Can I accrue annual leave entitlements while receiving worker’s compensation payments?

Section 130(1) of the Fair Work Act 2009 (Cth) prevents an employee from taking or accruing any leave, whether paid or unpaid, during a “compensation period” when the employee is absent from work because of a personal injury, for which the employee is receiving compensation payable under a law that is about worker’s compensation.

An exception to this rule arises in section 130(2) of the Act which allows the above employee to take or accrue leave during the compensation period if the taking or accruing of leave is permitted by a compensation law.

Therefore, the answer to this question depends on 2 factors:

• What is a compensation law?
• Is the taking or accruing of leave permitted by the relevant compensation law?

In Anglican Care v NSW Nurses and Midwives’ Association [2015] FCAFC 81, an employee was absent from work and receiving WorkCover payments following a workplace injury. However she was not credited with annual leave during the period of her absence.

The relevant compensation law was the Workers’ Compensation Act 1987 (NSW). Section 49(1) of this Act provided that compensation is payable to a worker even though the worker has received or is entitled to receive annual leave or long service leave benefits, and the court held that the compensation law permitted the accrual of annual leave even while the employee was receiving WorkCover payments.

The basis for this decision lies in the court’s interpretation of the word “permitted” in section 130(2) of the Fair Work Act. The court held that “permitted” was to be given a passive construction, meaning “allowed or not forbidden”. Therefore section 130(2) is satisfied by the relevant law refraining from forbidding annual leave or long service leave entitlements from accruing while an employee is receiving WorkCover payments.

The court also compared the NSW Act to section 97(1)(d) of the Victorian Accident Compensation Act 1985, giving the term “permitted” the same construction.

As such, as long as the relevant compensation law does not expressly forbid the accrual of leave entitlements while receiving WorkCover payments and being absent from work, it is likely that such employees will be able to accrue leave entitlements while receiving WorkCover payments.