Accruing and taking leave while receiving WorkCover payments – can it be done?

1 September 2015
The recent Full Bench of the Federal Court decision in Anglican Care v NSW Nurses and Midwives Association has clearly paved the way for Victorian workers absent from work and receiving workers’ compensation payments to continue to take or accrue leave during that period.

Background

In this recent case, an employee of Anglican Care, absent from work and receiving WorkCover payments following a workplace injury, was not credited with annual leave during the period of her absence.

Section 87 of the Fair Work Act 2009 (Cth) (the FW Act) provides employees, other than casual employees, with an entitlement to annual leave and sets out the manner in which the entitlement accrues progressively during a year of service.

Section 130(1) of the FW Act removes the entitlement to take or accrue leave where employees are absent from work because of personal illness or injury and receiving workers’ compensation, unless, as provided in s 130(2), the taking or accrual of that leave is “permitted by a compensation law”.

Anglican Care asked the Full Bench to determine whether the exception in s 130(2) of the FW Act applied only where a compensation law “provides or confers” an entitlement to take or accrue leave

Did the compensation law “permit” the accrual of leave?

The Workers Compensation Act 1987 (NSW) (the WC Act) is a “compensation law” for the purposes of s 130(2) of the FW Act. With respect to the interaction between an employee’s leave entitlement and the payment of weekly compensation, section 49(1) of the WC Act provides:

weekly compensation payable despite holiday pay etc

Compensation is payable under this Division to a worker in respect of any period of incapacity for work even though the worker has received or is entitled to receive in respect of the period any payment, allowance or benefit for holidays, annual holidays or long service leave under any Act (Commonwealth or State), award or industrial agreement under any such Act or contract of employment.

Anglicare argued that s 49(1) did not create an entitlement for an employee to take or accrue leave while absent and receiving workers’ compensation.

The Court found that the WC Act permitted the accrual of annual leave during Ms Copas’ absence.

In finding that s 49(1) of the WC Act permitted the accrual of annual leave whilst receiving workers’ compensation payments, the Court definitively determined:

s 130 of the FW Act does not require that the source of the entitlement be found in the compensation law in order for an employee to be able to enjoy the benefit of both compensation and leave over the same period.

In reaching this decision, the Court concluded that the term “permitted” meant “allowed, not forbidden”. The Court’s interpretation was further strengthened by Anglicare’s inability to identify any compensation law which “created or conferred an entitlement to leave”.

What does this mean for Victorian employees?

As partof its finding, the Court referred to the similarity between s 49(1) of the WC Act and s 97(1)(d) of the Accident Compensation Act 1985 (Vic), and noted that the meaning of the term “permitted” in that provision “coincides with the primary judge’s construction in the present case”.

The effect of this is that Victorian employees will also be able to accrue and take leave while absent from work and receiving workers’ compensation payments.

What about the Fair Work Amendment Bill?

Keep a watch on the amendment proposed under Fair Work Amendment Bill 2014, which is currently before the Senate, and which seeks to repeal s 130(2) of the FW Act.

Therefore, if the proposal is passed, employees in jurisdictions with compensation legislation that does not forbid the accrual or taking of leave while absent from work and in receipt of workers’ compensation, would no longer be able to take or accrue leave during that absence.

Watch this space