Five employ­ment law cas­es that shook the world: No #3 Annu­al leave and work­ers comp accruals

As part of a series of arti­cles we are exam­in­ing five employ­ment law cas­es that shook the world (or at least mem­bers of the Aus­tralian HR community).

Sec­tion 130 of the Fair Work Act 2009 (​“restric­tion on tak­ing or accru­ing leave or absence while receiv­ing work­ers’ com­pen­sa­tion”) includes the following:

“(1) An employ­ee is not enti­tled to take or accrue any leave or absence (whether paid or unpaid) under this Part dur­ing a peri­od (a com­pen­sa­tion peri­od) when the employ­ee is absent from work because of a per­son­al ill­ness, or a per­son­al injury, for which the employ­ee is receiv­ing com­pen­sa­tion payable under a law (a com­pen­sa­tion law ) of the Com­mon­wealth, a State or a Ter­ri­to­ry that is about work­ers’ compensation.

(2) Sub­sec­tion (1) 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.”

On the face of it the oper­a­tion of sec­tion 130 is rel­a­tive­ly clear: an employ­ee can­not take or accrue leave whilst off work and receiv­ing work­ers’ com­pen­sa­tion unless this is per­mit­ted under State / Ter­ri­to­ry work­ers com­pen­sa­tion law.

The dif­fi­cul­ty in the past – at least in NSW – was that it was­n’t clear from the terms of the Work­ers Com­pen­sa­tion Act 1987 (NSW) whether it did per­mit an employ­ee receiv­ing work­ers com­pen­sa­tion to take and accrue annu­al leave or not.
Sec­tion 49 of the NSW Act states as follows:

“Week­ly com­pen­sa­tion payable despite hol­i­day pay etc
(1) 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.

(2) The amount of com­pen­sa­tion so payable is the amount which would have been payable to the work­er had the work­er not received or been enti­tled to receive in respect of the peri­od any such pay­ment, allowance or benefit.”

On appeal in Angli­can Care v NSW Nurs­es and Mid­wives’ Asso­ci­a­tion [2015] FCAFC 81, the point being con­sid­ered was a tech­ni­cal one, name­ly whether for sec­tion 130(2) of the Fair Work Act 2009 to be engaged (and the taking/​accruing of annu­al leave to be allowed) the NSW Act had to actu­al­ly con­fer an enti­tle­ment to take or accrue annu­al leave. Or, as had been decid­ed by the pri­ma­ry judge, it was suf­fi­cient for the NSW Act just to allow for the dual receipt of annu­al leave and work­ers compensation.

Bromberg and Katz­mann JJ decid­ed that the broad­er inter­pre­ta­tion of the phrase ​“per­mit­ted by a com­pen­sa­tion law” was to be preferred:

“…s 49 of the WC Act did not cre­ate an enti­tle­ment to accrue leave. But 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. The pur­pose and effect of s 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.”

The case is there­fore author­i­ty for the propo­si­tion that an employ­ee in receipt of work­ers com­pen­sa­tion in NSW is also enti­tled to take and accrue annu­al leave.

The deci­sion was sub­se­quent­ly fol­lowed in respect of Vic­to­ri­an work­ers com­pen­sa­tion leg­is­la­tion in Aus­tralian Nurs­ing and Mid­wifery Fed­er­a­tion v Alfred Health [2017] FWCFB 4420.