Workers Compensation Update

In this edition, we look at a recent decision where the Tribunal found that an injured worker accrues leave entitlements while receiving workers compensation; and if they receive a lump sum of leave entitlements when they resign, that lump sum does not affect their workers compensation entitlements.

NTC v Woolston Printing [2025] TASCAT 186 (22 September 2025)

Background

The worker made a claim for compensation for a back injury in 2021 and continued to provided certificates of total incapacity.

On 15 April 2025, the worker resigned from his employment. Since his employment had ended, he received a lump sum payment from his employer which was for 16 weeks of annual leave (which he had accrued over the course of his employment).

The employer told the worker that because he had received 16 weeks’ worth of ‘income’, his weekly compensation would be suspended for 16 weeks.

The worker’s position was that although he had received the monetary equivalent of 16 weeks’ worth of annual leave, his weekly compensation should not be suspended.

The legal dispute was based on the parties’ interpretation of section 84 of the Workers Rehabilitation and Compensation Act 1988 (Act).

The employer’s argument

The employer relied on a case from 2003. This 2003 Ausdoc case had continued to be the law for 22 years.

It was based on this case (and the wording of the Act) that it was argued that a worker was not to receive weekly payments concurrent with a payment of annual leave, and that situations where a lump sum payment of accrued leave is paid when a worker’s employment is terminated should be treated no differently to a situation where a worker takes a period of annual leave away from his employment.

The employer also relied on section 69(4)(a) which provides that in fixing an amount of compensation payable to a worker, regard shall be had to any payment, allowance or benefit the worker may receive in respect of his employment, not being a payment or benefit in respect of a period of long service leave. The employer said that the lump sum payment of an annual leave made to the worker should therefore be taken into account in fixing the amount of weekly compensation payable to the worker.

The worker filed a referral with the Tribunal under section 42 seeking a determination of the issue. The worker’s position was that the 2003 Ausdoc case was wrong.

The worker’s argument

The worker argued that section 84(1) could not apply in circumstances where a lump sum was paid on the cessation of employment as the worker could not be said to have been ‘absent from his employment’ as required by the section, given his employment had come to an end.

The worker also argued that there was no ‘arrangement’ or ‘taking’ of annual leave as required by section 84(1)(b) or section 84(2).

Simply put, the worker’s argument was that he had not taken or applied for leave but rather the leave entitlements were paid to him because the employer was legally required to do so.

Neither party had a choice in that situation as the worker did not apply for leave and the employer had to pay the worker the accrued leave entitlements.

The issue

As the Tribunal said, the issue in this matter is whether an employer can suspend weekly payments of workers compensation for a period of time equivalent to a period of accrued annual leave paid as a lump sum on termination of employment.

The Tribunal’s decision

The Tribunal found in favour of the worker.

The Tribunal noted that the terms of section 84 require that the worker has to actually take leave, by choice, and payouts of accrued leave entitlements when an employment relationship ends is not the same thing.

The Tribunal said that since the worker was no longer an employee, he could not apply for leave from work. Accordingly, the Tribunal said that the right to suspend weekly payments of workers compensation under section 84(2) could not arise in cases where there was no longer any employment relationship.

The Tribunal also said that the 2003 Ausdoc case was incorrect because there is a difference between leave taken by a worker and the lump sum payment in lieu of annual leave. As such, the Tribunal did not follow the 2003 Ausdoc case.

The Tribunal did not deal with the employer’s submissions made in relation to the application of section 69(4).

The learning points

Firstly, where, at the termination or resignation of employment, a lump sum is paid to a worker for accrued annual leave, employers/insurers cannot rely on section 84 to suspend weekly payments of compensation where they would otherwise be entitled to receive weekly payments of compensation.

Secondly, only in such cases, a worker is entitled to both the lump sum payment of accrued annual leave and the weekly payments of compensation concurrently.

Thirdly, this case answers the question of whether an injured worker accrues annual leave while on compensation. The answer is not simple and direct. The obligation in section 84(1)(a) is that the worker must be given a similar period of leave on full pay in lieu of the equivalent annual recreation leave after return to work or at the termination of the worker’s right to compensation. If those conditions are not met, then it is unlikely that the worker can establish his right to a similar period of leave on full pay.

As such, whether it exists or not, depends on those conditions being met and if not, it is Schrödinger’s cat.