Leaving Your Job? The Truth About Sick Leave Payouts

“Australian workers are currently sitting on around 209 million days of unused annual leave.” That’s not a typo – recent research shows millions of us are hoarding leave, with an average balance of about four weeks for those who have entitlements.

At the same time, wage underpayments and dodgy practices are rife. A recent analysis of Fair Work Ombudsman data found more than half of businesses investigated between 2019 and 2024 were breaking workplace laws, with over $1.7 billion repaid to underpaid workers.

Put those two facts together and it’s no wonder a lot of Australians are asking, especially around New Year when resignations spike:

"“If I leave my job, what actually happens to all my sick leave? Do I get a payout… or does it just vanish?”"

If you’ve googled “sick leave payout Australia” or quietly wondered whether you should “use up” your sick days before resigning, you’re definitely not alone.

In this guide, we’ll walk through:

• Whether you’re entitled to a sick leave payout when you resign (or are terminated)
• How sick leave is treated differently to annual leave and long service leave
• Your resignation rights around taking sick leave during your notice period
• The key personal leave rules under the National Employment Standards (NES)
• How to check your employee entitlements using official resources like the Fair Work Ombudsman
• Where medical certificates and telehealth fit in if you’re genuinely unwell close to resignation

We’re writing from an Australian perspective, based on the Fair Work Act 2009, the NES, and current guidance from the Fair Work Ombudsman (FWO), plus commentary from Australian employment law experts.

At NextClinic, we talk every day to Aussies who are navigating sick leave, stress, burnout and job changes. We also dive deeper into related topics in our articles like “Sick Leave in Australia: Accrual, Rights, and Cash Rules” and “Sick on Annual Leave? How to Save Your Holiday Hours”.

Before we go on:

This article is general information for Australian workers and employers. It’s not legal advice. Always check your award, enterprise agreement, contract or get independent advice for your situation.

Let’s untangle it.

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1. Quick answer: Do you get a sick leave payout when you resign in Australia?

For most Australian employees, the answer is:

"No – unused sick leave (personal/carer’s leave) is not paid out when your employment ends."

That applies whether:

• You resign
• You’re dismissed
• You’re made redundant

Under the National Employment Standards, unused paid personal/carer’s leave is not one of the entitlements that must be included in final pay. Employment law firms and payroll experts consistently confirm this: unused sick leave is forfeited when your employment ends, unless a specific industrial instrument or contract says otherwise.

The Fair Work Ombudsman also explains that final pay must include things like:

• Outstanding wages for hours worked
• Accrued annual leave (and, if applicable, leave loading)
• Any long service leave you’re entitled to
• Redundancy pay (if it applies)

Personal/carer’s leave doesn’t appear on that list.

In Western Australia’s state system (which covers some private‑sector workers), the state government’s guidance is similar: there’s no minimum entitlement to have personal leave paid out when you resign, are made redundant or dismissed.

So, if you’ve been carefully saving up 60 sick days hoping for a juicy payout when you hand in your resignation letter… unfortunately, that’s not how the system is designed to work.

We’ll get into why in a moment – but first, it helps to be clear on how different types of leave are treated.

2. Sick leave vs annual leave vs long service leave: why the rules differ

One big source of confusion is that not all leave is created equal when it comes to payouts.

Annual leave

Under the NES, when your job ends you must be paid out:

• Any accrued but unused annual leave, and
• Any applicable annual leave loading (for example, the common 17.5%)

This applies whether you resign, are dismissed, or are made redundant.

That’s why you often hear about huge national tallies of “unused leave” – like those 209 million days of accrued annual leave currently sitting on Australian employers’ books.

Sick leave (personal/carer’s leave)

Sick leave is different:

• It accrues over time (usually 10 days per year for full‑timers, pro‑rata for part‑timers)
• It rolls over from year to year while you stay with the same employer
• It’s there to protect your income when you’re too unwell to work, or caring for an unwell family member

But it’s not treated as a cash entitlement at the end of employment. As we’ve seen, the general rule is: unused sick leave is not paid out when your job finishes.

Long service leave

Long service leave (LSL) is partly governed by state and territory laws. In many cases, if you’ve been with the same employer long enough and your job ends (including via resignation after a qualifying period), some or all of your long service leave is paid out in your final pay.

So, in summary:

• Annual leave: paid out on termination
• Long service leave: often paid out, depending on your state/territory and service
• Sick/personal leave: not paid out, unless an exception applies

Understanding that difference is the first step in getting your resignation rights clear.

3. Why doesn’t unused sick leave get paid out?

On the surface, it can feel unfair: why should annual leave be “worth money”, but sick leave disappears the moment you leave?

The logic in the Fair Work Act and NES is that:

• Annual leave is about rest and recreation – something you’re expected to take periodically, and which retains a monetary value if you haven’t used it yet.
• Personal/carer’s leave is a safety net that protects you during employment when you or your family are unwell. It’s there if you need it; if you’re lucky enough not to need it, it’s not “owed” as extra pay at the end.

Think of sick leave like an insurance policy that comes bundled with your job. You hope you won’t need to make a big claim – but if you do get seriously ill, that bank of leave can be a financial lifeline.

It’s also one reason there’s no maximum cap on accrued sick leave under the NES. It just keeps building up over the years, in case you ever need a long stretch off work due to something major (like surgery or a serious mental health condition).

In other words: sick leave is designed to protect your health and basic income while you’re employed – not to act as a savings account you cash out when you move on.

4. The main exceptions: when might sick leave be paid out?

While “no sick leave payout” is the default rule, there are a few limited situations where unused personal/carer’s leave could be cashed out or paid:

4.1. Enterprise agreements or awards that allow cashing out

The NES allows some cashing out of sick and carer’s leave only where an award or enterprise agreement expressly permits it, and strict conditions are met. For example, the Fair Work Ombudsman notes that under eligible awards/agreements:

• Cashing out is only allowed if the instrument says so
• A separate written agreement is made each time leave is cashed out
• The employee keeps at least 15 days of untaken paid sick/carer’s leave
• The employee receives at least what they would have been paid if they’d actually taken the leave

These arrangements are rare and usually designed for very specific contexts.

4.2. A contract or workplace policy that goes above the minimum

Sometimes, an employment contract or company policy might say:

• Unused personal leave will be paid out on termination, or
• A certain amount of personal leave can be cashed out at particular milestones

Because employers can always offer more generous entitlements than the NES, these clauses can be enforceable if they don’t conflict with the law. Employment lawyers generally advise that if your contract clearly promises a sick leave payout, your employer needs to honour that promise.

However:

• These clauses are uncommon, and
• Even where they exist, they may only apply in narrow circumstances (e.g. senior executives or particular agreements)

If you think you’ve been promised a payout, double‑check the exact wording of your contract and any enterprise agreement or policy manual.

4.3. Public sector and state‑based quirks

Some state public sector agreements historically had more generous arrangements for personal leave, including limited payouts in special circumstances. If you work in government or a state‑based system (especially in WA), your entitlements may differ slightly and are worth checking carefully.

For everyone else in the national system, though, the default NES rule applies: no sick leave payout on resignation or termination.

5. Your resignation rights: taking sick leave during your notice period

Even if you don’t get a payout, your personal leave rules still matter a lot when you’re leaving a job – especially if you fall genuinely ill during your notice period.

The Fair Work Ombudsman explains that the normal rules for taking leave continue to apply during a notice period. That means:

• You can take sick or carer’s leave during your notice period,
• As long as you:
  • Notify your employer as soon as possible, and
  • Provide reasonable evidence if they ask for it (typically a medical certificate or statutory declaration)

Your employer generally can’t refuse legitimate sick leave just because you’re on the way out, and they must pay you for that leave from your sick leave balance, just as they would earlier in your employment.

A few important points:

• Your notice period usually keeps running even if you’re on sick leave. You don’t “owe extra days” because you were ill, unless your award/contract says differently.
• If you’re dismissed and paid “in lieu of notice” (i.e. you’re paid out instead of working your notice), you normally can’t then claim additional sick leave on top; the payment in lieu replaces your right to work – or be on leave – during that time.
• If you resign and then ask to shorten your notice period due to illness, your employer doesn’t have to agree, but they must still apply sick leave rules properly for any time you remain employed.

Our article “Sick Leave in Australia: Accrual, Rights, and Cash Rules” goes deeper into how sick leave interacts with notice and dismissal, if you’d like to explore more.

6. “Should I just use up my sick leave before I quit?”

This is the question a lot of Aussies quietly wrestle with:

"“If I don’t get a sick leave payout, shouldn’t I use all my days before I resign?”"

Here’s the blunt truth:

• Taking sick leave when you’re not actually unwell is misuse of an entitlement and can amount to misconduct.
• Employers are allowed to ask for evidence for as little as one day of sick leave, and many do – especially around resignation and notice periods.
• If they suspect you’re “chucking a sickie” to burn through your balance, you could face disciplinary action, and in serious cases dismissal.

That doesn’t mean you should feel guilty for using sick leave if you are unwell – physically or mentally. Under the NES, you’re entitled to take personal leave when you’re unfit for work due to illness or injury, including mental health conditions like anxiety, depression or burnout.

If you’re reaching the point of resignation because your job is wrecking your health, it may actually be wise to:

• Take legitimate sick leave or mental health days while you’re still employed
• Get appropriate medical support
• Then make a clear decision about whether to stay, negotiate changes, or resign

We unpack this in more depth in:

• “Is Stress a Justifiable Reason for Sick Leave?”
• “How to Ask Your Boss for a Mental Health Day”

Both guides step through your rights if stress or mental health is the main reason you’re considering quitting.

7. Long stretches of sick leave and job security

If you’re seriously ill or injured – or going through a major mental health episode – you might be weighing up:

"“Should I resign, or can I stay employed while I recover?”"

The Fair Work Ombudsman’s guidance on long periods of sick leave explains that:

• While you still have paid sick leave available, you’re generally protected from dismissal because of your absence, even if it’s longer than three months.
• Once you’ve been away for more than three months (consecutively or total over 12 months) and used up all your paid sick leave, that specific protection ends. Your employer may then lawfully consider termination on capacity grounds, provided they follow the correct process.
• Other protections (like anti‑discrimination or workers’ compensation laws) can still apply, depending on your situation.

This is one of the big reasons sick leave exists: to support you through serious illness while you remain employed.

If your health is the main driver for leaving a job, it’s worth speaking to:

• Your GP (about medical options and certificates)
• Your union, if you’re a member
• The Fair Work Ombudsman or an employment lawyer, if you’re unsure of your rights

Resigning can feel like taking control – but it can also mean losing access to entitlements, income protection, and job security at a vulnerable time. It’s a big decision, and getting advice first is usually a good move.

8. How to check your own employee entitlements before you resign

Before you hand in that resignation letter in the New Year, it’s worth doing a quick “entitlements audit”. Here’s a practical step‑by‑step:

Step 1: Check what system you’re in

Most private‑sector employees are covered by the national system (Fair Work Act / NES). Some in WA’s private sector, local government, or certain public sector roles are under state systems with slightly different rules.

If you’re unsure, the Fair Work Ombudsman’s website and Infoline (13 13 94) can help.

Step 2: Find your award or enterprise agreement

Use the Fair Work ombudsman’s Find my award tool or check with HR/your union to work out:

• Which modern award or enterprise agreement covers your job, if any
• Whether it contains any special clauses about:
  • Cashing out sick leave
  • Personal leave payouts
  • Extra entitlements on redundancy or resignation

In most cases, you’ll find it mirrors the NES – i.e. no sick leave payout.

Step 3: Read your employment contract

Look for clauses on:

• “Personal leave”, “sick leave” or “personal/carer’s leave”
• “Termination” or “ending employment”
• “Final pay”

You’re checking whether your employer has promised more than the minimum. If your contract explicitly says unused personal leave will be paid out, you may be entitled to that – even though the NES does not require it.

Step 4: Check your leave balances

Log into your HR portal or ask payroll to confirm:

• Accrued annual leave
• Accrued sick/personal leave
• Long service leave (if applicable)

Remember:

• Annual leave and possibly long service leave will usually translate into dollars at exit.
• Sick leave most likely will not – but it’s still there for you to use legitimately if you fall unwell before your last day.

Step 5: If in doubt, get advice

If something looks odd – for example, your employer says they never pay out annual leave, or they’re refusing legitimate sick leave —:

• Start with the Fair Work Ombudsman’s resources and calculators
• Contact your union, if you’re a member
• Consider getting independent legal advice

There’s a lot of wage theft and misunderstanding out there; getting a clear answer can literally be worth thousands of dollars.

9. Medical certificates, telehealth and sick leave near resignation

Given how closely employers scrutinise sick leave near the end of employment, good evidence becomes even more important.

Under the NES and Fair Work ombudsman guidance:

• You must notify your employer of sick leave “as soon as practicable”
• They’re entitled to request evidence that would satisfy a reasonable person that you were genuinely unfit for work
• This evidence is often:
  • A medical certificate from a registered health practitioner, or
  • A statutory declaration

Our article “Online Medical Certificates: Top 5 Reasons for Rejection” digs into what makes a certificate legally robust and why some are knocked back.

If you’re ill during your notice period – whether it’s COVID, gastro, a flare‑up of a chronic illness or severe stress – a clear, well‑prepared certificate can:

• Protect your paid entitlements
• Reduce conflict or suspicion with your employer
• Help you avoid being accused of faking illness to “use up” your leave

How we can help at NextClinic

We know sitting in a waiting room when you’re sick, anxious or about to leave a job is the last thing you feel like doing. Through our telehealth service, we:

• Offer 1‑day and 2‑day online medical certificates for work, issued by Australian‑registered doctors
• Provide telehealth consultations if you need a more detailed assessment, longer time off or referrals
• Email your certificate so you can forward it straight to your employer

If your employer has strict evidence requirements (for example, always asking for a certificate during notice periods or around public holidays), having quick access to a legitimate online certificate can make life a lot easier.

You can read more about how this works in:

• “Can You Get a Script Without a Video Call?”
• “GP Closed for Christmas? How to See a Doctor Online”

10. Common myths about sick leave payouts in Australia

Let’s bust a few myths that keep doing the rounds in Aussie workplaces.

Myth 1: “I’ve banked heaps of sick leave, so I’ll get a fat cheque when I resign.”

As we’ve seen, unused sick leave is almost never paid out on resignation, dismissal or redundancy, unless a very specific award, agreement or contract says otherwise.

If your contract doesn’t explicitly promise it, assume you won’t be paid for it.

Myth 2: “If I don’t get a payout, I might as well ‘use it or lose it’ before I go.”

Deliberately taking sick leave when you’re not unwell is misuse of an entitlement and can be grounds for disciplinary action. Employers are increasingly vigilant about evidence, especially around resignations and public holidays.

If you’re actually struggling – with physical illness or mental health – you should use your leave. But don’t fake it. It’s not worth the risk to your reference, reputation or legal standing.

Myth 3: “My boss can just say no if I get sick during my notice period.”

If you’re genuinely unfit for work and provide reasonable evidence, your employer must treat that time as sick leave, even during your notice. They can’t just declare “we’re not accepting sick leave now that you’re quitting” – that would likely breach the NES.

They can:

• Ask for medical evidence, and
• Manage performance or conduct issues separately, if relevant

But they can’t rewrite the law because your resignation annoyed them.

Myth 4: “Casuals get nothing if they’re sick or resign.”

Casuals don’t accrue paid sick leave under the NES – that part is true. But they do have some entitlements, including:

• Unpaid carer’s leave
• Compassionate leave (unpaid)
• Paid family and domestic violence leave in many cases

Casuals are also still covered by protections against discrimination, unfair dismissal (in some cases), and other workplace rights.

11. A practical checklist if you’re thinking of resigning in the New Year

If 2026 is the year you plan to move on, here’s a simple plan you can work through this week:

1. Download or screenshot your leave balances
   • Note your annual leave, personal leave and long service leave (if any).
2. Read your award or enterprise agreement
   • Check for any special rules on personal leave, resignations or payouts.
3. Re‑read your employment contract
   • Look closely at clauses on personal leave and termination. Are there any promises about payouts?
4. Calculate your expected final pay
   • Roughly estimate what your annual leave and (if applicable) long service leave would be worth, so you’re not shocked later. The Fair Work ombudsman’s calculators are a good starting point.
5. Check your health – honestly
   • Are you already unwell, burnt out or on the edge? If so, it might be worth:
     • Talking to your GP or a mental health professional
     • Taking legitimate sick leave now if you’re not fit to work
     • Reading our guides on stress‑related sick leave and mental health days
6. Plan how you’ll handle illness during your notice period
   • Check your workplace’s policy on medical certificates
   • Decide whether you’d use your regular GP, a telehealth provider like us, or both if you fall ill
7. If unsure, get advice before you resign
   • Contact the Fair Work Ombudsman, your union, or an employment lawyer – especially if:
     • You’re in a complicated situation (redundancy, dispute, long illness), or
     • You suspect your employer hasn’t been complying with workplace laws

Spending a bit of time now can avoid nasty surprises – or costly mistakes – later.

12. Bringing it together: your rights, your health, your next chapter

Let’s recap the key points:

• In most cases in Australia, there is no sick leave payout when your employment ends – whether you resign, are dismissed or made redundant.
• Annual leave (and often long service leave) must be paid out in your final pay; personal/carer’s leave generally is not.
• Limited exceptions exist where:
  • An award or enterprise agreement allows strictly‑regulated cashing out, or
  • Your contract or policy clearly promises more generous terms
• Your resignation rights include the ability to take legitimate sick leave during your notice period, with proper notice and evidence.
• Trying to “burn through” sick leave when you’re not actually unwell can backfire badly – but you should use your entitlements if illness or mental health issues mean you’re not fit to work.
• Long periods of genuine sickness are protected up to a point, and resigning too quickly can sometimes leave you worse off than staying employed while you recover.
• Official resources from the Fair Work ombudsman and independent legal guides are your best friends when checking your exact employee entitlements and personal leave rules.

At NextClinic, we can’t rewrite the Fair Work Act for you (tempting as that might be!), but we can:

• Help you get fast, legitimate online medical certificates when you’re genuinely unwell
• Support you with telehealth consultations, prescriptions and referrals anywhere in Australia
• Give you clear, practical information through our blog so you can make informed decisions about your health and work

Your next step this week

Before you rush into that “New Year, new job” resignation, challenge yourself to do just one of the following this week:

• Download and read your award or enterprise agreement,
• Re‑read your employment contract focusing on leave and termination, or
• Check your current leave balances and sketch out what your final pay might look like.

Then, if you feel comfortable sharing, drop a comment below:

• Which step did you choose, and what did you discover about your entitlements?
• Did anything surprise you about sick leave payouts or resignation rights?

Your experience might be exactly what another Aussie needs to read before they make their own big decision in 2026.

References

• Australians have 209 million days of annual leave due - Roy Morgan Research
• Australia's worst industries for wage theft revealed in new report
• Sick and carer’s leave and compassionate leave - Fair Work Ombudsman
• What Happens To Unused Sick Leave In Australia? | Sprintlaw
• Dismissal - Fair Work Ombudsman
• Personal leave
• Difference between Australian and New Zealand Leave Entitlements and Calculations - Part 1 Australia - The Paymasters Limited
• Sick Leave Payouts: Australian Employment Legal Guide | Sprintlaw
• Long periods of sick leave - Fair Work Ombudsman

FAQs