Understanding the Impact of WorkCover on Annual Leave in Victoria

A common question asked by our clients is whether they can accrue annual leave while off work and in receipt of WorkCover payments. For employees in Victoria, navigating the balance between WorkCover entitlements and annual leave can be complex. WorkCover provides financial and medical support to workers who suffer from a work-related injury or illness, but it also affects how annual leave is accrued, taken, and paid out.

Many employees wonder: Do I still accrue annual leave while on WorkCover? Can I take annual leave while receiving compensation payments? What happens if my employment is terminated? The answers depend on factors such as whether the worker is still performing duties, the terms of their employment contract, and the specific laws governing workers’ compensation.

This article explores how WorkCover impacts annual leave entitlements in Victoria, covering leave accrual, taking leave during WorkCover, payouts on termination, and key legal considerations. Understanding these rights can help employees make informed decisions about their leave while recovering from a workplace injury.

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Accrual of Annual Leave While on WorkCover

The accrual of annual leave while receiving WorkCover payments depends on whether the employee is still working:

(a) If You Are Working (Full or Reduced Hours)

1. • If you are on modified duties or reduced hours as part of a return-to-work plan, you will continue to accrue annual leave.
   • This is because you are still classified as “at work” for the hours you actually perform work.

(b) If You Are Not Working at All

• • Some awards, agreements and contracts do allow you to accrue annual leave.
  • This is because annual leave generally accrues based on time spent working.

Key Point

• If you are on unpaid WorkCover leave, some employees do continue to accrue.

Taking Annual Leave While on WorkCover

Employees can request to take annual leave while receiving WorkCover payments. However, this has implications:

If You Are Working (Full or Reduced Hours)

1. • If you take annual leave, you will typically receive your normal annual leave pay instead of WorkCover payments for that period.
   •  In some cases, employees may be able to receive both annual leave pay and partial WorkCover payments if they are on a partial return-to-work arrangement.

Example

An employee receiving WorkCover at 80% of their pre-injury wage may choose to take a week of annual leave. They will be paid their full normal wage from their annual leave balance and their WorkCover Payments.

Payout of Annual Leave on Termination

Employees can request to take annual leave while receiving WorkCover payments. However, this has implications:

• For the first 52 weeks of a WorkCover claim, an employer has a legal obligation to offer suitable duties to the employee, and they cannot terminate employment solely due to the injury or WorkCover claim. 
• However, if an employee’s employment is terminated while they are on WorkCover, due to valid reasons unrelated to the injury or WorkCover claim (such as redundancy or misconduct), they are entitled to a payout of any unused annual leave.
• This is the same as for any other employee, meaning the leave must be paid out at the employee’s full ordinary rate.
• You can also receive a redundancy whilst on WorkCover and it does not affect your ongoing rights to WorkCover.

Superannuation and Long Service Leave

• Superannuation is not paid on WorkCover payments (unless required by an award or agreement) until you have been on WorkCover for one year.
• Long service leave may still accrue while on WorkCover, depending on the circumstances and length of absence.

Summary of WorkCover & Annual Leave in Victoria

Need Specific Advice?

Your exact rights can depend on your employment contract, award, or enterprise agreement.  Should you have any queries relating to your leave entitlements when relying on WorkCover, please do not hesitate to contact our experienced team of solicitors for personalised advice.