Senior Associate, Ben Motro and Lawyer, Hannah Linossier explain the impact of a recent Federal Circuit Court case which clarifies the previously unsettled position of whether annual leave can be accrued by employees on workers compensation.

The Federal Circuit Court has held that in New South Wales, a worker can accrue leave and receive workers compensation simultaneously. In the case of NSW Nurses and Midwives Association v Anglican Care [2014] FCCA 2580 Judge Emmett resolved the interaction between section 130 of the Fair Work Act 2009 (FWA) and section 49 of the Workers Compensation Act NSW 1987 (WCA), holding that a worker is entitled to accrue annual leave whilst absent from work and receiving workers compensation payments.

Background

NSW Nurses and Midwives Association (NSWNMA) brought an application on behalf of Ms Copas who worked for Anglican Care as an Assistant in Nursing. In December 2009, Ms Copas suffered a workplace injury after which she was unable to undertake work for Anglican Care. Ms Copas continued to be employed but was absent from work and received compensation under the WCA. NSWNMA argued that Ms Copas was entitled to around $3000 for 18 months of unpaid annual leave that she had accrued whilst on workers compensation. Judge Emmett had to consider whether Ms Copas was entitled to accrue the annual leave during the time she was absent from work on workers compensation.

In coming to her decision, Justice Emmett had to consider the previously unclear interaction between the FWA and the WCA.

Interaction of FWA and WCA

Under the FWA, an employee is prevented from taking or accruing leave when the employee is absent from work because of a personal illness or injury and for which they are receiving compensation payable under a law regarding workers compensation.

However, where a specific compensation law (for instance the WCA) permits an employee to take or accrue leave, then this exemption does not apply and an employee will be permitted to take or accrue leave under the FWA, even though they are receiving workers compensation.

Relevantly, section 49 of the WCA states that:

“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 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.”

Additionally, there is no provision of the WCA that expressly provides that an employee is entitled to take or accrue leave (under the FWA or otherwise), whilst they are receiving workers compensation payments under the WCA.  Previously, many employers held the view that employees were not entitled to take or accrue leave (including annual leave), because the WCA does not expressly permit an employee to take or accrue leave during periods in which an employee is receiving workers compensation entitlements.

Decision

The NSWNMA submitted that Ms Copas was entitled to have accrued the annual leave by virtue of section 49 of the WCA which it says is a law which permits the taking or accrual of leave during a compensation period for the purpose of s130(2) of the FWA. In contrast, Anglican Care submitted that section 49 creates no entitlement whatsoever to take leave or holidays or to accrue leave or holidays and that s 130(2) of the FWA applies so as to extinguish the applicant’s claim for annual leave.

In interpreting the sections, Judge Emmett accepted that the WCA did not in itself create an express right to receive annual leave payments during receipt of workers compensation, but that the section “expressly provides the opportunity for the worker to receive both workers’ compensation and accrue annual leave”.  Therefore, Her Honour held that a ‘beneficial construction’ of section 49 permits the accrual of annual leave payments while on workers compensation and that the FWA therefore ‘allows’ or ‘permits’ the worker to accrue annual leave whilst on workers compensation under the WCA.

In other words, because the WCA does not prevent an employee from taking or accruing leave, Justice Emmett accepted that this implicitly ‘permitted’ an employee to take and accrue leave.

The NSWNMA was therefore successful in its application and Judge Emmett ordered that Anglican Care pay Ms Copas around $3,000 in untaken leave she had accrued during her workers compensation absence.

Effect of this decision

Although this case addresses specific provisions in New South Wales legislation, it is possible that where a similar uncertainty applies in other states with like legislation, this case could be used to support the proposition that a worker can accrue annual leave whilst absent from work on workers compensation.

It is also important to be aware that this decision may be impacted by the Fair Work Amendment Bill 2014, which proposes to remove section 130(2) of the FWA. The effect of this amendment would be to remove the exception on the restriction to take or accrue leave while receiving workers compensation leave. However, this Bill is currently before the Senate and its fate is not yet known.