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Isolation: Is it sick leave? (Q & A)

As with most things around Covid-19, the rules change frequently, the information from government websites is contradictory and various parties are pushing their own views depending on their own agenda.

Fletcher Building got a roasting by unions in the media for deducting sick leave when their employees were isolating for being a household contact. A large company being viewed as not doing the right thing along with the union claiming there is ‘ample government support available’. The stuff article suggests “the Government offers a number of wage subsidy programmes to help pay employees who needed” to isolate. A little poetic licence being used there – there are two types of subsidy.

The first is the ‘Leave Support Scheme’ available if an employee has to isolate for more than 4 consecutive days and can’t work from home. The other is the ’Short Term Absence Payment’ which can be applied for if an employee is having to isolate while waiting for the results of a PCR test.

Moving away from the rhetoric, what is an employer legally required to pay? Here are a few scenarios, noting that this is the minimum requirement, you can choose to do more. If you have any specific questions please give us a call.


They get paid as normal (and work from home). No deduction from any leave entitlements and the employer cannot claim a subsidy.

The employee is on sick leave, and sick leave is deducted from entitlements. When all their sick leave is used, the employee is on unpaid sick leave. The employer can apply for the ‘Leave Support Scheme’ and receive $600 for an employee working 20 hours or more a week and $359 for those working less. If this subsidy is applied for and granted, it must be paid to the employee. It is not in addition to paid sick leave and does not prevent the employer from deducting sick leave entitlement from the employee’s leave balance.

Keep in mind the subsidy declaration requires the employer to endeavour to pay the employee at least 80% of their wages if they are claiming the subsidy.

This is the tricky one and was the Fletcher Building issue. As the employee is not sick we do not believe you can deduct sick leave. The employer can apply for the Leave Support Scheme subsidy, but again remember the declaration requires the employer to endeavour to pay the employee at least 80% of their wages if the employer is claiming the subsidy. Make sure you have written consent from your employee on what you are going to pay if it less than 100% of their wages. This could include that any top up in addition to the subsidy is deducted from annual leave, lieu days or alternate days (earned from working public holidays).

Yes, you can deduct from sick leave. We are aware of some unions advocating that the employee ‘shouldn’t have to use their leave’. Our opinion is based on two factors – the wording in the Holidays Act and that the subsidy is a payment to the employer to assist them in paying wages. Although there is an obligation to pass the subsidy on to the employee, it is not a payment to the employee and as such does not affect any other obligations or entitlements. The Holidays Act states in section 63(2) that ‘sick leave must be provided…’ and then goes on to describe entitlements based on length of service and then in section 65 it describes the scenarios where sick leave may be taken.

Let us know any other questions you have that we might include in future Q&A articles by emailing them to [email protected]

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