Are there dual entitlements to annual leave and weekly workers compensation payments?

3rd Oct 2019

Injured employees in most Australian states now have the additional financial protection of being able to accrue and take annual leave while they are receiving weekly payments under the applicable workers compensation schemes. 

This has been the position in NSW since 2015 when the Federal Court in Anglican Care v NSW Nurses and Midwives’ Association [2015] FCAFC 81 established that s130 of the Fair Work Act 2009 (Cth) did not prevent an injured employee from taking or accruing annual leave while the person was receiving weekly workers’ compensation payments under s49 of the Workers Compensation Act 1987 (NSW). Section 130 provides, inter alia, that an employee is not entitled to take or accrue any leave if the employee is receiving workers’ compensation payments under a Commonwealth, state or territory law unless permitted by that law to take or accrue leave. Although s49 does not expressly permit employees to take or accrue annual leave in these circumstances, it allows injured employees to continue to receive weekly workers’ compensation payments during periods when they are also entitled to annual leave (or long service leave) under any Act, award, industrial agreement or contract of employment.

More recently in 2017, the Fair Work Commission applied this decision in the Victorian context: Australian Nursing and Midwifery Federation v Alfred Health [2017] FWCFB 4420 and United Firefighters Union of Australia v Emergency Services Telecommunications Authority T/A ESTA [2017] FWCFB 4537. In Australian Nursing and Midwifery Federation v Alfred Health, the Fair Work Commission held that if a worker is still employed and on payments, they are still performing a ‘service’ [54] and unless an enterprise bargaining agreement (EBA) or employment contract specifically excludes it, annual leave accrues [68]–[69]. 

The Fair Work Ombudsman (FWO) recently updated its website to outline the position in the different states and territories. The position in Queensland, Western Australia and Tasmania align with NSW and Victoria (in contrast to the ACT and the NT): annual leave can be accrued and taken while an injured employee is receiving workers’ compensation payments. With the exception of Tasmania, employees in these states will be entitled to be paid both annual leave and workers’ compensation. For SA employees, the position is the same as the other states, except in the case of total incapacity for 52 weeks or more. For Commonwealth employees, the accrual is capped at 45 weeks only and Commonwealth employees generally cannot take annual leave while on workers compensation. 

If your client is eligible, how are these entitlements calculated? 

Since these decisions, we have found that employers sometimes need a little guidance to correctly calculate and pay out an employee’s annual leave entitlements.

You will need to first determine what the current balance of these entitlements is, and if the employer has applied the correct calculation. Often, but not always, the balance is found on a worker’s payslip. If this is not the case, the employer’s payroll department should be approached for the current balance. 

Once you have the current balance, you then need to work back from the last pay period the worker worked, or was first paid a weekly payment. Annual leave accrues at a certain number of hours per week (depending on the contract of employment/EBA and whether the worker is part-time of full–time). If the worker’s payslips show the balances of the leave, you can find the weekly rate by comparing two consecutive pre-injury payslips (subject to indexation rules). 

Then it is simply a matter of multiplying these hours by the number of weeks they have been receiving weekly payments, and compare these with the figure provided by the employer. Any leave taken during this time will have to be deducted from the calculation.

If the employer has not calculated the correct amount of leave, a polite email or letter directing them to the relevant Fair Work webpage will normally do the trick.

How else could this affect your clients? 

If weekly payments are terminated, your client will have the security of being able to access the annual leave entitlements that have accrued while they were unable to work and receiving weekly payments.

Also when a client’s payments stop because they reach retirement age, or have a work capacity after 130 weeks, they will be able to access accrued annual leave entitlements as a weekly payment or a lump sum if their employment ends.

It is anticipated that employers will become more proactive in terminating a worker’s employment after the 52-week period to prevent the accumulation of leave entitlements.

A version of this article originally appeared on on the Ryan Carlisle Thomas Blog and can be found here.

Ashleigh Kemp is an Associate at Ryan Carlisle Thomas practising in all areas of personal injuries including WorkCover, Transport Accidents and Public Liability claims. A passionate advocate, she is dedicated to maximising her clients' entitlements.


The views and opinions expressed in these articles are the authors' and do not necessarily represent the views and opinions of the Australian Lawyers Alliance (ALA).

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Tags: Workers' rights Workers compensation Ashleigh Kemp Annual leave