An employee’s absence on workers compensation can create some issues for an employer, aside from rehabilitation and workers compensation premium considerations. Most enquiries from WorkplaceInfo subscribers relate either to the taking or the accrual of paid leave entitlements during workers compensation, or the interaction of workers compensation with other employment conditions. The introduction of the Fair Work Act 2009 may have changed the legal obligations with which an employer must now comply.
Taking and accrual of leave — NES
The Fair Work Act introduced the National Employment Standards (NES), which increased the number of different statutory employment conditions from those previously provided under the Australian Fair Pay and Conditions Standard. For the first time, federal workplace legislation specified uniform rules in relation to the taking, and accrual, of paid and unpaid leave. The types of paid and unpaid leave provided under the NES include annual leave, paid personal/carer’s/compassionate leave (including unpaid compassionate leave and unpaid carer’s leave), public holidays, community service leave (including paid jury service) and unpaid parental leave.
Section 130 of the Fair Work Act states that an employee is not entitled to take or accrue any leave or absence (whether paid or unpaid) under the NES during a period of absence due to personal illness or injury where the employee is receiving workers compensation payable under a Commonwealth, a state or a territory law relating to workers compensation. The Fair Work Act applies, subject to the relevant workers compensation law permitting the taking or accrual of leave, although no state or territory workers compensation law appears to permit this in the form referred to in the Fair Work Act.
The effect of s130 is to ‘switch off’ the leave accrual and taking rules under the NES for the period of the employee’s absence on workers compensation. It does not impact on the calculation of an employee’s service or continuous service, meaning service prior to and subsequent to the absence on workers compensation is taken into account when calculating an employee’s accrual of leave.
This means an employee cannot take or accrue annual leave or personal/carer’s leave, nor take a public holiday, any compassionate leave or community service leave (including jury service).
It should be noted that s130 of the Fair Work Act does not prevent an employee from taking unpaid parental leave during a compensation period.
For example, s49 of the NSW Workers Compensation Act 1987 permits the taking of annual leave, public holidays and long service leave during a period of workers compensation, but it does not permit the taking or accruing of these forms of paid leave where the employee is not otherwise entitled to such leave. Therefore, the Fair Work Act would still prohibit the taking and accruing of leave in New South Wales that is sourced from the NES.
The taking and accrual of long service leave is usually subject to the relevant state or territory long service leave legislation.
Long service leave
The taking and accrual of long service leave during an absence on workers compensation will depend on the relevant state or territory long service leave (or award-derived long service leave provision under the NES). This can differ depending on the jurisdiction. For example, under New South Wales and Queensland long service leave legislation, an employee continues to accrue long service leave during an absence on workers compensation; whereas, under Victorian legislation, an employee ceases to accrue long service leave when an absence from work exceeds 48 weeks in any year on account of illness or injury.
There is normally no requirement under the various statutes that prohibits an employee taking accrued long service leave during a period of workers compensation. Generally, long service leave legislation requires the employer to give the requisite amount of notice before sending the employee on long service leave, although in some jurisdictions this may be impracticable, (eg Queensland requires three months notice).
Rostered Days Off (RDOs)
Most modern awards allow an employee to work in excess of 38 hours in a particular week so as to accrue a credit of hours that achieves an average of 38 hours over the work cycle (and an average of weekly wages over the four weeks). The most common arrangement is working 152 ordinary hours over a four-week period, which represents 19 working days of eight hours each, with the twentieth day being an RDO. A modern award will usually specify those absences that are to be counted as if the employee had worked, for the purposes of accruing credit for an RDO.
Generally, a modern award provides that an RDO which falls due while an employee is absent on workers compensation is absorbed into the period of compensation. For example, the Manufacturing and Associated Industries and Occupations Award 2010 provides that the employee will accrue a credit for each day of absence from duty, or part day for a part day absence, on annual leave, long service leave, public holidays, paid personal/carer’s leave, workers compensation, paid compassionate leave, paid training leave or jury service. This provision usually appears in the ‘Payment of Wages’ clause of the award.
An employee who returns to partial duties as required by their rehabilitation program can take paid leave under the NES for the number of hours the employee is required to work. For example, an employee who works four hours as part of their rehabilitation program and receives workers compensation for the remaining four hours each day can take annual leave for the period the employee is working (ie four hours). In this example, the employee is unable to take a total of eight hours paid annual leave for that day because this would include a period the employee is receiving workers compensation.
Under the Superannuation Guarantee (SG), the employer must contribute 9% of an employee’s ordinary time earnings (OTE) to the employee’s superannuation fund. The Australian Tax Office has produced a checklist as a guide to what types of payments are included, or excluded, from an employee’s OTE, including workers compensation payments. The checklist reflects amendments made last year under an ATO superannuation guarantee ruling (SGR 2009/2).
Workers compensation payments, including top-up payments, where no work is performed by the employee are not included in an employee’s OTE for SG purposes.
Workers compensation payments, including top-up payments, where work is performed by the employee are to be included in the employee’s OTE for SG purposes.
Source: Paul Munro, IR Consultant.
Article sourced from Workplaceinfo, A daily Bureau service for HR & IR professionals. For a free 14 day trial, contact us on firstname.lastname@example.org or call Craig on 0450 747337.