Once an employee has used up all of their sick leave, it may become difficult to keep them on as an employee, if they continue to be absent from work.  Continuous and persistent absence of an employee can negatively impact on productivity, customer and client satisfaction, and put extra pressure on existing staff.

Employers are not generally obliged to hold jobs open indefinitely where staff have used up their sick leave. However, it is important that any disciplinary action taken against an employee is justified and that a fair process is followed.   If you get this wrong, you could face a potentially costly personal grievance.

Here are some key steps to follow:

Comply with the relevant employment agreement

Make sure that you have checked the relevant employment agreement and wage records before you take any adverse action against an employee.  

Most employees are entitled to 5 days[1] of sick leave per annum (once they become entitled), but there are employees that are entitled to more sick leave, based on what is set out in their employment agreement, and some may have accumulated up to 20 days by not using sick leave for a number of years.

Consider the role

Ask yourself how valuable the employee is to the organisation and whether it is possible to easily replace them, or temporarily cope without their presence.  It’s more likely that a dismissal will be “justifiable” if the employer can show that the role is important for day to day business operations, and not a role where others can readily fill in for the sick employee on a temporary basis.

Sometimes it might be more economical and efficient to allow a valuable employee to take sick leave in advance, to take unpaid leave, or to hire a temporary replacement, rather than to risk losing them permanently.  Consider how long the employee has been there before their period of long-term illness, how easily they can be replaced, and how the remaining staff will be impacted by the termination. 

Keep in mind that there will be costs involved in the termination process, paying out notice (if any), recruiting and training a replacement employee, and so on.

Consider the illness or injury

Depending the nature of the illness or injury, the employer could decide to wait for the employee to recover, or not.  Consider how long the employee has been sick and the chances of recovery?  Will they recover fully, or will they only be able to return in a reduced capacity?

If the employee is covered by ACC [link to ADX760742 once published], the employer will have to coordinate with the relevant ACC caseworker of the employee (especially if the employee is on a gradual return to work plan).The answers to these questions will help you decide whether dismissal is really necessary. 

Consider alternatives

Before deciding to dismiss an employee due to illness or injury, you should consider alternative arrangements. For example:

  • Could you hire a replacement on a fixed term contract?
  • Could you allow your employee to work with reduced duties or hours?
  • Is working from home a possible viable solution?

Procedural fairness

Once the employer is satisfied that dismissal could be justifiable, the employer should follow a fair process before making any final decisions.

What will constitute a fair process in the circumstances will depend on the particular case, so if you are unsure, you should seek advice from an employment expert at this point. 

Usually, a fair process will require clear communication. This means letting your employee know in advance that dismissal is being considered, giving your employee the opportunity to seek legal advice or support, listening to your employee’s views, and considering those with an open mind before making a decision.

Leading law firms committed to helping clients cost-effectively will have a range of fixed-price Initial Consultations to suit most people’s needs in quickly learning what their options are.  At Rainey Collins we have an experienced team who can answer your questions and put you on the right track.


If and when The Holidays (Increasing Sick Leave) Amendment Bill is passed, employees will become entitled to 10 days of sick leave instead of 5 days.  The law is expected to pass around mid 2021 according to government information.  


If you are a New Zealand Super Gold Card Holder (Australian Senior Cards do not qualify) we will give you a 75% discount off our initial 1 hour consultation fee. We will also give you a 17.5% discount off the first matter we handle for you and then 12.5 % off any subsequent matters for you.  These discounts relate to your personal matters only (i.e. not business or organisational matters).