking more leave than is available.
Sick Leave is paid using Relevant Daily Pay (if known) or Average Daily Pay.
Relevant Daily Pay (RDP) - The amount the employee would have earned if they had worked that day, including any additional earnings such as commission. An employee should be paid their Relevant Daily Pay for Sick Leave if the Relevant Daily Pay is known and their daily pay doesn't vary within the pay week. PayHero will default to this value, based on their normal hourly rate, for any employees whose Employee Work Pattern specifies their normal hours per day.
Average Daily Pay (ADP) - The daily average of an employee's earnings over the previous 52 weeks. If it's impossible or impractical to determine the Relevant Daily Pay for an employee, or if the employee’s daily pay varies within the pay period when the leave falls, the Average Daily Pay can be used instead. PayHero will default to this value for any employees for whom hours per day have not been specified in their Employee Work Pattern.
Within the draft pay, you can click the blue info icon on the pay line to see the calculation details for the rate that's currently being applied:
You can learn more about these rates, including how to switch between RDP and ADP, here: Other Leave Rates.
Frequently Asked Questions
Employees only receive their Sick Leave entitlement when the anniversary date itself is captured in a pay and processed.
For example, take an employee whose Sick Leave anniversary is 13/05/2023. If they're included in a pay that covers the dates 08/05/2023 - 14/05/2023 but isn't processed until 17/05/2023, the employee's Sick Leave balance won't increase until 17/05/2023.
When employees are added to a draft pay, PayHero will include any approved, unpaid leave requests that fall within the pay period, but it won't bring in any unpaid leave requests from an earlier pay period.
To pay leave for an earlier pay period, you can create a One Off Pay for this employee and the previous pay period. This will include any unpaid time entries and leave requests. If they were overpaid salary in the original pay, you can also add 'Ordinary Time' to the pay with negative hours to deduct the overpayment.
Alternatively, if preferred you can instead revert the original pay back to draft, remove the employee and add them back to the pay so their new leave request is included. It's a good idea to download their payslip before removing them from the pay, so that you can compare for any changes that may arise.
Employees can take Sick Leave for the first week of a non-work related accident, or for topping up their ACC payments by 1 sick day per week. See the ACC Payments article for more details on how Sick Leave can be used in relation to ACC.
Not a problem! When creating a request for a single day of leave, the portion of the day being taken can be specified via the Part Day field.
If you and the employee agree to allow leave in smaller increments than quarter days, the leave can be further adjusted once it's included in a draft pay by editing the Quantity. If the Quantity is set to Hours, you may specify the hours and rate the leave is to be paid at, but you must also specify Days, as that will determine how the employee's leave balance is reduced.
In this example, the employee works an 8 hour day but the employer has agreed to process 5 hours of leave, so the appropriate portion of their leave balance to be reduced is 0.63.
Our recommended approach is always to process leave via leave requests. Doing so ensures PayHero automates as much of the process as possible for you and creates a detailed record in the Leave tab for future reference.
However, if you'd prefer to enter Sick Leave manually into a draft pay, you can do so by adding the 'Sick Leave' pay item to the employee's earnings. See the relevant section of the following article for details on this process: Processing Leave