GN 5.11 Compensation and other work entitlements
Published: 12 August 2019
Last edited: 12 August 2019
Application: this guidance applies to exempt workers
Overview
The interaction between workers compensation and other entitlements including annual leave/holiday pay, long service leave, sick leave and superannuation can be important for workers.
The legislation in this area can be complex and involves an interplay between the state workers compensation legislation, a worker's industrial entitlements (entitlements under an award or other industrial agreement) and, in the case of superannuation, the Commonwealth tax legislation.
A worker’s industrial entitlements will vary depending on the industrial award or agreement the worker is employed under. The law in this area can change and insurers need to be mindful of the importance of working closely with employers to make informed and accurate decisions regarding a worker’s compensation entitlements under the Workers Compensation Acts.
This guidance considers the interaction between workers compensation entitlements and other entitlements.
Holidays, annual holidays or long service leave
Workers compensation is payable to a worker even though the worker may have received or is entitled to receive payment for annual leave/holiday leave or long service leave during the period claimed. The worker is entitled to receive both the compensation and the leave payments pursuant to section 49 of the Workers Compensation Act 1987 (1987 Act).
Section 130 of the Fair Work Act 2009 (Cth) states an employee is not entitled to take or accrue leave while receiving workers compensation. The section goes on to say that this does not prevent an employee from taking or accruing leave during a compensation period if the taking or accruing of the leave is permitted by a compensation law of a State or Territory that is about workers compensation.
The interaction between section 130 of the Fair Work Act 2009 and section 49 of the 1987 Act was considered in the matter of Anglican Care v NSW Nurses and Midwives Association [2015] FCAFC 81 (see below). The result is that workers do accrue leave while receiving workers compensation entitlements.
Anglican Care v NSW Nurses and Midwives’ Association [2015] FCAFC 81
The worker was employed in aged care as an Assistant in Nursing in NSW. On 17 December 2009, she sustained an injury in the course of her employment. From that date until the date of the termination of her employment in May 2011 she was unable to work and was in receipt of weekly benefits under the Workers Compensation Act 1987.
Upon termination, she was paid out her accrued and untaken annual leave. Her employer argued she was not entitled to accrue and take annual leave while in receipt of workers compensation (relying on section 130 of the Fair Work Act 2009).
The Fair Work Act 2009 (FWA) provides that for each year of service with his or her employer, an employee is entitled to four weeks of paid annual leave and, in the case of certain categories of shift workers, five weeks (section 87 FWA). As noted above, section 130 of the FWA precludes some employees from taking or accruing any leave.
The question at the heart of this case is whether the worker was precluded. Put another way, whether section 130 deprives her of the entitlement conferred by section 87.
Ultimately the matter was determined in the Federal Court of Australia with the Court finding that:
The purpose of section 130(2) is to enable employees who are absent from work and in receipt of compensation to retain their entitlements to leave over the same period as long as that course is sanctioned, condoned or countenanced by the relevant compensation law. Put another way, employees in this position are entitled to both compensation and leave benefits provided that permission is given by the compensation law for dual receipt. While it is no longer sufficient that the compensation law does not prevent the simultaneous enjoyment of the two, it is not necessary that the compensation law provides for the payment of the leave benefit.
… The purpose and effect of section 130 is to remove the entitlement to take or accrue leave for employees in receipt of workers compensation unless there is a law relating to compensation in the relevant jurisdiction which countenances the simultaneous receipt of workers compensation while the employee is absent from work. Section 49 of the WC Act is such a law.
[at paras 64-65, emphasis added]
The practical outcome of this decision is that section 49 of the 1987 Act overcomes the restriction in section 130 of the FWA and the worker in this matter was entitled to be paid her untaken, accrued annual leave (about $2,993.96 before interest).
Rostered days off or flex leave
Generally, a worker receiving workers compensation won’t accrue rostered days off (RDO) or flex leave but this is subject to the specific details of the worker’s industrial award or agreement. This is because accruing a day off is usually dependent on the worker working for a specified number of hours in a particular cycle, eg 140 hours every four weeks.
If the worker is off work and receiving compensation payments, the worker won’t be performing the required number of hours to accrue the day off. This is different to annual leave or long service leave which depend on the length of time the worker has been employed.
Insurers should encourage employers to check the applicable industrial award or agreement.
Sick leave
Weekly compensation is payable even though the worker may have received sick pay for the period claimed. This can arise where a worker takes their sick leave and later brings a claim for compensation, or where an award is made, or the insurer later agrees that compensation is payable for the period.
However, the worker is not entitled to be paid twice – the correct approach is that the worker will be entitled to have his/her sick leave re-credited (section 50 of the 1987 Act).
Superannuation
Employers are generally obliged to make superannuation contributions on behalf of their employees (subject to some limitations). The minimum employers must pay is called the super guarantee. The legislation dealing with superannuation is Commonwealth legislation.
The super guarantee is currently 9.5 per cent of an employee’s ordinary time earnings. Ordinary time earnings does not include weekly workers compensation payments paid to a worker where the worker is not working.
Generally, an employer is not required to make contributions to a superannuation fund in respect of these weekly compensation payments to a worker.
Where a worker has returned to work following an injury, for example with less hours or restricted duties, then the salary or wages for this work will be classed as ordinary time earnings for superannuation guarantee purposes.
However, there may be specific arrangements under an industrial award or agreement and workers should be encouraged to make enquiries about their specific circumstances.
More information about superannuation is available at the Australian Tax Office website.
Related: Legislation and regulations
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