Workers comp resignation: are entitlements due?

Q&A

Workers comp resignation: are entitlements due?

An employee who is absent on workers compensation has resigned. What entitlements are due?

An employee who is absent on workers compensation has resigned. What entitlements are due?

This question was recently sent to our Ask an Expert service.

Q An employee who is absent on workers compensation has tendered his resignation by giving the company five weeks’ notice. He has been employed with the company for about seven years and has been on on workers compensation for five months. What entitlements, if any, is the employee to be paid on the date of termination and has any leave accrued during his five-month absence on workers compensation? He is employed in Victoria.

A The are no specific additional entitlements that apply because an employee resigns while on workers compensation. The entitlements would generally relate to payment of accrued leave.

Although the person is no longer employed by the company, the employer should monitor the employee’s post-employment rehabilitation under workers compensation as future payments will continue to affect the company’s workers compensation premium.

Entitlements


The employee would be entitled to the following payments on termination:

Annual leave

Under the National Employment Standards (NES) (s90(2)), if the employment ends and the employee has untaken paid annual leave, the employer must pay the employee the amount that would have been payable to the employee had the employee taken that period of leave. The employee is to be paid at the base rate of pay (unless otherwise provided by the applicable award or agreement) and would include any annual leave loading.

As the employee has provided the appropriate period of notice of termination there would be no withholding of monies under the applicable award or agreement. The base rate of pay is the ordinary rate of pay under the employee’s contract of employment – it is not the level of weekly compensation payments currently being received by the employee from the workers compensation insurer.

With respect to accrual of annual leave, the Fair Work Act (FWAct) (s130) states that an employee is not entitled to take or accrue any annual leave during  a period when the employee is absent from work because of personal illness or injury, for which the employee is receiving workers compensation, unless provided otherwise by the relevant Commonwealth, state or territory workers compensation law.

The Workplace Injury Rehabilitation and Compensation Act 2013 [Vic] does not provide otherwise to the FWAct. Consequently the employee has not accrued annual leave during the period absent on workers compensation. The absence does not break an employee’s service with the employer, meaning service prior to the absence on workers compensation is taken into account when calculating an employee’s accrual of leave.

Long service leave

In this case, the employee’s long service leave entitlements are regulated by the Long Service Leave Act 1992 [Vic].

On the day employment ends, an employee with at least seven years' continuous service with the employer is entitled to receive payment for any untaken long service leave. This will apply whether the employee has resigned, been terminated by the employer, been made redundant, or has died. An employee ceasing work with at least seven years continuous employment is entitled to be paid long service leave at the standard accrual rate of one week for each 60 weeks of continuous employment, regardless of the reason for termination.

If an employee is receiving WorkCover benefits and returns to work on a return to work plan, the employee’s long service leave entitlement will be calculated on either their pre-injury pay rate or their pay rate at the time the leave is taken, whichever is the greater. This also applies where an employee has not yet returned to work but wishes to take leave, or the employee’s employment is ended by termination or resignation.

With respect to the accrual of long service leave, any absence from work of not more than 48 weeks in any year on account of illness or injury is to be counted as part of the period of employment. Any absence for that reason in excess of 48 weeks is not to be counted. Illness or injury leave includes a WorkCover absence.

In the case of other state and territory jurisdictions, an employee with seven years' continuous service whose reason for resignation is due to illness or incapacity would usually be entitled to pro rata payment of long service leave on termination. Reference should be made to the relevant state or territory long service leave legislation to determine an employee’s entitlement in this circumstance.

Accident pay

The Fair Work Commission (FWC) deleted the accident pay clause from all modern awards (other than the Black Coal Mining Industry Award) effective on and from 1 January 2015. However, there are a number of claims before the Fair Work Commission which attempt to introduce new accident pay clauses in many awards.

While it is not relevant to the above case, accident pay is an employment condition that may still be provided in an enterprise agreement. Accident pay provides for a ‘make-up’ payment which represents the difference between the amount of workers compensation paid by the insurer (usually the award rate) and the ‘actual’ rate of pay, including any over award payment, applicable to the employee who is absent from work on workers compensation.

Accident pay may still be payable to an employee even where the employee is no longer employed by the employer. The agreement would provide a maximum period over which accident pay is payable, usually 26 weeks, but some awards may provide a longer period, e.g. 39 weeks or 52 weeks.

The payment of accident pay is not dependant on the employee’s continued employment with the employer, only while the employee is receiving workers compensation up to the maximum prescribed period.

Need more help with people management?

Australian Business Consulting and Solutions has a dedicated team of HR experts who can assist you with your specific people management issues and problems. If you would like a free and obligation-free initial assessment of what you require in terms of professional assistance, you can obtain more information from our website.
Post details