Will your annual leave still accumulate while you’re off and receiving income protection?

Will your annual leave still accumulate while you’re off and receiving income protection?

An employee may receive income protection payments from a superannuation fund or insurer if he or she is absent from work due to illness or injury. In this absence, will the employee’s annual leave, personal/carer’s leave, and long service leave still accumulate?

Fair Work Act 2009

Under the Fair Work Act 2009, employees receiving workers’ compensation payments and absent from work are not entitled to take or accrue paid leaves such as annual leave and personal leave. Under section 130, workers are exempt from this rule if their workers’ compensation scheme permits them to do so.

In accordance with the NES, an employee is entitled to receive paid annual leave and paid personal/carer’s leave during those periods that count as “service” and “continuous service”. Section 22 of the Act defines those terms to include all employment other than:

  • When an employee is absent from work for a span of time contrary to an employer’s direction, such as when he or she abandons employment, engages in industrial action, etc.
  • A period of unpaid leave (e.g., a parent’s unpaid leave or a carer’s unpaid leave) does not count as “service” unless it is community service leave or a stand down.
  • An unpaid authorised absence(for example, an employer-granted leave without pay or an employee-granted absence that is unpaid due to health issues.)

As far as accruing annual leave and personal/carer’s leave is concerned, an employee receiving income protection policy payments would be considered to be on “unpaid leave” or an “unauthorised absence”. Unlike workers’ compensation, an employer does not have any legal obligation to provide income protection insurance.

Because the employee was unable to receive payments from the employer for accrued leave during the absence, paid annual leave and paid personal/carer’s leave would not accrue.

Long-Term Disability Leave

A state’s or territory’s long service leave law determines whether long service leave is accrued during an employee’s illness or injury absence. To determine the specific provisions for long service leave in a state or territory, it is necessary to check the relevant legislation for that state or territory.

For instance, in New South Wales, long service leave is accrued by employees absent from work due to illness or injury. In other jurisdictions, long service leave laws also permit employees to accrue long service leave even in these circumstances, though there may be a cap on how much can be accrued.

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Matthew G. Collins