A recent decision by the Federal Circuit Court of
Australia has now clarified that, in New South Wales at least,
employees continue to accrue annual leave when they are absent from
work and receiving workers compensation payments.
Section 130 of the Fair Work Act (FWA)
provides that an employee is not entitled to take or accrue any
leave if the employee is absent from work because of illness or
injury for which they are receiving workers compensation payments
under a Commonwealth, State or Territory law (Compensation
Period), UNLESS permitted by that law to take or
accrue any leave during the Compensation Period.
The relevant provision of NSW Workers Compensation Act
1987 (WCA), section 49, does not expressly permit
an employee to take or accrue leave during a Compensation Period.
However, it does allow workers to continue to receive payments of
weekly compensation, without deduction, during periods where they
are also entitled to receive paid annual leave.
Until the decision of Justice Emmett in NSW Nurses &
Midwives Association –v- Anglican Care  FCCA 2580,
NSW employers had reasonable grounds to believe that employees were
not entitled to take or accrue annual leave during a Compensation
Although her Honour accepted that the WCA did not in itself
create an express right to receive annual leave payments during a
Compensation Period, she adopted a "beneficial
construction" of Section 49 which permitted employees to
accrue annual leave during a Compensation Period as required by the
Justice Emmett found that Section 49 of the WCA
"expressly provides the opportunity for the worker to
receive both workers compensation and accrue annual leave" and
accepted "that a liberal approach to statutory interpretation
is appropriate when dealing with legislation aimed at protecting
the safety of workers and providing for compensation for injured
As a result of her Honour's decision, NSW employees accrue
annual leave (and potentially other leave entitlements) during a
Compensation Period, and have had that entitlement since the
commencement of the FWA. This entitlement also applies to employees
in other states and territories in which such "beneficial
construction" is available.
IMPACT ON OTHER STATES AND TERRITORIES
If the reasoning in this decision is followed in other states
and territories, then it will have significant ramifications
outside New South Wales.
The relevant legislation in Victoria and Western Australia is
similar to that in New South Wales, allowing an employee who takes
annual leave to continue to receive payments of weekly compensation
at the same level (section 185(4) Workplace Injury
Rehabilitation & Compensation Act 2013 (Vic) and section
80 Workers Compensation & Injury Management Act 1981
In Queensland and South Australia, the relevant legislation
already permits employees to take or accrue leave while they are
receiving workers' compensation payments. Hence, annual leave
already accrues and the NSW decision does not impact in these
states (section 119A - Workers Compensation &
Rehabilitation Act 2003 (QLD); section 40(2) - Workers
Rehabilitation & Compensation Act 1986 (SA)).
In Tasmania, the relevant legislation contains provisions that
prevent "double dipping", so that workers cannot receive
weekly payments of compensation and paid annual leave
simultaneously (section 84 Workers Rehabilitation &
Compensation Act 1988 (Tas)).
There are no relevant provisions in the Northern Territory
Workers Rehabilitation & Compensation Act.
PROPOSED LEGISLATIVE CHANGES
The "Fair Work Amendment Bill 2014",
currently before Federal Parliament, proposes to remove an
employee's entitlement to take or accrue leave while receiving
workers compensation, regardless of whether permitted or allowed by
a compensation law.
However, as the proposed amendment will only apply in relation
to a Compensation Period beginning after the commencement of the
Amendment Act, NSW employees will be entitled to take or accrue
annual leave until this Bill is passed.
NSW employers should review their employment records to ensure
that they have not, and do not continue, to inadvertently breach
the FWA by not properly accruing leave for employees during a
Employers in Victoria and Western Australia should be aware that
a similar decision may be handed down in their states.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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