“Does annual leave accrue when an employee is on workers’ compensation?”

By our guest blogger, Danny King  - Principal of Danny King Legal

Each employment relationship is different, and may be subject to multiple pieces of legislation and other industrial instruments that interact with each other. Finding answers to very specific employment law questions is not always an easy task, and the laws in this area are dynamic. Care needs to be taken as even seemingly simple questions can lead to surprising outcomes. Anglican Care recently learnt this the hard way.

1. What is the law?
The Fair Work Act 2009 provides the following:
S 130(1) – Restriction on taking or accruing leave or absence while receiving workers’ compensation:
“an employee is not entitled to take or accrue any [annual] leave or absence (whether paid or unpaid) under this Part during a period (a compensation period) when the employee is absent from work because of personal illness, or 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.”

In NSW, that “compensation law” is the Workers Compensation Act 1987, and, until recently, it was considered by most practitioners that the NSW Act did not permit the accrual of annual leave whilst on workers’ compensation. However, the recent Federal Circuit Court decision of NSW Nurses and Midwives’ Association v Anglican Care [2014] found that employees who are on workers’ compensation leave in NSW are entitled to accrue annual leave. This decision has caused many annual leave balances to be adjusted upwards - in some cases by a very significant degree.
Typically employers will take out workers’ compensation insurance which, once all paid sick leave has been exhausted, will cover the remaining time taken. Employers now need to be mindful that these periods of workers’ compensation do, in fact, come with a cost in the form of annual leave accrual. Importantly, this can cause a significant increase in termination pay outs for those employees who have had lengthy absences on workers’ compensation. Where a Modern Award provides for annual leave loading to be paid out open termination, the cost of such accruals to employers can increase by 17.5%.

2. Watch this space
With each new government, industrial relations are placed under a new spotlight – and the Abbott government is no exception.
The Coalition’s Fair Work Amendment Bill 2014, which was passed by the House of Representatives on 27 August 2014, includes an amendment that prevents employees from accruing annual leave whilst receiving workers’ compensation. Consequently, if the Senate passes the Amendment Bill then the effect of the decision in NSW Nurses and Midwives Association v Anglican Care will be reversed, and many employers with long-term workers compensation recipients can breathe a sigh of relief.
In the interim, employers in NSW should be aware that, when employees are on compensation leave, their annual leave continues to accrue.

3. Further advice and guidance
Employment law is a complex field that is constantly subject to change. Entitlements can be given or taken away, often without proper notice to the general public, and employers can be caught out even when they have previously had good advice on their obligations.
Danny King Legal is an employment law firm, and we frequently advise clients on all aspects of the complex relationship and recruiting obligations between employers and employees. Get in touch to discuss your situation, get advice on how to get the most out of your investment in wages, and minimise your exposure to employee claims.

Danny King Legal

T: +61 280 680 941
E: hello@dannykinglegal.com

Employers and Emergency Events - A Guide for Employers affected by emergency measures

Recent events in Sydney have been devastating for us all. Alongside the tragedy, fear, and remarkable resilience of the human spirit, comes the economic reality of the fall-out. When events occur that trigger emergency measures – such as acts of terrorism, extreme violence, or natural disasters – many businesses are impacted by the emergency measures put in place to deal with the crisis and its consequences.

Our own personal experience has prompted us to address the question: what happens to my employees? Our office was evacuated shortly after the Martin Place siege began – but what happens next? We were faced with the challenge of how to handle our own employment entitlements and responsibilities, in an uncertain physical space. 

So the key question for employers (like me) is: what am I supposed to do in this situation?

If you are wondering the same thing, in the community spirit of banding together, we are sharing our findings.

Safety

The immediate safety of your staff must always be the primary concern, and you should ensure that you have emergency management procedures in place. You should make sure every member of staff is aware of who they need to contact, where the meeting area is, who is responsible for ensuring that everyone is accounted for - that sort of thing. Once the urgent matters are addressed, care should be taken to support the emotional reaction to very upsetting situations. Make time to listen to your staff and seek out help for those in distress.

Employment Entitlements during Emergency Events

Employers faced with a situation where they cannot continue to work normally, or who have employees who cannot be usefully employed, may have several options to choose from, including:
Inviting employees to take paid leave (e.g. annual leave) or, where the applicable award or agreement allows for it, instructing employees to take paid leave;
Re-directing employees to other work sites or offices where possible;
Organising flexible work arrangements, such as working from home; or
Standing down an employee if authorised to do so under the applicable award, or if the requirements under the Fair Work Act are met. 

Standing down employees (without pay)

Employers should first look to the relevant Modern Award, as some awards contain provisions for taking leave or standing down in emergencies. Similarly, Enterprise Agreements and employment contracts may contain specific provisions concerning stand down.

We note that many awards do not have a standing down provision, including: the Clerks - Private Sector Award 2010; Legal Services Award 2010; Live Performance Award 2010; Broadcasting and Recorded Entertainment Award 2010; Graphic Arts, Printing and Publishing Award 2010; and the General Retail Industry Award 2010.

Where employees are not covered by an award or agreement, then s524 of the Fair Work Act will apply. The critical element of this section is that the employee “cannot be usefully employed”. In emergency events, the most applicable circumstance is detailed by s524 (1) (c) – namely, that the cause of the stoppage of work is one “for which the employer cannot reasonably be held responsible.”

Other Entitlements

Following an emergency event, employers should also keep in mind that employees may be entitled to seek other forms of leave, including:
Personal/Carer’s Leave if the employee suffers injury or illness or needs to care for someone who is consequently sick, injured or has been affected by an unexpected emergency – note that this includes stress related illnesses;
Community Service Leave if the employee is part of a complying community or emergency service initiative; and
Compassionate Leave if someone close to the employee has consequently passed away. 

In general, the best approach for employers to take when faced with distressing events is to communicate with their employees. Ask employees for their input and together find the most suitable way to cope with the situation and move forward.

First points of reference for Employers:

• Fair Work Commission Website
• Fair Work Commission Awards List
• National Employment Standards
• Danny King Legal

• Danny King Legal
  T: +61 280 680 941
  E: hello@dannykinglegal.com