There is no single national answer. Whether you accrue annual leave or personal/carer’s leave while receiving workers’ compensation depends on the state or territory scheme that covers you — and in most jurisdictions annual leave accrues while sick leave does not.
The reason is section 130 of the Fair Work Act 2009. It switches the default off: an employee is not entitled to take or accrue leave during a period of workers’ compensation unless the applicable compensation law permits it. Eight schemes, eight different answers.
Key Takeaways
- Section 130 of the Fair Work Act 2009 blocks leave accrual during workers’ compensation unless the relevant compensation law permits it.
- Annual leave accrues in NSW, Qld, Tas, Vic, WA, SA and (since 9 June 2023) the ACT. It does not accrue in the NT.
- Personal/carer’s leave accrues only in Qld, SA and — since 1 July 2024 — WA.
- Long service leave is separate again and is governed by state LSL legislation, not the Fair Work Act.
- Anyone giving you a single national rule for this is wrong.
Why Section 130 Makes This State-Dependent
Section 130 of the Fair Work Act is titled “Restriction on taking or accruing leave or absence while receiving workers’ compensation”. Its structure matters:
- Subsection (1) removes the entitlement to take or accrue leave during a compensation period.
- Subsection (2) restores it where the taking or accruing of leave is permitted by a compensation law.
Workers’ compensation is state and territory legislation, so subsection (2) hands the answer to eight separate statutes plus the Commonwealth Comcare scheme. Some of them say something explicit; some are silent, and silence has been interpreted as “not permitted”.
Queensland is the clearest example of an explicit permission: section 119A of the Workers’ Compensation and Rehabilitation Act 2003 (Qld) states that a compensation entitlement does not restrict the taking or accrual of annual leave, sick leave or long service leave.
Victoria is the clearest example of the opposite reasoning. In 2017 the Fair Work Commission held that Victoria’s compensation legislation permits the accrual of annual leave and long service leave — but that personal leave was deliberately left out of the relevant provisions, so it does not accrue. Same state, two different answers depending on the leave type.
State-by-State: Does Leave Accrue on Workers’ Compensation?
This table reflects the Fair Work Ombudsman’s published position on annual leave and sick leave during workers’ compensation. Check it against your current scheme before acting — these provisions do change, and two of them changed recently.
| Jurisdiction | Annual leave accrues? | Personal/carer’s leave accrues? | Notes |
|---|---|---|---|
| NSW | Yes | No | Sick leave can be taken during compensation, with top-up where sick pay exceeds the compensation rate |
| Victoria | Yes | No | Personal leave was found to be intentionally excluded from the permitting provisions |
| Queensland | Yes | Yes | Explicitly permitted by s 119A of the Qld Act |
| South Australia | Yes | Yes | Special rule at 52 weeks total incapacity — see below |
| Western Australia | Yes | Yes, from 1 July 2024 | Changed under WA’s new compensation scheme |
| Tasmania | Yes | No | Annual leave can be taken, but Tasmania does not pay both entitlements at once |
| ACT | Yes, from 9 June 2023 | No | No accrual for compensation periods before that date |
| Northern Territory | No | No | Neither accrual nor taking of leave is permitted |
| Commonwealth (Comcare) | Yes, for 45 weeks only | Yes, for 45 weeks only | Leave generally cannot be taken during compensation |
Two entries deserve their own explanation.
South Australia’s 52-week rule
In South Australia annual leave accrues normally, and it can be taken or paid out. But once an employee has been totally incapacitated on workers’ compensation for 52 weeks or more, their accumulated annual leave is treated as having been taken and paid for by the compensation payments, and they cannot then take it. Annual leave loading continues to be paid.
This is the provision most likely to produce a surprise on termination — an employee expecting a payout of an accrued balance that has already been notionally discharged.
Western Australia’s 2024 change
WA moved from “no personal leave accrual” to “personal leave accrues if otherwise entitled” on 1 July 2024. Any compensation period straddling that date needs to be split. If your payroll rules were written before mid-2024 and have not been reviewed, WA is the first place to look.
Can You Take Leave While on Workers’ Compensation?
Accruing and taking are separate questions, and the answers do not always match.
- Annual leave can be taken in NSW, Qld, Tas, Vic, WA and SA, and in the ACT for periods from 9 June 2023. It cannot be taken in the NT, and generally cannot be taken by Commonwealth employees.
- Most schemes allow compensation payments and annual leave payments to run at the same time. Tasmania is the exception.
- Sick leave can only be taken during a compensation period in NSW and Queensland. NSW permits a top-up where the sick leave payment exceeds the compensation rate.
- In South Australia, employees totally incapacitated for 52 weeks or more cannot take annual leave, for the reason set out above.
Employees often want to take annual leave during a long compensation absence to top their income up to full pay. Whether that is possible, and whether it costs them the leave, is a jurisdiction question — not a policy question you can decide centrally.
Returning on Reduced Hours
Partial return to work is the most common real-world scenario and the easiest to get wrong.
An employee back on reduced hours while still receiving compensation accrues leave on the hours actually worked, in the ordinary way. Whether they also accrue on the hours they are still absent depends on the same state rules in the table above.
A worked example. Sam is a full-time employee in Victoria, normally 38 hours a week, returning at 15 hours a week while on weekly payments.
- Annual leave: accrues on the 15 worked hours and on the 23 absent hours, because Victoria permits accrual during compensation. Sam accrues at the full-time rate.
- Personal/carer’s leave: accrues on the 15 worked hours only, because Victoria does not permit accrual during compensation. Sam accrues roughly 39% of the normal rate.
Run that same case in Queensland and both leave types accrue in full. Run it in the Northern Territory and neither accrues beyond the hours worked. This is why a single national accrual rule in your payroll configuration will silently underpay some employees and overpay others.
What This Means for You
- Identify the scheme, not the office. Coverage follows the applicable workers’ compensation law, which for multi-state employers may differ from where your payroll team sits.
- Configure accrual per jurisdiction and per leave type. The commonest error is one global switch for “leave accrual during workers’ comp”.
- Diarise the transition dates. WA (1 July 2024) and the ACT (9 June 2023) both changed, and compensation periods spanning those dates must be split.
- Track long service leave separately. LSL is governed by state legislation with its own service and continuity rules — see long service leave in Australia state by state.
- Check the balance before termination. What is payable on exit depends on what lawfully accrued, and in SA, on whether the 52-week rule has already discharged it. Our guide to leave payouts on termination covers the rest.
For the underlying entitlement and how it accrues in ordinary circumstances, see personal leave, sick leave and carer’s leave in Australia.
Leave Balance supports different accrual rules per employee group and per leave type, so a Queensland employee and a Northern Territory employee on the same compensation scenario end up with the balances their own jurisdiction actually gives them.
leave emails? Track your employee's leave with Leave Balance
This article is general information about Australian workplace entitlements, not legal advice. Workers’ compensation rules vary by state and territory and change over time — contact your state or territory workers’ compensation regulator, or the Fair Work Ombudsman, for advice about your situation.