9 June 2021

Employees Taking Excessive Sick Leave

Many employers have grappled with a small group of employees that take excessive amounts of sick leave over and above their statutory entitlement.  Often this occurs in circumstances where employees are genuinely suffering sickness or injury in circumstances beyond their control.   Alternatively employers may have their suspicions that the excessive use of sick leave is not genuine but being used by employees to augment their annual leave.


These issues have been the source of recent discussion and debate given the events of 2020 and the Covid-19 crisis where employees were actively encouraged to stay away from work in the event they suffered illnesses. 


More recently Parliament has extended the statutory minimum sick leave entitlement from 5 working days to 10 days to take effect on 24 July 2021.    Despite the increase to 10 days per year, the maximum amount of unused sick leave that an employee can be entitled to accumulate will remain at 20 days. 


This doubling of the statutory entitlement with no change to the maximum accumulated amount has caused significant concern for many employers worried that employees will increase their sick leave usage for fear of losing this in the next annual cycle or that it will be more difficult to deal with employees making excessive use of sick leave.


Genuine Illness – Medical Incapacity

Where an employee continues to take sick leave to the point where this exceeds their annual statutory contractual entitlements, whether in lump blocks or sporadically throughout the year, this may place significant strain on the employer’s day to day business operation.  Where an employee is genuinely sick or injured to the point where they are unable to continue working while an employer must act in good faith and in compliance with the Holidays Act, an employer is not bound to hold their position open indefinitely. 


It has been well established “there can come a point at which an employer…can fairly cry halt”.   This process is known as medical termination.  Before an employer can make a determination as to medical incapacity an embark on a termination process they are required to carry out a full and fair investigation into the employee’s true medical position including their current state of health and reason for the extended absence with a focus on their future prospects of returning to work, the timeframe for this to occur, and in what capacity.   


This process is one of the more difficult and complex investigations an employer can embark on, given it is through no fault of the employee and is very separate and is in no way to be confused with a disciplinary investigation or any allegation of wrong-doing by the employee. It is necessary to approach this process in good faith, as a reasonable and fair employer, and the employer needs to consider the employee's position with a sympathetic ear.


In determining whether a medical termination can be substantively justified the matters to be considered are the following:


  1. The Length of Employment: The longer an employee has been employed, the higher the expectation that the employer will hold their job open during an extended period of illness or injury.
  2. The Nature of Employment: It is important to consider the ability to temporarily fill the positon with temporary or fixed term workers or whether the role is such that it can only be filled by a permanent replacement such as in a management level position or highly technical field.
  3. The Needs of the Employer: The resources and size of the employer will be relevant.  Large employers with large numbers of staff will be expected to carry the cost of a long term illness or injury more than a smaller employer will have.
  4. The Ability of a Gradual or Limited Return: An employer will be expected to assess the ability of the employee to return to work on light duties in a limited capacity or limited hours pending a full return.
  5. Certainty of Return: While difficult to assess the expected timeframe and certainty of an employee returning to work at full capacity will be critical to any decision as to whether a person can be terminated for medical incapacity.


Prior to embarking on this exercise, employers need to place the employee on notice that they are undertaking an investigation, take consideration of mental incapacity and invite the employee to a meeting to provide any medical information as to their current prognosis and the prospect of returning to work.  


In circumstances where an employee has been unable to return to work for a period of many months, and cannot offer any certainty or assurances as to the timeframe for their return, an employer will often be justified in terminating the role.


There may also be circumstances where an employee takes excessive but sporadic sick leave in excess of their statutory entitlements. In these circumstances the employer can also engage in this process to call on the employee to discuss their needs and ability to medically carry out their role.


This process is extremely delicate and difficult to undertake and we would encourage any employer to seek legal advice before embarking on this process.


Non-Genuine Sick Leave

Unfortunately there will also be circumstances in which an employee makes excessive use of sick leave in circumstances where an employer doubts the genuineness of the sick leave.


It is open to employers to embark on a medical incapacity investigation in these circumstances in which they call upon the employee to provide medical evidence of their long term medical reasons and the employer when to put to the employee that they are unable to hold their job open where there has been excessive use of sick leave, even if this is sporadic.


However there will also be circumstances where an employer has suspicions of individual or particular sick days being not genuine.  In these cases the employer may embark on a misconduct or serious misconduct investigation provided it has adequate reason for suspicion against the employee and embarks on a fair process.


In 2013 the Employment Relations Authority in Taiapa v Te Runanga o Turanganui (2013) NZ EmpC 38 considered a personal grievance raised by an employee who claimed to have been wrongfully dismissed when the employer terminated him for falsifying sick leave.  The employee sought annual leave for five days to attend a waka racing championship but the employer could not offer the full amount of annual leave, offering only a limited portion.  The employee attended work then claimed he had suffered a calf muscle injury and taking sick leave in which he claimed to have been recuperating.   


Soon after the employer became aware of social media posts showing the employee was at the waka championship. 


The employer had reasonable suspicion the sick leave was not genuine on the basis of the employee being denied annual leave then claiming sick leave.    The employment court considered the employer had reasonable grounds for suspicions the sick leave was false when it considered:


  • The Denial of annual leave followed by claimed sick leave
  • The absence of explanation or engagement from the employee when the allegation he had falsified sick leave was put to him,
  • The bland and uninformative nature of the doctor’s certificate to the employer,
  • Conflicting excuses by the employee


The Employment Court concluded the employer had reasonable suspicions and was entitled to commence a process alleging serious misconduct.


The Employment Court found that sick leave taken by an employee whether paid or unpaid is a benefit for the employee and incurs a loss for the employer and stressed the importance of mutual trust and confidence between employers and employees in its use.


An employee’s assurances of the employee’s use of sick leave for proper purposes will usually be accepted at face value by the employer.  Sick leave is a facility to be used when needed and not a mechanism to augment annual leave.  It follows that deliberate misuse of sick leave entitlements may constitute serious misconduct in employment depending on all relevant circumstances.”


The increasing use of social media by employees coupled with the extension of sick leave to 10 working days may lead to many circumstances where employers are not prepared to accept use of sick leave as genuine. In these circumstances raising allegations of misconduct can be difficult. It is essential that a fair process is followed and we would encourage any employer to seek legal advice in embarking on such a process.



Whether employees who are perceived to be taking excessive sick leave do so for genuine reasons beyond their control, or due to a desire to “use up” their entitlements or augment their annual leave, employers are not expected to sit idly by.


The best approach is to raise concerns with employees in an open and up-front manner giving the employee opportunity to be represented and give their explanation along with any medical evidence for use of sick leave.


Given the numerous pitfalls and the likelihood of causing offence to employees who have genuinely taken sick leave or are fearful of losing their employment, it is essential to have a sound legal advisor in your corner to assist with these processes.


For any employment needs, contact the Employment Team at Saunders & Co Lawyers – Partner, Andrew Riches, Claire McCool, Deborah Hendry