Hilliard & Berry Solicitors

Workplace Relations Specialists

Australian Employment Law Specialists

Another go at scrapping workers’ compensation accruals

Parliament introduced a new Fair Work Amendment (Remaining 2014 Measures) Bill 2015 (the New Amendment Bill) which re-introduces a clause repealing s130(2) of the Fair Work Act 2009 (FW Act) so that no injured workers can accrue leave on workers' compensation. 


In Thompson v Armstrong & Royse Pty Ltd (1950) [1950] HCA 46 (Thompson-decision) the High Court of Australia held that an employee was not entitled to be paid annual leave as well as Workers Compensation. Various States and Territories moved to reverse this ruling, by legislation, shortly after.

The Howard Government introduced the Workplace Relations Amendment (Work Choices) Act 2005 (Cth) and the legal landscape became one of no entitlement to take or accrue leave while on compensation payments unless another workers compensation law permitted it.

The Rudd Government, on the other hand, introduced the Fair Work Act 2009 (Cth) (FW Act) which, essentially, continued the same legislative theme.

The FW Act provides that an employee is not entitled to take or accrue leave during a period of Workers Compensation payments unless it is permitted by a compensation law (it should be noted that parental leave is not affected by this section).

At the most basic level, the National Employment Standards found the FW Act provide for payments in relation to public holidays, annual and long service leave.

In June 2015 the Full Bench of the Federal Court of Australia in Anglican Care v NSW Nurses and Midwives' Association [2015] FCAFC 81 (Anglican-decision) had put an end to the debate surrounding the issue of whether an employee is entitled to accrue and/or take leave while on Workers Compensation payments.

The Anglican-Decision

Bromberg and Katzmann JJ, noted that the first question was what was meant by “permitted” and more precisely “permitted by” in s130(2) of the FW Act and s49 of the WC Act. The expression is not defined and, unless the context suggests otherwise, it is to be inferred that it carries its ordinary English meaning.

Section 130 of the FW Act provides that an employee may recover both annual leave entitlements and compensation during the same period of absence from work as long as a compensation law permits it. A mere failure by the compensation law to advert to the situation will not suffice.

Section 49 of the Workers Compensation Act 1987 (WC Act) provides that weekly compensation is payable 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.

Their Honours found that the word ‘permitted’ did not require a positive statement from the compensation law to permit the accruing or taking of leave. All that was required was the compensation law to ‘not prevent, prohibit or restrain those things” and further found ‘While it is no longer sufficient that the compensation law does not prevent the simultaneous enjoyment of the two, it is not necessary that the compensation law provides for the payment of the leave benefit.

Their Honours determined that legislation had been introduced to reverse the effects the Thompson-decision that workers who had been paid annual leave while absent due to a compensable illness were not entitled to the compensation payments during that period.

Their Honours concluded that the Federal Government, at the time of Work Choices, intended workers compensation legislation of the Commonwealth, States or Territories would not be affected. The joint judgment noted that there was no reason to suppose that the change introduced by s130 was intended to have the far-reaching consequences that Anglican Care contended for.

The New Fair Work Amendment (Remaining 2014 Measures) Bill 2015

In October 2015 the Government's Fair Work Amendment Bill 2014 (Previous Amendment Bill) passed Parliament, after a string of clauses were removed including a clause that would have prevented incapacitated employees accruing leave while receiving workers' compensation. 

The omitted clauses included one repealing s130(2) of the Fair Work Act 2009 (the FW Act), which allowed injured workers to take or accrue leave while they're absent from work and receiving workers' compensation only if it's permitted by the relevant state or territory workers' comp law. 

In December 2015 the Federal Government introduced the New Amendment Bill which contains six measures omitted from its Previous Amendment Bill, including a clause ensuring employees cannot accrue leave while they are absent on workers' compensation.

In accordance with the New Amendment Bill’s explanatory memorandum:

"In those jurisdictions where it is possible to accrue leave... employers incur an additional cost relative to other jurisdictions…"

"It appeared anomalous to the majority of the [2012] Fair Work Review Panel that employees in [some] jurisdictions may accrue annual leave while on workers' compensation but not under other jurisdictions…"

 "This amendment engages but does not limit human rights because the [National Employment Standards] continues to ensure that employees receive remuneration that provides for fair wages and a decent living." 

The New Amendment Bill also curtails union entry rights by, for example, repealing provisions that require employers or occupiers to facilitate transport and accommodation arrangements for permit holders exercising their rights in remote locations. 

The other four measures re-introduced through the Bill relate to annual leave loading, individual flexibility arrangements, transfer of business and the Fair Work Commission's administrative powers. 

Assistant Science Minister Karen Andrews said in her second reading that the six measures were needed for a fairer and more efficient workplace relations system, and the Government "intends to work constructively with the crossbench" to ensure their passage through Parliament. 

The New Amendment Bill was referred to the Committee (the Senate Education and the Employment Legislation Committee) on 3 December 2015. The report is due on 4 February 2016.


Anglican Care v NSW Nurses and Midwives'

Association [2015] FCAFC 81  

Thompson v Armstrong & Royse Pty Ltd (1950)

[1950] HCA 46  

Section 130(2) - Fair Work Act 2009  

Section 49 - Workers Compensation Act 1987  

Supplementary Explanatory Memorandum to

Work Choices Bill 2005  

Explanatory Memorandum to the New

Amendment Bill 2015  

Fair Work Amendment (Remaining 2014

Measures) Bill 2015


For further information, advise and/or assistance contact our Workplace Relations Team on(02) 8324 7500 alternatively email Simon Berry (Partner) on sberry@hilliardandberry.com.au or Andrea Willits (Senior Associate) on awillits@hilliardandberry.com.au.

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