THE Federal Circuit Court has clarified that employees on leave with worker’s compensation are entitled to accrue annual leave as part of ‘continuous service’, after a former sonographer claimed more than $25,000 in entitlements at the end of his employment.

Following an injury sustained during the course of employment, the sonographer, who then worked for Medical Imaging Queensland, took leave for a period of two years on worker’s compensation payments, after which his employment ended.

In calculating his entitlements for untaken annual leave, the worker argued that annual leave accrued during his time off should be calculated as part of the final sum to be paid by the employer.

However, the organisation contested the claim, arguing the two-year period of leave was encompassed under section 22 of the Fair Work Act 2009, dealing with the unpaid leave as a period of service.

Specifically, the organisation argued the employee was on ‘unpaid authorised leave’ and therefore not entitled to an annual leave payout as Queensland WorkCover was responsible for paying the worker’s wages during the period.

To determine an outcome, Judge Jarrett of the Federal Circuit Court referred to two conflicting cases decided previously.

In Webster v Tony and Guy Port Melbourne, Fair Work Australia (now Fair Work Commission) ruled an employee was not entitled to seek compensation for unfair dismissal as he was not found to have served under the employer for a period of at least 12 months.

The service period was interrupted when the employee was paid by the Transport Accident Commission following an injury sustained in an accident unrelated to his employment.

However, in Workpac v Bambach, a Fair Work Australia Full Bench ruled the employee’s period of services was not interrupted by leave on worker’s compensation because it did not constitute ‘unpaid leave’ under section 22 of the Fair Work Act.

Judge Jarrett said the element of whether the company was responsible for payment of compensation was relevant.

“In Webster, the employee was not entitled to any form of remuneration from his employer during his period of leave – his entitlement to payments came from the relevant traffic accident legislation and was unconnected with his employment. His receipt of entitlements under that scheme was not dependent upon him being an employee,” Judge Jarrett stated.

“In Bambach, his employer was obliged to remunerate the injured worker during his absence from work in accordance with the Workers Compensation Act 1987 (NSW).

“What is important is the existence of an obligation on the employer to pay the employee whilst he or she is absent.”

On grounds that the sonographer had been receiving compensation payments as a result of a workplace-related injury, Judge Jarrett ordered Medical Imaging Queensland to pay the employee an annual leave payout of $25,132.32, including interest.

Read the full decision here.

Implications for Employers

While influenced by state-based legislation regarding compensation, this case is significant for resource industry employers as it clarifies that workers on leave with compensation following a work-related injury may be entitled to accrue annual leave concurrently.

This provision means employees at the end of their employment period may be entitled to a payment encompassing accrued annual leave, even if their period of service was interrupted by absence caused by workplace injury.

Following from Judge Jarrett’s reference to former Fair Work cases, AMMA members are also reminded that a period of service may not be interrupted by absence if payment to the employee was in the way of compensation for a work-related injury.

For further information, advice and guidance about how this decision affects your organisation, contact your local AMMA office and speak to one of our workplace relations consultants.