When An Employee Calls In Sick During Their Notice Period In New Zealand

You’ve finally received a resignation letter (or you’ve issued notice of termination), you’re planning handover dates, and then it happens: the employee calls in sick.

Most small business owners have the same immediate question: can an employee take sick leave during a notice period - and if they can, what does that mean for you as the employer?

The good news is that New Zealand employment law gives a fairly clear framework for sick leave and notice periods. The tricky part is applying it correctly in real life, especially where you’re balancing operational needs, a fair process, and the risk of a personal grievance.

Below, we’ll walk through what you need to know (and what to do) when an employee is taking sick leave during a notice period in NZ.

Can I Take Sick Leave During Notice Period? The Employer-Friendly Answer

In most cases, yes - an employee can take sick leave during their notice period if they are genuinely unwell or injured, and they meet the normal sick leave requirements.

From an employer perspective, the key point is this: notice period rules don’t cancel sick leave entitlements. If the employee has sick leave available and is sick, they can usually use it even if they’re partway through working out their notice.

That said, there are some common “what ifs” worth being clear on:

• If the employee isn’t actually sick (for example, they’re using “sick leave” to avoid working the notice period), you still need to respond carefully and in good faith.
• If the employee has no sick leave left, you may be looking at alternative arrangements (for example, unpaid leave if agreed, annual leave if agreed, or other options depending on your employment agreement and policies).
• If the employee is sick for a long time, the notice period doesn’t automatically “pause” in a neat way - you’ll want to manage this deliberately and document your approach.

If you want to reduce grey areas in future resignations and terminations, this is the kind of scenario that’s worth addressing up front in an Employment Contract and your workplace policies.

What The Law Says: Sick Leave, Notice Periods, And Good Faith

When you’re assessing sick leave during a notice period in NZ, there are three main legal “buckets” to keep in mind:

1) Sick Leave Entitlements (Holidays Act 2003)

Sick leave is a minimum entitlement under the Holidays Act 2003. In broad terms:

• Employees become entitled to sick leave after 6 months’ current continuous employment with you.
• The minimum entitlement is 10 days’ sick leave per year (and it can be accumulated up to a cap under the Act).
• Sick leave can be taken when the employee is sick or injured, or when a dependant is sick or injured (if that meets the legal threshold).

If they have sick leave available and they meet the criteria, you generally treat the leave the same way you would at any other time - even if they’re in their notice period.

2) Notice Period Requirements (Employment Agreement + Employment Relations Act 2000)

Notice periods are usually set out in the employment agreement (and sometimes supported by workplace policies). If you don’t have a clear notice clause, things can become messy fast.

The Employment Relations Act 2000 also matters because it requires both parties to act in good faith. That means:

• You should not assume bad faith just because sick leave happens to fall in the notice period.
• The employee should not mislead you about being unwell (but proving that is another issue - and you still need a fair process).

Good faith is one reason employers need to be careful about knee-jerk decisions like refusing sick leave, withholding pay, or making accusations without evidence.

3) Health And Safety Duties (Health And Safety at Work Act 2015)

Even in a notice period, you still have duties under the Health and Safety at Work Act 2015 to provide a safe workplace. If an employee is unwell, it may be unsafe to have them working (for them or for others), depending on the situation.

In practice, taking a sensible approach to genuine illness is often the safest option legally and operationally.

What To Do When An Employee Calls In Sick During Their Notice Period

If an employee says they’re sick during their notice period, your goal is to respond consistently, lawfully, and in a way you can justify later if you need to.

Here’s a practical compliance-first approach for small business employers.

Step 1: Check Their Sick Leave Balance And Eligibility

Before you do anything else, confirm:

• Have they reached 6 months’ continuous employment?
• Do they have sick leave available?
• Does your payroll system show accrued/available sick leave correctly?

If the employee doesn’t have sick leave available, you can move to discussing alternatives (more on this below). If they do, you generally process the sick leave as normal.

Step 2: Apply Your Normal “Sick Leave” Process (Don’t Make Up New Rules For Notice Periods)

A common employer mistake is creating special rules just because the employee is leaving. That’s where consistency helps you.

For example, if your usual process is that employees notify their manager by 7am and log the absence in your system, keep that the same. If you suddenly demand extra proof “because they resigned,” that can look retaliatory or unfair.

Step 3: Consider Whether You Need A Medical Certificate

Under New Zealand law, you can generally request medical proof:

• After 3 consecutive calendar days of sickness/absence, at the employee’s cost; or
• Earlier than 3 days, but if you request it earlier, you usually need to cover the cost (so be careful about requesting it routinely).

In a notice period context, requesting a medical certificate can be reasonable, especially if:

• the absence is lengthy,
• the employee’s role is critical to operations,
• the timing is unusual (for example, every Monday/Friday of the notice period), or
• you have an established policy of requiring certificates in certain situations.

What you want to avoid is using medical certificates as a “punishment” for resigning.

Step 4: Document Everything (Lightly, But Properly)

You don’t need to over-lawyer your day-to-day communications, but you should keep clear records of:

• when the employee notified you they were sick,
• what they said (and what you said in response),
• any request for medical proof, and
• how you processed the leave in payroll.

This documentation is especially helpful if the employee later claims they were treated unfairly during the notice period.

Step 5: Plan For Handover Gaps (Operationally)

If the employee is away during handover, you may need to adjust quickly. Common options include:

• bringing forward internal training,
• reallocating tasks temporarily,
• limiting handover to what’s essential, and/or
• paying for an overlap period with a replacement (if feasible).

Try not to “solve” operational disruption by making legal shortcuts with leave entitlements - that’s usually where disputes start.

What If You Suspect The Employee Is Misusing Sick Leave During The Notice Period?

This is the hard part for employers: sometimes the timing really does look suspicious. But even if you strongly suspect misuse, you still need to respond carefully.

In practical terms, your safest approach is to focus on what you can do lawfully, rather than accusing the employee without evidence.

Reasonable Steps You Can Take

• Request a medical certificate (where lawful and reasonable).
• Apply your policies consistently (for example, notification requirements).
• Have a calm, factual conversation if there are inconsistencies (for example, “We need clarity on your availability for handover; please confirm expected return date”).
• Consider an investigation process only if you have credible evidence of dishonesty (and get advice first).

Steps That Often Create Risk For Employers

• Refusing sick leave automatically because the employee is in a notice period.
• Withholding final pay because you “think” they aren’t sick.
• Threatening dismissal without a fair process.
• Pressuring the employee to take annual leave instead (annual leave has different rules and shouldn’t be used as a workaround).

If annual leave comes up in the conversation, it helps to understand the boundaries around directing leave. For example, there are situations where employers can require annual leave with proper notice, but it’s not a blanket solution - especially if the employee is actually unwell. If this is an issue in your business, it’s worth being clear on annual leave direction rules.

Don’t Forget Mental Health Sick Leave Scenarios

Sometimes “sick leave” during a notice period isn’t a cold or injury - it’s stress, burnout, or another mental health issue triggered by the transition of leaving a job.

As an employer, you don’t need to diagnose the issue, but you should treat it as a legitimate health matter where it meets the sick leave threshold. If you’re navigating mental health absences in your workplace, having a baseline understanding of mental health leave at work can help you respond in a supportive (and compliant) way.

Does Sick Leave Extend The Notice Period In NZ? How Pay And Final Dates Usually Work

One of the biggest practical questions for employers is whether sick leave “stops the clock” on the notice period.

There isn’t a one-size-fits-all answer, because it depends on:

• the wording of the employment agreement (especially notice clauses),
• whether the employee is resigning or you are terminating employment, and
• what the parties agree to in practice.

In many everyday resignation scenarios, the notice period will often continue to run even if the employee is absent on sick leave - meaning the final date can remain the originally agreed date. However, it’s not automatic in every case: the position can differ depending on the agreement terms, any workplace policies, and any variation the parties agree to (for example, agreeing to extend the end date so the employee can complete a handover).

What changes is how they’re paid during that time:

• If they have sick leave available, sick days are usually paid as sick leave.
• If they don’t have sick leave available, the absence may be unpaid unless another leave type applies or you agree otherwise.

What About Payment In Lieu Of Notice?

If you’re considering ending employment earlier than the notice end date (for example, because the employee is absent for most of the notice period and there’s little value in continuing), be careful.

In some cases, you may be able to use payment in lieu of notice so the employee doesn’t work out the remainder of the notice period. But you generally shouldn’t assume you can do this unilaterally: whether it’s permitted (and how to do it lawfully) depends on the employment agreement, any applicable policy, and/or the employee’s agreement - and you still need to follow a fair process where relevant. If you’re thinking about this option, it’s worth getting across the basics of payment in lieu of notice before taking action.

Final Pay Considerations

When an employee leaves, you’ll usually need to calculate and pay final entitlements such as:

• any outstanding wages up to the final day,
• any paid sick leave taken (if applicable),
• any annual leave owing (paid out), and
• any other contractual entitlements.

If a resignation/notice period becomes contentious, final pay is a common trigger point for disputes. This is where having clean termination documentation and a consistent process matters a lot. For some businesses, it’s helpful to have an agreed offboarding approach supported by an Employee Termination Documents Suite.

How To Reduce Future Issues: Practical Policy And Process Tips For Small Businesses

If you’re finding that questions about sick leave during a notice period are a recurring issue in your workplace, that’s usually a sign you need clearer guardrails - not tougher reactions.

Here are practical, small-business-friendly ways to reduce the risk of last-minute disputes.

1) Tighten Up Your Notice Clause And Leave Clauses

Your employment agreement should clearly deal with:

• how much notice is required,
• how notice must be given (in writing, who to notify),
• the employer’s rights (and limits) around directing leave, and
• your expectations around handover and return of property.

Clarity here doesn’t remove sick leave rights, but it does reduce confusion about the process when someone is leaving.

2) Keep Your “Sick Leave Evidence” Approach Consistent

If you only ever request medical certificates from people who resign, it can look like a penalty for leaving. If you have a consistent policy (and apply it reasonably), you’re in a much safer position.

3) Plan For Handover Earlier Than You Think You Need To

Notice periods can be unpredictable. A good handover plan often starts the day you receive notice:

• identify key tasks and logins,
• prioritise client-facing obligations,
• secure business-critical knowledge, and
• schedule handover sessions early (not just in the final week).

This way, if sick leave happens, you’re not left with a business-critical gap.

4) Be Prepared For “No Notice” Resignations Too

Sometimes the issue isn’t sick leave during the notice period - it’s that the employee resigns and doesn’t work the notice at all, or they abandon the role.

That’s a different scenario with different risks and options. If it comes up in your business, it helps to understand what can happen when an employee resigns without notice.

Key Takeaways

• An employee can usually take sick leave during their notice period if they’re genuinely unwell and have sick leave available - the notice period doesn’t cancel sick leave rights.
• Your safest approach as an employer is to apply your normal sick leave process consistently, including notification requirements and (where appropriate) medical certificate requests.
• If you suspect misuse, avoid assumptions or punitive action - focus on lawful options like requesting medical proof and documenting communications, while continuing to act in good faith.
• Sick leave doesn’t automatically “extend” a notice period in every case: the outcome can depend on the employment agreement wording, any agreed variation, and the circumstances of the exit.
• Be careful if you’re considering ending employment early or using payment in lieu of notice - check your agreement and get advice first to reduce personal grievance risk.
• Clear contracts and policies (set up from day one) make notice periods and leave management far less stressful for small business owners.

If you’d like help reviewing your employment agreements, leave policies, or how to manage a tricky resignation or termination, you can reach us at 0800 002 184 or team@sprintlaw.co.nz for a free, no-obligations chat.