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Annual leave entitlements for employees receiving workers’ compensation payments in WA

Please note: This article is intended to be brief information only and should not be relied or acted upon as legal advice. You should always seek legal advice tailored to your own individual circumstances. Please also note that this article is current as at the date of publication and the law may have subsequently changed since.

National vs State system employers

This article addresses issues concerning the employment of employees in Western Australia by “national system employers” under the Fair Work Act 2009 (Cth) (Fair Work Act).

Please be aware that some employees in Western Australia (ordinarily those employed by sole traders, partnerships and non-trading corporations) are employed by “state system employers”, being employers covered by the state industrial relations system under the Industrial Relations Act 1979 (WA).

If you are not sure whether an entity is a national or state system employer, you should seek legal advice.

Entitlement to accrue annual leave during absence on workers’ compensation

In the recent case of Touhey v Salini Australia Pty Ltd [2022] FCA 55, the Federal Court of Australia found that employees in Western Australia, who are absent from work due to personal illness or injury and are receiving workers’ compensation payments under the Workers’ Compensation and Injury Management Act 1981 (WA) (WCIM Act) for such illness or injury, are generally entitled to accrue annual leave entitlements during such absence.

Under section 130 of the Fair Work Act, an employee is generally not entitled to take or accrue any leave or absence (whether paid or unpaid) under the National Employment Standards (NES) during a 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.

However, section 130(2) of the Fair Work Act provides an exception where the taking or accruing of the leave is permitted by a compensation law.

In reaching her conclusion that the section 130(2) exception applied in respect of the WCIM Act (being a compensation law), her Honour Justice Banks-Smith followed and applied the case of Anglican Care v NSW Nurses and Midwives’ Associattion [2015] FCAFC 81 (which dealt with similar NSW workers’ compensation legislation) and found that “the WCIM Act ‘sanctioned, condoned or countenanced’ and so permitted the dual receipt of compensation and annual leave benefits'” (at [62]).

The result was such that the employee in question was found to have accrued annual leave entitlements during the period of his absence on workers’ compensation and, consequently, his employer was found to have contravened the Fair Work Act by failing to pay out such accrued leave to him upon the ending of his employment.

Under section 90(2) of the Fair Work Act, an employer is generally obliged to pay out any accrued but untaken annual leave entitlements to an employee upon the employee’s employment ending.

As such, employees receiving workers’ compensation and employers should ensure that annual leave entitlements (and other leave entitlements) are being calculated and afforded correctly.

Employers and employees should also be aware that it may be unlawful adverse action for an employer to dismiss an employee because they have a workplace right to accrue annual leave during a workers’ compensation related absence.

Further information

If you require advice or assistance, please do not hesitate to contact us.