Employers are paying billions for sick leave as staff take record amounts of time off – but some say it’s a sign of a healthier, fairer workforce, writes Catherine McGregor in today’s extract from The Bulletin.
To receive The Bulletin in full each weekday, sign up here.
Sick leave on the rise
New Zealanders are taking more sick leave than ever before, according to the latest Workplace Wellness survey by Southern Cross Health Insurance and BusinessNZ. The study of 111 employers representing nearly 174,000 workers found the average rate of absence in 2024 was 6.7 days per employee – the highest since the survey began and up from 5.5 days in 2022. That equates to nearly 13 million lost workdays, compared with 10 million just two years earlier.
The 2021 law change doubling legal sick leave from five to 10 days appears to be one factor, though the report noted the relationship between policy and behaviour was “not straightforward”. Post-pandemic attitudes have also shifted, the report said, with nine in 10 employers now encouraging staff to stay home when unwell. Public health experts say that after Covid, the “soldier on” mindset has become socially unacceptable, reports The Post’s Rob Stock (paywalled). As vaccinologist Helen Petousis-Harris put it, New Zealand has moved closer to “responsible workplace behaviour” in line with other advanced economies.
Does it really count as a cost?
The survey estimated the direct cost of absences at $4.2 billion, or about $1319 per employee – up nearly 60% since 2020. Yet Southern Cross chief executive Nick Astwick argues that supporting sick employees is “an investment, not a cost”. Allowing people to recover properly, he said, means healthier, more productive staff over time.
Economists largely share that view. Simplicity’s Shamubeel Eaqub told BusinessDesk’s Brianna McIlraith (paywalled) that as more sick leave has been taken, holiday leave requests have gone down, suggesting the main impact of the law change was that employees could more accurately record why they took time off. He and Infometrics’ Gareth Kiernan both questioned whether higher absence rates truly harm productivity, given that unwell employees who previously worked through illness were often less effective and contagious to others.
A new leave system on the way
The rise in sick leave coincides with a broader overhaul of workplace leave. In September, the government confirmed that the Holidays Act 2003 will be scrapped and replaced with a simpler, hours-based system designed to fix years of payroll errors. Under the new framework, all employees will begin accruing leave from their first day on the job – 0.0385 hours of sick leave for every hour worked. While this will still give a full-time worker the equivalent of 10 days per year, part-timers will only receive a proportionate amount. Sick leave will also be able to be taken in hours, allowing workers to take time off for short appointments instead of full days. The bill is due to pass before the end of the parliamentary term in 2026, with a two-year transition period to follow, meaning the new Employment Leave Act should take effect in 2028.
When sick leave goes wrong
While the Workplace Wellness survey suggests employers are becoming more flexible, a recent Employment Relations Authority case shows some still harbour deep anxieties about sick leave. As Brett Kerr-Laurie reports in The Press (paywalled), a Christchurch engineering firm was ordered to pay $28,000 after taking what the ERA called a “harsh and oppressive” approach to an employee’s absences, which regularly fell on Fridays and Mondays. The company’s director, who reportedly believed “sick leave is for broken bones”, withheld pay, swore at the worker, and personally reviewed all sick-day requests – actions the authority found unjustifiable.
Employment lawyer Andrew Shaw said the case should be a cautionary tale. “Looking at a pattern or assumption is not going to be enough for the authority,” he said. Instead, employers must have solid evidence such as social media posts or financial records before accusing someone of faking being sick.
Subscribe to +Subscribe