Can You Take Sick Leave While Suspended From Work In NZ?

Suspending an employee is already a high-stakes process for a small business. You’re trying to protect your workplace, run a fair process, and keep the business moving.

Then the curveball hits: the employee says they’re sick and wants to take sick leave while they’re suspended.

If you’re wondering whether that’s allowed, who pays what, and what you should do next, you’re not alone. In this guide, we’ll break down how sick leave during a suspension typically works in New Zealand, what your obligations are as an employer, and how to manage the situation carefully without derailing a disciplinary process.

What Does “Suspended From Work” Actually Mean In NZ?

Before you can deal with sick leave while suspended, it helps to be clear on what suspension is (and what it isn’t).

In New Zealand, suspension is usually a temporary direction not to attend work. It’s most commonly used during a workplace investigation or disciplinary process where:

• there’s a concern about safety, misconduct, or risk to the business
• you need to preserve evidence or prevent interference with witnesses
• the employee’s presence at work could create further issues (e.g. conflict, disruption, reputational harm)

Suspension isn’t meant to be a “punishment” or a shortcut around a fair process. If you use it, you should be able to justify it as a reasonable step, and you still need to follow proper process (including giving the employee a chance to respond).

In practical terms, suspension might be:

• Paid suspension (often the default approach, unless there’s a clear and lawful basis to do otherwise)
• Unpaid suspension (generally higher risk and typically only used where it’s clearly provided for in the employment agreement, or the employee agrees, and it’s reasonable in the circumstances)
• Stand-down (a separate concept that can apply in limited situations - for example, where an employee cannot safely work - and should not be used as a substitute for disciplinary suspension)

Getting the basics right here matters, because pay and leave entitlements often depend on what kind of “suspension” you’ve actually implemented.

For many small businesses, it’s worth checking whether your Employment Contract includes a suspension clause (and if it does, what it actually permits you to do).

Can An Employee Take Sick Leave While Suspended?

Often, yes - an employee may still be able to take sick leave while suspended, provided they meet the normal eligibility requirements for sick leave.

Suspension usually means the employee isn’t required (or allowed) to perform work during that period. It doesn’t automatically “pause” the employment relationship. In most cases, the person is still your employee, and their minimum entitlements under the Holidays Act 2003 continue to apply.

That said, the real question isn’t only “can they take sick leave?” but:

• Are they entitled to paid sick leave (have they met the eligibility requirements and do they have a sick leave balance available)?
• What is their pay status during suspension (paid vs unpaid suspension)?
• Is the sick leave request genuine, and can you ask for medical proof?
• How does this affect your disciplinary timeline and process fairness?

In other words, sick leave while suspended isn’t automatically invalid - but you still need to manage it carefully and consistently.

Do You Still Have To Pay Sick Leave If The Employee Is Suspended?

This is where things can get tricky, because sick leave and suspension can overlap in ways that affect pay. The “right” answer depends heavily on the facts, on what your employment agreement says, and on whether the employee would otherwise have been working during the period in question.

Scenario 1: The Employee Is On Paid Suspension

If you’ve put the employee on paid suspension, they are already being paid for the relevant period. If they then say they are sick, you’ll need to think through what this means operationally and legally.

Common considerations include:

• Double-dipping isn’t a thing - they don’t get “extra” money because they’re sick.
• But how you record it can matter - in many cases, because the employee is already being paid and isn’t required to work, you may treat the time as paid suspension (without deducting sick leave). If you want to deduct sick leave instead, it’s safest to do so in a way that’s consistent with your policies and practice, and ideally with clear communication (and, where appropriate, agreement) so it doesn’t look like you’re changing the basis of pay mid-process.
• Consistency and fairness matter - whatever approach you take should be consistent with your policies and how you’ve treated similar cases.

Because paid suspension is often discretionary and fact-specific, this is one of those moments where getting tailored advice is smart before you lock in a position (especially if the matter may later end up in the Employment Relations Authority).

Scenario 2: The Employee Is On Unpaid Suspension

If the employee is on unpaid suspension and then seeks paid sick leave, the analysis can become more sensitive.

At a high level, sick leave is designed to cover an employee’s inability to work due to illness or injury. If you’ve directed them not to work (suspension), there can be arguments about whether sick leave is payable for days the employee would not have been working anyway (because they were not required or permitted to work).

This doesn’t mean you can automatically refuse it. But it does mean you should tread carefully and consider:

• whether the employee would otherwise have been rostered or expected to work those days
• whether the unpaid suspension itself is lawful, clearly authorised (e.g. by the employment agreement or agreement with the employee), and reasonable in the circumstances
• what your agreement and policies say about suspension, pay, and leave

Because unpaid suspensions can carry significant legal risk in NZ (including good faith and unjustified disadvantage issues), if you’re in this scenario it’s worth getting advice early rather than trying to “patch” the process later.

Scenario 3: The Employee Is Not Eligible For Sick Leave

Even if an employee is genuinely unwell, they only get paid sick leave if they meet the eligibility rules (e.g. they’ve worked for you for at least 6 months and have a sick leave balance available). Otherwise, the absence may be:

• unpaid leave (by agreement)
• annual leave (if agreed)
• another arrangement, depending on your policies and the circumstances

If you’re considering whether other leave types can be used or directed, it helps to understand the rules around annual leave and when an employer can (and can’t) require it.

Can You Ask For A Medical Certificate During Suspension?

Yes - in many cases, you can still ask for evidence of illness or injury, even if the employee is suspended.

Under the Holidays Act framework, employers can generally request a medical certificate:

• if the employee has been sick for 3 or more consecutive calendar days (and the employee generally pays for this), or
• earlier (for example, on the first day) if you tell the employee as early as possible and agree to cover the cost of obtaining the certificate

From a practical small business perspective, the key is to avoid making the request look punitive. Suspension already creates tension. If you request medical proof, keep your communication neutral and policy-based.

For example:

• Explain you’re requesting it in line with your usual process
• Confirm what date you need it by
• Keep it separate from the disciplinary allegations (don’t imply they’re lying unless you have a strong basis)

If you suspect the sick leave claim is not genuine, you should be very careful. Jumping to conclusions (or treating the employee differently because they’re under investigation) can create process risks. This is where having clear internal documents and expectations set out upfront is so helpful.

How Does Sick Leave While Suspended Affect A Disciplinary Process?

This is often the real business problem: you’ve started an investigation or disciplinary process, and now the employee is off sick. What do you do?

Usually, sick leave doesn’t make the process disappear - but it can affect timing and how you run it fairly.

1. You May Need To Pause Meetings (But Not Always)

If the employee is genuinely unwell, pushing ahead with a meeting could be unfair (and could later be criticised as procedurally unjust).

That said, you don’t necessarily need to put everything on hold indefinitely. A reasonable approach might be:

• ask the employee (politely) when they expect to be well enough to participate
• offer a later date, or alternative format (e.g. written feedback)
• consider whether they have a representative who can help facilitate communication

2. Keep Communicating (In Writing)

When stress is high, miscommunication happens fast. Keep clear written records of:

• your suspension letter and the reasons for suspension
• the employee’s sick leave notification
• any medical certificate requests and responses
• any changes to meeting dates or process steps

Having good documentation is one of the simplest ways to reduce risk later - especially if the relationship deteriorates and you need to defend your process.

3. Don’t Treat Suspension As A Shortcut To Termination

Sometimes employers suspend, the employee goes off sick, and the business feels stuck. The temptation can be to “wrap it up” quickly.

But in NZ, disciplinary outcomes (including dismissal) need to be reached through a fair and reasonable process. If you rush, ignore the employee’s health situation, or fail to genuinely consider their response, you increase your risk of a personal grievance.

If you’re approaching the end of the process and considering termination, it’s worth ensuring your exit documents and pay arrangements are correct (including notice). In some cases, payment in lieu of notice may come up, but it needs to be handled carefully and in line with the agreement and the process you’ve followed.

Practical Tips For Employers To Manage Sick Leave While Suspended

When you’re juggling a small team, you need a solution that is legally sound and workable. Here are practical steps that help you manage sick leave while suspended without escalating risk.

Confirm The Suspension Terms Clearly

Your suspension letter (or email) should clearly set out:

• whether the suspension is paid or unpaid
• the reason for suspension (in neutral terms)
• the expectation that the employee remains available to participate in the process (unless unwell)
• confidentiality expectations while the process is ongoing

This is one reason having strong employment documentation from day one matters - including tailored workplace policies and a solid Workplace Policy framework that covers leave, conduct, and investigations.

Apply Your Sick Leave Rules Consistently

If you usually require medical certificates in certain circumstances, follow that same approach here. Inconsistent treatment can look like retaliation or bias.

If you don’t already have clear leave procedures, consider implementing them in a staff handbook so everyone understands the process before issues arise. Many businesses manage this through a Staff Handbook, which helps align expectations and reduces “grey area” disputes.

Separate Health Issues From Misconduct Issues

It’s fine to run a process while an employee is unwell, but you need to ensure you’re not:

• accusing them of dishonesty without evidence
• pressuring them to participate when medically unfit
• making the suspension (or your communications) feel punitive

If the employee raises stress, anxiety, or mental health concerns, treat that as a health and safety matter as well as an employment matter. Employers in NZ have duties under the Health and Safety at Work Act 2015 to provide a safe workplace, and psychosocial risks can be part of that picture.

It can also help to understand how businesses typically approach mental health leave and sick leave generally, so your approach is balanced and consistent.

Be Careful With Surveillance Or “Checking Up”

If you think the employee isn’t genuinely sick, it can be tempting to gather evidence in informal ways (e.g. checking social media, asking other staff, or using cameras).

This is a sensitive area. Privacy obligations under the Privacy Act 2020 can apply, and workplace monitoring has its own risks. If your workplace uses monitoring tools, make sure you’re confident you’re using them lawfully and transparently. This is especially relevant if you have systems like workplace cameras.

Get Advice Early If The Situation Is Escalating

If any of these factors apply, it’s usually time to get tailored legal advice:

• the employee is on unpaid suspension (or you’re considering it)
• the employee has produced medical information suggesting they can’t participate for a long period
• you’re considering termination
• there are allegations involving safety, harassment, fraud, or serious misconduct
• the employee has raised a personal grievance risk

It’s much easier (and often cheaper) to run a clean process upfront than to defend one later.

Key Takeaways

• Sick leave while suspended can be possible in NZ because suspension usually doesn’t end the employment relationship or remove minimum entitlements.
• Whether you need to pay (and how you record leave) can depend on whether the employee is on paid or unpaid suspension, their eligibility for sick leave, what the employment agreement says, and whether they would otherwise have been working.
• You can usually request medical evidence in line with the Holidays Act rules, but it’s important to do so neutrally and consistently to avoid claims of bias or retaliation.
• Sick leave may delay parts of an investigation or disciplinary process, but it doesn’t automatically prevent you from continuing the process in a fair and reasonable way.
• Clear documentation, consistent leave procedures, and well-drafted employment documents reduce the risk of disputes when suspension and sick leave overlap.
• If the situation is complex (especially unpaid suspension or potential termination), getting tailored legal advice early can save you time, cost, and stress.

If you’d like help managing a suspension, reviewing your employment documents, or handling a disciplinary process the right way, you can reach us at 0800 002 184 or team@sprintlaw.co.nz for a free, no-obligations chat.