In response to Parliament passing the Holidays (Increasing Sick Leave) Amendment Bill to increase the minimum employee sick leave entitlement from 5 days to 10 days per year, we have made changes to the default sick leave settings that will take effect from 23 July 2021. This article will detail:
- changes made in the platform relating to leave;
- how such changes impact settings in existing businesses created before 23 July 2021; and
- what the leave settings will look like for new businesses created on or after 23 July 2021.
The new sick leave entitlement.. in a nutshell
Effective from 24 July 2021:
- An employee's minimum sick leave entitlement will increase from 5 days per year to 10 days per year;
- Employees will receive the extra five days when they reach their next entitlement date on or after 24 July 2021 – either after reaching 6 months’ employment or on their sick leave entitlement anniversary, being 12 months after they were last entitled to sick leave;
- An employee may carry over up to 10 days unused sick leave in any year - this was previously 15 days;
- The maximum amount of unused sick leave that an employee will be entitled to will remain at 20 days.
To be clear, any employee who currently receives an entitlement of 10 or more sick days per year will not be affected by this change.
Addition of new 'Standard entitlement' leave allowance template
Effective from 23 July 2021, all businesses will have access to a new default leave allowance template ("LAT") named 'Standard entitlement'. This LAT incorporates the legislated minimum leave entitlements by grouping the following default leave categories available in the platform:
- Annual holidays, with an entitlement of 4 weeks per year;
- Parental leave;
- Sick leave, which now includes the 10 day per year entitlement;
- Alternative holiday leave;
- Domestic violence leave, with an entitlement of 10 days per year;
- Leave without pay; and
- Bereavement leave.
Take note, this LAT should NOT be assigned to employees deemed to be irregular and therefore not meeting the criteria for entitlements to most of the leave types stated above (and as a result, receive pay-as-you-go (PAYG) holiday pay with their regular pay instead).
If you have created additional leave categories, those leave categories will not be enabled in the new LAT, which means employees will not see those leave categories as an option when requesting leave. You can easily enable them by navigating to Payroll Settings > Leave Allowance Templates > clicking on the LAT name ('Standard entitlement') > this will expand the LAT settings and display the enabled leave category settings. Those marked in red denote they are not enabled - to enable them, click to the left of the red x, then click on 'Save'.
The 'Standard entitlement' LAT will form part of updating existing employee sick leave entitlements, as described further below. It can also be assigned to all new employees moving forward.
Changes required for businesses created prior to 23 July 2021
All businesses have a default business leave category called 'Sick Leave'. This is currently configured with an entitlement (standard allowance) of 5 days per year. Specifically, the settings are as follows:
As each business has the ability to change the default settings of this business leave category to suit their needs, we are not automatically updating the standard allowance configuration for this category so as not to disrupt any existing tailored configuration. Rather, users can make the changes to this leave category themselves. In order to ensure the configuration is updated in line with the new sick leave requirements, the following changes will need to be made:
- Standard allowance: Replace '5' with '10' to indicate the new 10 days per year entitlement;
- Maximum accrual: Replace '5' with '10' to ensure no more than 10 days per year is accrued;
- Carry over: Replace '15' with '10' to ensure an employee's balance does not exceed more 20 days at any time.
The updated configuration should look as follows:
Updating the business sick leave category will ensure that new employees added to the platform will have the updated sick leave entitlement attached to their record (in the instance where you don't assign a LAT to an employee). It does not, however, automatically update each existing employees' sick leave entitlement. Rather, an extra step will be required to do the update at an employee level. This next step should only be done right before creating the pay run whose pay period falls within 24 July 2021. If there are multiple pay schedules in a business, this next step can be done on a per pay schedule basis. There are several methods that can be used to update the sick leave entitlement at an employee level:
Option 1: Assigning the 'Standard entitlement' LAT to employees
The quickest and most recommended method of updating employee sick leave entitlements is to assign the 'Standard entitlement' LAT to each employee file, if the employee is not already attached to a LAT. (Where businesses have created their own LAT and assigned to employees, use the Option 2 method to update the employee sick leave entitlement).
You can assign this LAT to an employee on an individual basis by navigating to the employee's Pay Run Defaults screen > then select 'Standard entitlement' from the "Apply the following Leave Allowances Template" dropdown.
Alternatively, you can complete this step in bulk using the employee import/export template by updating the value in column AU "LeaveTemplate" for each affected employee and then importing back in to the platform.
Option 2: Updating existing LAT
If LATs are already used for your business, all you will need to do is update the sick leave entitlement in the LAT and apply the update to all employees assigned to the LAT. To do this, click on the LAT name (from the Leave Allowance Templates screen) to expand on the LAT settings and then navigate to the Sick Leave configuration. Make the necessary changes, as follows:
Then click on 'Save'. If there are existing employees assigned to the LAT, the following modal will display:
If you click on 'OK', this will update the sick leave entitlement for all existing employees assigned to the LAT, meaning that you won't have to manually update each employee. If you click on 'Cancel', the sick leave entitlement in the LAT will update but only apply the updated entitlement to any employee newly assigned to the LAT thereafter. The sick leave entitlement for existing employees assigned to the LAT will NOT be updated so make sure you choose correctly here!
Impact on new businesses created on or after 23 July 2021
Any business created on or after 23 July 2021 will have the new leave settings applied by default. As such, no manual changes or updates will be required.
Specifically, the default 'Sick Leave' leave category will automatically apply the 10 days per year entitlement with a maximum balance of 20 days for an employee at any time. Additionally, the new 'Standard entitlement' LAT will be made available to new businesses.