In this edition, we address:
- Whether an injured worker accrues annual leave whilst not at work due to a workplace injury for which they are receiving compensation – Fawwaz Aziz and Hari Gupta.
Accrual of annual leave while receiving weekly compensation
An injured worker has an active workers compensation claim. The worker is receiving weekly payments of compensation because they are unfit to work. Does the worker also accrue annual leave while they are away from work?
What does legislation say?
At the Federal level, section 130 of the Fair Work Act 2009 (Cth) (FWA) restricts a worker from taking or accruing leave or absence while receiving workers’ compensation. However, subsection (2) provides that an employee can take or accrue leave when receiving compensation if “the taking or accruing of the leave is permitted by a compensation law”. Generally, such compensation laws are made at the State level.
In Tasmania, the sections of the Workers Rehabilitation and Compensation Act 1988 (Act) relevant to this topic are sections 84 and 84B.
Section 84 of the Act states that employers must give “a similar period of leave on full pay in lieu of that annual recreational leave” to a worker in receipt of compensation “at some time within 3 months” from the date of returning to work; or “at the termination of his or her right to compensation under the Act” if they do not return to work.
A worker who takes annual leave during the period of incapacity is not entitled to receive weekly payments of compensation at the same time, as per section 84(2). The purpose of this section is to prevent “double dipping”. As a safeguard, employers are prohibited from forcing a worker to take annual leave during the period of incapacity.
Section 84B of the Act states that where a worker takes annual recreational leave during any period where their “weekly payments is pending”, and the employer is “subsequently found liable to pay weekly payments”, the leave is recredited back to the worker’s accrued leave entitlements.
The relevant sections of the Act talk about whether a worker can take leave while on compensation, however, those sections do not address whether a worker accrues leave while on compensation.
A debate on the operation of these sections of legislation is inevitable. Fortunately, we can rely on cases from other States to assist with understanding the interpretation of the legislation.
What happens in other States?
In Anglican Care v NSW Nurses and Midwives’ Association [2015] FCAFC 81 (Anglican Care), the Full Court held that section 130 of the FWA does not apply to workers in New South Wales as section 49 of the Workers Compensation Act 1987 (NSW) “countenances the simultaneous receipt” of workers compensation and accrual of leave entitlements.
The Court outlined the similarity with laws in Western Australia, South Australia, and the Commonwealth. All of which “provided for the payment of compensation during a period of leave or a period during which employees had entitlements to certain leave benefits”.
More recently, in Touhey v Salini Australia Pty Ltd [2022] FCA 55, the judge followed the decision in Anglican Care and held that the Workers’ Compensation and Injury Management Act 1981 (WA) “sanctioned, condoned or countenanced” section 130 of the FWA and “so permitted the dual receipt of compensation and annual leave benefits”.
In Tasmania, the Tribunal faced the issue of whether a worker accrues leave while receiving workers compensation in P. v Setori Engineering Pty Ltd [2020] TASWRCT 34. However, the Tribunal found that it did not have the jurisdiction to decide the issue as a deed of release from the worker’s claim extinguished the worker’s right to any further payments of compensation. This meant there was no claim for compensation to be determined and therefore there was no jurisdiction.
In the Tasmanian Magistrates Court, the implications of section 130 of the FWA were considered in McFerran v McCulloch trading as Grenville Stud [2015] TASMC 10. This decision was delivered after Anglican Care was handed down, but it is unclear if the Magistrates Court received submissions about Anglican Care. It was held that section 84 of the Act creates no right to accrue annual leave during incapacity for work and that it simply gave workers certain rights as to annual leave accrued during their incapacity.
The Magistrates Court specifically found that section 84 did not give rise to an entitlement to accrue annual leave while a worker was in receipt of compensation. It does not seem that this decision was appealed and appears to remain as good law, although given what has transpired since, this decision may well not be followed.
Learning points
The main takeaway is that while the Tasmanian Magistrates Court in the months following the verdict in Anglican Care, rejected the contention that section 84 permits the accrual of annual leave, the Supreme Court or Tribunal is yet to determine this issue since Anglican Care was decided.
What we do know is that the Act does not allow an injured worker to receive workers compensation and take annual or long service leave for the same period.
In any case, the question of whether a worker can accrue leave while receiving workers compensation remains unanswered in the context of injured workers in Tasmania noting that the Magistrates Court has rejected that notion.
Our top tip for employers and their insurers is that while the Act does not explicitly permit the accrual of annual leave, they should have regard to the relevant industrial award or agreement or employment contract for guidance.
More information
If you have any questions about this commentary, please do not hesitate to contact us.
Hari Gupta
Senior Associate
T: (03) 6235 5133
E: hgupta@pageseager.com.au
Fawwaz Aziz
Lawyer
T: (03) 6235 5175
E: faziz@pageseager.com.au
