Is sick leave paid out on termination?

Generally speaking, under s 101 of the Fair Work Act 2009 (Cth) employees are not allowed cash out sick leave unless their modern award or enterprise bargaining agreement (EBA) contain specific terms which allows for sick leave to be paid out on termination of employment.

Currently, three industry awards allow employees to cash out their sick leave, namely the Black Coal Award, Timber Award and Stevedoring Award.

Pursuant to s 101 (2) (a)-(c) of the Fair Work Act, if the modern awards or EBA include terms relating to cashing out paid sick leave, these terms must require that:

(a)  paid sick leave must not be cashed out if the cashing out would result in the employee’s remaining accrued entitlement to paid personal/carer’s leave being less than 15 days; and

(b)  each cashing out of a particular amount of paid sick leave must be by a separate agreement in writing between the employer and the employee; and

(c)  the employee must be paid at least the full amount that would have been payable to the employee had the employee taken the leave that the employee has forgone.

If an employee’s relevant industry award or EBA is silent on this matter, they are not entitled to have their sick leave paid out.