You have worked at the same company for six years, barely taken a sick day, and now you are resigning for a better opportunity. Your payslip shows a personal leave balance of 58 days. That must be worth something on your final pay — right? Unfortunately, in almost every case, the answer is no. Here is the part many Australians discover too late: under the Fair Work Act 2009 and the National Employment Standards, unused sick leave (formally called personal/carer’s leave) is generally not paid out when your employment ends. It simply disappears.
This is one of the most misunderstood differences in Australian employment law. Unused annual leave must be paid out in full on termination, down to the last hour. Unused sick leave gets nothing — unless your contract, enterprise agreement or award says otherwise. Below we unpack exactly how the rules work, the rare exceptions where a payout is possible, how to check what applies to you, and what happens to your other leave balances in the final pay packet.
The headline rule: sick leave is not paid out on termination
Section 90(2) of the Fair Work Act requires employers to pay out all accrued but untaken annual leave when employment ends. There is no equivalent provision for personal/carer’s leave. The National Employment Standards give you 10 days of paid personal/carer’s leave per year (pro-rata for part-timers), and that entitlement exists so you can take time off while you are ill or injured, or caring for a sick family member — it is not a deferred cash balance.
This applies however your employment ends:
- Resignation: your unused sick leave balance is extinguished on your last day.
- Redundancy: redundancy pay is calculated separately and sick leave is not added to it.
- Dismissal (not for serious misconduct): same outcome — no payout.
- End of a fixed-term contract: the balance does not carry to your next employer and is not cashed out.
It also does not matter how large the balance is. Because personal leave carries over from year to year with no cap, it is common for healthy, long-serving employees to accumulate dozens of days. The Fair Work Ombudsman is clear that this accumulated balance holds no cash value at termination unless a workplace instrument gives it one. If you are running the numbers on a job change, use our annual leave calculator for the balance that does get paid out — and treat your sick leave balance as a safety net, not a savings account.
Why annual leave and sick leave are treated differently
The different treatment comes down to purpose. Annual leave is a rest entitlement: the law treats four weeks of paid rest per year as something you have earned by working, and cashing it out on termination is the fair substitute for the holiday you never took. Sick leave is an insurance-style entitlement: it exists to protect your income if you get sick. If you never needed it, there is nothing to compensate.
How the three main long-term leave types behave when you leave a job:
| Leave type | NES entitlement | Paid out on termination? | Rate of payout |
|---|---|---|---|
| Annual leave | 4 weeks per year (5 for shiftworkers) | Yes — always (s 90(2) Fair Work Act). Cannot be overridden by any award, agreement or contract. | The base rate that would have applied had you taken the leave, plus any leave loading that applied during your employment. |
| Personal/carer’s leave (sick leave) | 10 days per year, pro-rata for part-timers; accumulates year to year | Generally no — unless an award, enterprise agreement or employment contract specifically requires it. | N/A (no payout). Rare contractual payouts are usually at the base hourly rate. |
| Long service leave | Varies by state/territory legislation | Usually yes, once the qualifying period is met (often 10 years, with pro-rata payout after 7 years in most states). | Set by the relevant state Act; check your state’s rules before you resign. |
Notice the asymmetry: annual leave payout is a federal guarantee that no employer can contract out of, while sick leave payout depends entirely on whether your specific workplace instruments grant it. Long service leave sits in the middle — it is state-based, but payout is the norm once you qualify. If your exit involves a redundancy, our redundancy pay calculator can help you work out that separate entitlement.
The exceptions: when unused sick leave IS paid out
While the Fair Work Act does not prohibit paying out sick leave — it simply does not require it — employers are free to offer more generous terms, and some do:
1. Enterprise agreements
Some enterprise agreements include a clause requiring payout of a portion of accrued personal leave on termination, sometimes capped at a set number of days. These clauses exist in parts of the construction, manufacturing and public sectors. If your workplace has an enterprise agreement, read the personal leave clause — this is the single most common source of a sick leave payout in Australia.
2. Individual employment contracts
Senior or executive contracts occasionally include a personal leave payout term. These are individually negotiated and uncommon, but enforceable where they exist.
3. Public sector and some awards
Certain public service arrangements and a handful of modern awards have historically included sick leave payout or credit-transfer provisions. These are the exception rather than the rule — check the instrument that covers you rather than assuming.
4. Employer policy (discretionary)
A small number of employers voluntarily pay out unused sick leave as a retention or goodwill measure, particularly at redundancy. This is entirely at the employer’s discretion unless it is written into a binding policy or contract. Get any promise in writing before you rely on it.
The practical takeaway: check your enterprise agreement, contract and award first. If none of them mentions a payout, you can safely assume there is not one. The Fair Work Ombudsman’s final pay guidance makes the same point — always confirm against the instrument that covers your employment.
How sick leave accrues (and why balances get so big)
Understanding accrual explains why the payout question matters so much. Under the National Employment Standards:
- Full-time employees accrue 10 days of paid personal/carer’s leave for each year of service. It accrues progressively based on ordinary hours worked — effectively 1/26th of your ordinary hours across the year — not as a lump sum on your anniversary.
- Part-time employees accrue the same entitlement on a pro-rata basis. If you work 22.8 hours a week (three days), you accrue 60% of the full-time amount.
- Casual employees get no paid personal leave at all. The trade-off is the casual loading (typically 25% under most awards), which is paid precisely because casuals do not accrue paid leave, notice or redundancy entitlements.
- Carry-over is unlimited. Unused personal leave accumulates from year to year with no cap under the NES. Take two sick days a year for a decade and you will hold roughly 80 days in reserve.
- It is paid at your base rate for the ordinary hours you would have worked — no overtime, penalties, loadings or allowances.
Personal leave is also a single pool: the same balance covers your own illness or injury and carer’s leave when an immediate family or household member is sick or there is an unexpected emergency. You can estimate how your balance has built up with our sick leave calculator.
What to do before you resign
- Read your enterprise agreement and contract. Search for “personal leave” and “termination” or “payout”. This is the only place a payout entitlement would hide.
- Do not resign while you are genuinely unwell without using your leave. If you are sick before your notice period, you are entitled to take paid personal leave (with evidence if required). Once you resign, the balance is gone.
- Get your final pay breakdown in writing. It should show accrued annual leave paid out (plus leave loading if applicable), any pro-rata long service leave, payment in lieu of notice, and outstanding wages. Sick leave will not appear as a line item.
- Confirm your payout rate. Annual leave on termination is paid at the rate that would have applied had you taken it — check that any leave loading you received during employment is reflected.
- Do not “use up” sick leave dishonestly. Taking sick leave when you are not unwell can be misconduct. The balance is not yours to spend recreationally.
Common myths about sick leave payouts
Myth 1: “My employer has to pay it out like annual leave”
No. The payout guarantee in section 90(2) of the Fair Work Act applies to annual leave only. Nothing equivalent exists for personal/carer’s leave.
Myth 2: “After 10 years of service it must be paid out”
You are thinking of long service leave, which pays out (often pro-rata from 7 years) under state legislation. Sick leave has no service threshold that triggers a payout.
Myth 3: “I can cash out sick leave while still employed”
Generally no. Cashing out exists for annual leave (in limited circumstances, by agreement) — not for personal leave under the NES.
Myth 4: “My new employer inherits my sick leave balance”
No. Personal leave does not transfer between employers; each new job starts your accrual from zero.
Frequently asked questions
Do I get paid for unused sick leave when I resign in Australia?
No, not under the Fair Work Act or the National Employment Standards. Your accrued personal/carer’s leave balance is extinguished when your employment ends. You only receive a payout if your enterprise agreement, contract, award or a binding employer policy specifically provides for one.
What about unused sick leave in a redundancy?
Redundancy pay is calculated on your base rate for ordinary hours per completed year of service, and unused sick leave is not added to it. Your final redundancy payment covers outstanding wages, accrued annual leave, payment in lieu of notice and redundancy pay itself — but not sick leave.
Can my employer refuse to pay out my annual leave too?
No. Unlike sick leave, accrued annual leave must be paid out in full on termination under section 90(2) of the Fair Work Act, including any applicable leave loading. No award, agreement or contract can override this.
Does sick leave accrue during my notice period?
Yes. Personal leave continues to accrue while you work out your notice period, because you are still employed and accruing based on ordinary hours. However, leave does not accrue during periods of unpaid leave, and the newly accrued hours are still subject to the same no-payout rule on your final day.
I’m on a fixed-term contract that is ending. Do I get my sick leave paid out?
No. The end of a fixed-term contract is a termination of employment for these purposes, and the standard rule applies: unused personal leave is not paid out unless your contract or agreement says otherwise. Your accrued annual leave, however, must still be paid out.
Where can I check what applies to my situation?
Start with your enterprise agreement, employment contract and the modern award (if any) that covers you — in that order. The Fair Work Ombudsman (fairwork.gov.au, or 13 13 94) has plain-English guidance on final pay and personal leave. This article is general information, not legal advice.
Conclusion
The uncomfortable truth is simple: unused sick leave in Australia is a safety net, not a savings account. The Fair Work Act guarantees a payout for annual leave but deliberately does not do the same for personal/carer’s leave, and in the overwhelming majority of workplaces that balance quietly returns to zero on your last day. The exceptions — enterprise agreements, individual contracts and rare award provisions — are real but uncommon, which is why checking your own paperwork is the single most important step. Before you resign, run your numbers with our annual leave calculator and sick leave calculator — and if your exit involves a restructure, check your redundancy pay entitlement too.