Dual entitlement to annual leave and workers comp affirmed

In 2015 the Federal Court confirmed in the case of Anglican Care v NSW Nurses and Midwives’ Association1 (which was a case relating to an underpayment claim) that employees receiving workers’ compensation may be entitled to continue to accrue annual leave. In that case, a nursing assistant claimed that she was entitled to be paid, on termination of her employment, for the annual leave she had accrued during the two year period she had been absent from work and receiving workers compensation payments.

Until the Anglican Care decision, it was widely accepted that the effect of section 130 of the Fair Work 2009 (Cth) (FW Act) was clearly to prevent an employee from accruing or taking annual leave while they are receiving compensation payments unless this was expressly permitted by the relevant state workers’ compensation laws. Given that such laws are concerned with compensating employees for loss of earnings when off work due to a compensable injury, they generally do not expressly provide an entitlement to annual leave.

In Anglican Care, the Federal Court clarified, however, that section 130 should not be given such a narrow interpretation and that it would not operate as a bar to the accrual of leave if the relevant state workers compensation laws allow the simultaneous receipt of workers compensation and leave. The Court went on to find that section 49 of the Workers Compensation Act 1987 (NSW) (WC Act) is one such law.

Although the case provided clarification on the interpretation of section 130, given the decision only concerned the interpretation of the compensation law in NSW, it still left some uncertainty about the position of employees in other states.

This issue arose again recently in the case of Australian Nursing and Midwifery Federation v Alfred Care2 when the position in Victoria was challenged. The case concerned a dispute under an enterprise agreement about whether Ms McNamara (an ANMF member) was entitled to take or accrue annual leave under the applicable enterprise agreement whilst receiving workers compensation.

The employer argued that the provisions of the Victorian workers compensation laws were distinguishable from the WC Act, as there is nothing in the Victorian workers compensation laws which contemplate employees accruing (as opposed to taking) leave during periods when they are receiving workers compensation. It said that, based on Anglican Care, a workers compensation law must “sanction, condone or countenance” the accrual of annual leave – it is not enough that it simply does not prevent it. Although the Victorian compensation laws countenance annual leave being taken, the employer argued that they do not provide for leave to accrue.

The Fair Work Commission (FWC), however, disagreed. The FWC held that the Victorian compensation laws were not materially different to the NSW laws and any differences were insufficient to justify the FWC departing from the approach adopted by the Federal Court in Anglican Care. As a result, Victorian employees can both take and accrue annual leave when receiving workers compensation payments.

So where does this leave us?

The decision in Alfred Care confirms that, despite the decision in Anglican Care being concerned with the provisions of only the WC Act, the FWC will apply the principles of the case broadly when interpreting other state compensation laws and employees will be entitled to accrue annual leave where the relevant compensation laws permit the payment of annual leave.

1Anglican Care v NSW Nurses and Midwives’ Association [2015] FCAFC 81
2Nursing and Midwifery Federation v Alfred Care [2017] FWCFB 4420


Mark Dunphy

Mark is an employment lawyer experienced in litigious and non-litigious applications of employment and industrial relations law.

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