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Perspective

Does an employee accrue leave while absent on workers’ compensation?

Section 130 of the Fair Work Act 2009 (Cth) (FW Act) restricts the accrual of any leave or absence while an employee is absent from work because of a personal illness or injury for which they are receiving workers compensation. However, the provisions of the FW Act only apply insofar as they are not inconsistent with State legislation.

Victoria, New South Wales and Western Australia Although workers compensation legislation is silent on accruing annual leave, case law has determined that State workers compensation laws ‘permit’ an entitlement if they do not expressly prevent or prohibit it (see Anglican Care v NSW Nurses and Midwives’ Association [2015] FCAFC 81).
Queensland A worker continues to accrue annual, sick and long service leave while absent from work in receipt of workers’ compensation. See section 119A of the Workers’ Compensation and Rehabilitation Act 2003 (Qld).
South Australia A worker may continue to accrue annual leave while absent from work in receipt of workers’ compensation if they are entitled to under a relevant award or industrial instrument.

If they do not have that entitlement, they may be entitled to the monetary value of the annual leave that would have accrued had they not been absent from work. See section 50 of the Return to Work Act 2014 (SA).

Tasmania A worker continues to accrue sick, annual, and long service leave while absent from work in receipt of workers’ compensation. See sections 84A and 84B of the Workers Rehabilitation and Compensation Act 1988 (Tas).

Note: The provisions of workers compensation legislation only apply insofar as they are not inconsistent with an Industrial Act or industrial instrument.

In the case of Leonard v State of Queensland (Queensland Health) & Anor [2020] QIRC 207, the provisions of the Industrial Relations Act 2016 (Qld) were somewhat inconsistent with the above, in that workers were not entitled to accrue leave entitlements for periods of unpaid absences exceeding 3 months.

The worker commenced a period of workers’ compensation leave which was backdated by approximately seven months by WorkCover Queensland. He notified the Commission of a dispute with his employer after it did not attribute any accrued annual or sick leave to his employment while he was absent (on its understanding that the worker was absent without pay).

The Queensland Industrial Relations Commission found the worker was entitled to accrue annual and sick leave while he was absent from work, in receipt of workers’ compensation payments.

The employer tried to argue the employee was unpaid because they did not receive wages while absent on workers compensation. The Commission rejected this argument, noting an employer’s obligation with respect to an employee is not limited to the payment of wages – payments are made pursuant to a legal obligation on the employer to provide insurance to the worker.

In considering Queensland’s applicable workers compensation and industrial legislation the Commission noted that, so long as a worker remains in employment with the employer during their absence, the period of absence counts towards service, and a worker is not ‘absent without pay’ if they are paid workers’ compensation payments.

Lessons for employers

  1. An absence from work while in receipt of workers compensation payments is not an unpaid absence for the purposes of interpreting the FW Act, and applicable workers compensation and industrial legislation.
  2. Periods of absences while receiving workers compensation payments also count towards an employee’s continuous service. In Workpac Pty Ltd v Bambach [2012] FWAFB 3206, the employer was unsuccessful in raising a jurisdictional objection to its workers unfair dismissal claim, on the basis that he had not worked for the minimum qualifying period.

Written by Nes Demir

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Heightened levels of stress around the pandemic is also a relevant factor. An April 2020 study reported 88% of the participants (US employees) faced moderate to extreme stress during the pandemic and nearly 70% faced the most stressful time of their professional career.

Paul Evans

Managing Director, Toro Digital

Psychological hazards of e-working during the pandemic is a relevant factor. The Australian Psychological Society identified these hazards as conflicts between work and family, workload and over-working, future uncertainty and isolation/loneliness.

Heightened levels of stress around the pandemic is also a relevant factor. An April 2020 study reported 88% of the participants (US employees) faced moderate to extreme stress during the pandemic and nearly 70% faced the most stressful time of their professional career. Participants noted their productivity consequently declined by at least one hour a day for 62% and at least two hours for 32%.

Unsurprisingly, there has been a marked rise in mental health related prescriptions since March 2020.

These risks can be mitigated by undertaking appropriate risk analysis for each employee, ensuring controls are instituted that mitigate those risks, ensuring regular communication between management and employees around individual circumstances, setting clear expectations including around joint goals and objectives, scheduling regular informal team gatherings, and ensuring access to support and resources.

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