From our industrial relations experts, TTIA

Under the Fair Work Act (FWA), an employee is prevented from taking or accruing leave when the employee is absent from work because of a personal illness or injury and for which they are receiving compensation payable under a law regarding workers’ compensation.

However, where a specific compensation law (for instance the NSW Workers Compensation Act (WCA)) permits an employee to take or accrue leave, then this exemption does not apply and an employee will be permitted to take or accrue leave under the FWA, even though they are receiving workers compensation.

Section 49 of the NSW WCA states that

“Compensation is payable under this Division to a worker in respect of any period of incapacity for work even though the worker has received or is entitled to receive any payment, allowance or benefit for holidays, annual holidays or long service leave under any Act (Commonwealth or State) award or industrial agreement under any such Act or contract of employment.”

Additionally, there is no provision of the WCA that expressly provides that an employee is entitled to take or accrue leave (under the FWA or otherwise), whilst they are receiving workers compensation payments under the WCA. Previously, many employers held the view that employees were not entitled to take or accrue leave (including annual leave), because the WCA does not expressly permit an employee to take or accrue leave during periods in which an employee is receiving workers compensation entitlements.

In a recent case before the Court, Judge Emmett, in interpreting the sections, accepted that the WCA did not in itself create an express right to receive annual leave payments during receipt of workers compensation, but that the section “expressly provides the opportunity for the worker to receive both workers’ compensation and accrue annual leave”.

Therefore, Her Honour held that a ‘beneficial construction’ of section 49 permits the accrual of annual leave payments while on workers compensation and that the FWA therefore ‘allows’ or ‘permits’ the worker to accrue annual leave whilst on workers compensation under the WCA.

In other words, because the WCA does not prevent an employee from taking or accruing leave, Justice Emmett accepted that this implicitly ‘permitted’ an employee to take and accrue leave.

This decision may be impacted by the Fair Work Amendment Bill 2014, which proposes to remove section 130(2) of the FWA. The effect of this amendment would be to remove the exception on the restriction to take or accrue leave while receiving workers compensation leave.

NSW employees receiving workers’ compensation are entitled to annual leave accrual.  In Victoria and WA, which have similarly worded provisions about employee entitlements for workers’ compensation, it is likely that the question about annual leave accrual would be decided the same way. 

In Queensland, South Australia, and the ACT, the compensation laws in those states already confirm that employees on workers’ compensation continue to accrue annual leave.

Tasmania is currently the only jurisdiction that expressly says employees may not take annual leave and workers’ compensation at the same time.

Proposed Amendments

The Federal Government does have a provision in its proposed workplace reform package that would remove all employees’ entitlements to take or accrue leave when receiving workers’ compensation, which would override other current compensation laws. However, this Bill is currently before the Senate and its fate is not yet known.

From our industrial relations experts, TTIA

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