The Full Federal Court has upheld the first instance decision inNSW Nurses and Midwives’ Association v Anglican Care [2014] FCCA 2580 (NSW Nurses) that an employee in receipt of workers’ compensation payments under the Workers Compensation Act 1987 (NSW) is also entitled to accrue annual leave entitlements.  

The dispute concerned the meaning and effect of s130 of theFair Work Act 2009 (Cth) (FW Act), namely whether s130 deprived Ms Copas of the entitlement to accrue annual leave under s87 of the FW Act.  

The Full Court found that “the purpose of s130(2) is to enable employees who are absent from work and in receipt of compensation to retain their entitlements to leave over the same periods 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.”  

Impact in WA:  

National system employers, including Proprietary Limited Companies.  

Annual leave  

Section 80(1) of the Workers’ Compensation and Injury Management Act 1981 (WA) (WCIM Act) is in very similar terms to s49(1) and (2) of the Workers Compensation Act 1987 (NSW).  

Therefore, although the Federal Court decision interprets NSW legislation it is likely a Court would interpret the WCIM Act in the same way.  Meaning it is arguable that WA based employers (which are national system employers) would have the same obligation to provide an employee with a dual entitlement to accrue annual leave whilst receiving workers’ compensation  payments.  

Sick Leave  

Employees are still prevented from dual receipt of sick leave and workers’ compensation payments pursuant to s80(2) of the WCIM Act.  

Long Service Leave  

Section 130 of the FW Act only relates to leave entitlements prescribed by the FW Act.  Long service leave entitlements are not prescribed by the FW Act but by State legislation.  

In WA, for the most part, these entitlements derive from  theLong Service Leave Act 1958 (WA) (LSL Act).   

As such the NSW Nurses decision will have no impact on the right to take or accrue long service leave while on workers’ compensation.    

Section 80(1) of the WCIM Act provides that employees are entitled to receive long service leave while in receipt of workers’ compensation payments but it makes no mention of an employee’s right to accrue long service leave.  

The LSL Act provides that a maximum of 15 sick days per year will count as service when accruing long service leave in WA.  

Future changes  

It does not appear that the decision has been appealed to the High Court.  

However, Part 3 of Schedule 1 of the Fair Work Amendment Bill 2014 proposes to repeal s130(2) of the FW Act. This Bill has been passed by the House of Representatives and is currently before the Senate. The opposition opposes the bill in its entirety. If passed, the repeal of s130(2) will mean that national system employees will not be able to take or accrue applicable leave entitlements while they are receiving workers’ compensation.  

State system employers, including unincorporated entities such as sole traders  

The status quo is maintained in the State System as theIndustrial Relations Act 1979 (WA) does not confer the same rights as the FW Act.   

Employees of state system employers in WA are entitled to take accrued annual leave and long service leave entitlements while in receipt of workers’ compensation payments.  Those employees would not accrue annual leave during this period and would only accrue long service leave in respect of 15 days sick leave per year.  However, they are prevented from dual receipt of sick leave.  

Consequences for non-compliance  

A failure to allow a national system employee to receive or accrue annual leave while in receipt of workers’ compensation payments may consequently be regarded as a breach of the FW Act National Employment Standards and attract a civil penalty of up to $51,000 for a corporation and $10,200 for an individual.  

Given the NSW Nurses decision deals with interpretation of legislation, which was introduced back on 1 July 2009, there is scope to argue that the accrual of annual leave entitlements ought to have been recognised by employers since 1 July 2009.  

This means that any current or former national system employees who have received workers’ compensation payments since 1 July 2009 could be entitled to bring proceedings against their national system employer for breach of the FW Act including for failure to:

  • pay annual leave entitlements on termination     of employment that ought to have accrued whilst on     workers’ compensation; or
  • credit employees with annual leave entitlements whilst on workers’ compensation.   

Any aggrieved employees will have 6 years from the date of the initial breach to bring proceedings.  

In light of these developments, employers should consider whether their payroll systems require adjustment to accommodate the NSW Nurses decision.