Do You Accrue Annual Leave While on Workers’ Compensation in NSW?
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Principal Lawyer and Director · Last updated 30 August 2026
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Key Takeaway: Yes. In NSW you continue to accrue annual leave while on workers’ compensation. Although the Fair Work Act 2009 generally stops leave accrual during a workers’ compensation absence, it makes an exception where state law allows it, and nothing in the NSW Workers Compensation Act 1987 prevents accrual. So your standard four weeks under the National Employment Standards keeps building.
Annual Leave on Workers’ Compensation: Quick Answers
If you’re on workers’ compensation in NSW, you might be wondering: Do you accrue annual leave while on workers’ compensation? Or even, Can I take annual leave while on workers’ compensation? The answer to both is: yes!
We know that understanding how annual leave and workers’ compensation interact under NSW law can be confusing. In this guide, we’ll break down your rights, employer obligations, and key legal insights to help you navigate your workers’ compensation and annual leave entitlements in NSW. Whether you’re seeking clarity on leave accrual or wondering whether you can take paid annual leave while receiving workers’ compensation, we’ve got the answers you need.
Understanding Workers’ Compensation and Annual Leave in NSW
When you’re injured at work and unable to do your job, life doesn’t just stop. The bills keep coming, responsibilities pile up, and you might start wondering: What happens to my employee benefits while I recover? Specifically, do I still accrue annual leave while on workers’ compensation in NSW?
The relationship between workers’ compensation and annual leave isn’t always straightforward. Many employees assume that because they’re off work, their entitlements are frozen—but that’s not necessarily the case in NSW. To truly understand your rights, let’s break it down.
What Is Workers’ Compensation?
Imagine you’re injured on the job—whether it’s a sudden accident or a repetitive strain injury that’s worsened over time. In NSW, you don’t have to face the financial burden alone. Workers’ compensation is a safety net designed to provide financial support while you recover.
Under the NSW Workers Compensation Scheme, if you’re injured at work, you may be entitled to:
✅ Weekly payments to replace lost wages
✅ Medical and rehabilitation expenses
✅ Lump sum compensation for permanent impairment
✅ Support to return to work when you’re ready
The system is there to ensure that your recovery comes first—without the stress of lost income. Read more about your entitlements after an injury at work here.
How Does Annual Leave Work Under NSW Employment Law?
Annual leave is an important workplace entitlement that gives employees paid time off to rest, recharge, and take a break from work. Whether it’s a family holiday or just time to unwind, annual leave ensures that workers can step away from their job without losing income.
Under the National Employment Standards (NES), full-time and part-time employees in NSW are entitled to:
✅ Four weeks (or 20 days) of paid annual leave per year.
✅ Additional leave for some shift workers, depending on their award or agreement.
✅ Accumulated leave that rolls over each year if unused.
Annual leave accrues gradually based on the ordinary hours worked by an employee. This means that for every week you work, a portion of leave is added to your balance—ensuring you build up enough time off over the course of the year.
But what if you’re unable to work due to a workplace injury? If you’re not working while you’re on workers’ compensation, does your annual leave stop accruing?
The good news is that in NSW, you continue to accrue annual leave while on workers’ compensation. Even while you’re off work recovering, your annual leave balance keeps growing, ensuring you don’t lose out on your entitlements.
Do You Accrue Annual Leave While on Workers’ Compensation in NSW?
If you’re still employed, but you’re not actively working while on workers’ compensation, you might be wondering: Does my annual leave still accrue while I’m off work recovering?
The answer is yes. In NSW, you continue to accrue annual leave while receiving workers’ compensation payments. Unlike in some other states where leave accrual stops, NSW law protects your entitlements, ensuring that your time off due to a work injury doesn’t cost you your well-earned leave.
But why does this happen? And are there any exceptions? Let’s take a deeper look.
What the Fair Work Act Says About Annual Leave and Workers’ Compensation
Generally, the Fair Work Act 2009 states that employees do not accrue annual leave while absent on workers’ compensation—unless state or territory laws say otherwise.
This is where NSW stands apart. There’s nothing in the NSW Workers Compensation Act 1987 that specifically prevents employees from accruing leave while receiving workers’ comp. Because of this, NSW workers continue to build up annual leave during their time off, even if they’re receiving benefits rather than working their usual hours.
This is great news for injured workers. It means that when you return to work, your annual leave balance will reflect the time you’ve been away, just as if you had been working.
Exceptions and Special Circumstances
While most employees in NSW do accrue annual leave while on workers’ compensation, there are some situations where different rules may apply:
✅ Enterprise Agreements or Awards: Some workplace agreements may have specific provisions that impact how leave accrues during workers’ comp. Always check your contract or award to know where you stand.
✅ If You’re on Partial Duties: If you return to work on reduced hours, you’ll accrue annual leave based on the hours you actually work, rather than your pre-injury schedule.
✅ Public Sector Employees: Certain public sector workers may have different leave entitlements under their specific employment agreements.
If you’re unsure about your entitlements, it’s important to review your employment contract or seek legal advice to fully understand your rights.
At Withstand Lawyers, our experienced workers’ compensation lawyers have spent decades helping injured workers secure their full benefits. We offer a free claim assessment to ensure you’re getting everything you’re entitled to after a workplace injury.
The best part? Our fees are covered by the Independent Review Office (IRO), so we can focus on maximising your work injury compensation without any out-of-pocket expenses.
Contact us today to know where you stand after a workplace injury.
Can You Take Annual Leave While Receiving Workers’ Compensation?
It’s common for employees to ask “Can I take annual leave while on workers’ compensation?The answer is yes. In NSW, you are entitled to take annual leave while on workers’ compensation—but there are some important factors to consider. While you continue to accrue annual leave during your time off, actually using it requires employer approval, may impact your workers’ compensation payments, and could involve medical clearance depending on your situation.
If you’re thinking about taking paid annual leave while on workers’ compensation, here’s what you need to know.
Employer Approval: Standard Leave Request Process Applies
Even though you’re on workers’ compensation, the normal annual leave request and approval process still applies. This means you must:
✅ Submit a leave request to your employer, just as you would if you were actively working.
✅ Wait for employer approval, which is subject to their usual policies and workforce needs.
✅ Ensure your leave aligns with your recovery plan, especially if you are undergoing treatment or rehabilitation.
Since annual leave is a workplace entitlement, your employer cannot unreasonably refuse your request. However, they do have discretion over when leave is granted, just like they would for any other employee.
Impact on Workers’ Compensation Payments
While taking annual leave while on workers’ compensation is allowed, it may affect your payments. Here’s how:
- Concurrent Payments: Workers’ compensation is designed to replace lost income. If you take paid annual leave, you’re receiving your normal wages for that period. As a result, your workers’ compensation payments may be paused for the duration of your leave.
- Notification Requirement: It’s important to notify your workers’ compensation insurer before taking leave. This ensures they can adjust your benefits accordingly and avoid any overpayments or complications.
While taking annual leave won’t affect your overall entitlement to workers’ compensation, it may mean a temporary adjustment to how you receive payments during that period.
Medical Clearance: Ensuring Your Leave Supports Your Recovery
Depending on your injury and the type of leave you plan to take, you may need medical clearance before your employer or insurer approves your request. This is particularly important if:
❌ You plan to travel, especially overseas, as this could affect your ability to attend medical appointments or continue rehabilitation.
❌ You intend to engage in activities that might impact your recovery, such as physically demanding trips or recreational activities.
Your treating doctor may need to confirm that taking leave won’t delay or hinder your recovery, ensuring that both you and your employer are aligned on what’s best for your health.
Financial and Workplace Considerations
Taking annual leave while on workers’ compensation also comes with financial and long-term employment implications:
- Taxation: Workers’ compensation payments are not taxable, but annual leave payments are taxed as regular income. This could affect your tax bracket.
- Leave Loading: Some employees receive annual leave loading (usually 17.5%) on top of their leave pay. Check your award or enterprise agreement to see if you’re entitled.
- Return-to-Work Planning: If you’re on a return-to-work plan, taking annual leave might delay your progress. It’s best to coordinate with your employer and doctor to ensure your leave fits into your long-term recovery goals.
What If My Annual Leave Is Not Accruing While on Workers’ Compensation?
If you’re on workers’ compensation in NSW, your annual leave should continue to accrue—but what if you notice that your leave balance isn’t increasing? This can be concerning, especially if you’re planning to take time off once you recover.
If your annual leave is not accruing while you’re on workers’ compensation, here’s what you can do:
1. Check Your Payslips and Leave Balance
Start by reviewing your payslips and leave records to see if leave accrual has stopped. Your annual leave should continue accumulating just as it would if you were actively working. If you’re not seeing any accrual, there may be an administrative error or a misunderstanding of your entitlements.
2. Speak to Your Employer
If your leave isn’t accruing, your first step should be to raise the issue with your employer or HR department. They may be unaware that in NSW, employees continue to accrue annual leave while on workers’ compensation.
3. Review Your Employment Agreement or Award
Certain awards or enterprise agreements may contain specific clauses about leave accrual during workers’ compensation. While NSW law allows it, your workplace agreement may impact how leave is calculated or recorded.
4. Seek Legal Advice
If you’re unsure whether you’re receiving your full entitlements while on workers’ compensation, speaking to an experienced compensation lawyer can help clarify your rights.
At Withstand Lawyers, our dedicated workers’ compensation lawyers are here to assist. We offer a free claim assessment, so you can understand your entitlements and take the right steps to protect them.
📞 Contact us today to get the expert guidance you need.
The Bottom Line
If your annual leave isn’t accruing while on workers’ compensation in NSW, don’t ignore it. You have the right to accumulate leave, and if your employer isn’t following the law, you may need to take further steps to protect your entitlements.
Can I Make a Total and Permanent Disability (TPD) Claim While on Workers’ Compensation?
Yes, if your work-related injury or condition prevents you from ever working in your previous role, you may be able to claim both Workers’ Compensation and a Total and Permanent Disability (TPD) payout through your superannuation.
Many workers assume they must choose between TPD and workers’ compensation, but they are separate claims.
- Workers’ Compensation – Covers medical expenses, lost wages, and rehabilitation costs for work-related injuries or illnesses. Payments may be ongoing, but they typically stop once you recover or reach maximum medical improvement.
- Total and Permanent Disability (TPD) Claim – A lump sum payment from your superannuation fund if you are permanently unable to work in your usual job or any job suited to your skills and experience. TPD claims are not limited to work-related injuries—any illness or injury that stops you from working may qualify.
Can You Cla
im Both Workers’ Compensation and TPD?
Yes, you can both receive Workers’ Compensation and make a TPD claim, as they are separate claims and one does not affect the other.
If your injury is stopping you from returning to your previous role or any other job suited to your experience, you may be eligible to make a TPD claim. Contact our team of TPD lawyers today for a free claim check and find out what you’re entitled to.
We work on a No Win, No Fee basis, so you never pay out of pocket to make a claim. Call us on 1800 952 898 or fill out the online form to see how much your claim could be worth.
How Withstand Lawyers Can Help With Your Workers’ Compensation Claim
Navigating a workers’ compensation claim in NSW or applying for a Total and Permanent Disability (TPD) payout can feel overwhelming. The process involves legal paperwork, medical assessments, and insurer negotiations, making it difficult to know if you’re getting the full compensation you’re entitled to.
At Withstand Lawyers, we have decades of experience in workers’ compensation claims and TPD claims, helping injured workers secure the financial support they deserve. Whether you’re unsure about your workers’ compensation entitlements or need guidance on making a TPD claim through your superannuation, we’re here to assist.
Annual Leave and Workers’ Compensation FAQ
Do you accrue annual leave while on workers’ compensation in NSW?
Yes. NSW workers continue to accrue annual leave while receiving workers’ compensation. The Fair Work Act 2009 generally stops accrual during such absences unless state law provides otherwise, and the NSW Workers Compensation Act 1987 contains nothing that prevents accrual. As a result, your standard four weeks of annual leave under the National Employment Standards keeps building while you recover.
Why does NSW differ from other states on leave accrual?
NSW stands apart because the Fair Work Act 2009 halts annual leave accrual on workers’ compensation only where no state or territory law says otherwise. Since the NSW Workers Compensation Act 1987 has no provision preventing accrual, NSW workers keep building their four weeks of annual leave even while receiving benefits rather than working their usual hours.
Can I take annual leave while receiving workers’ compensation?
Yes, you can take annual leave while on workers’ compensation in NSW, subject to three considerations. Taking the leave requires your employer’s approval, it may affect your weekly workers’ compensation payments, and depending on your situation it could require medical clearance. Meanwhile, you still accrue your standard four weeks of annual leave throughout the absence.
How much annual leave am I entitled to in NSW?
Under the National Employment Standards, full-time and part-time employees in NSW are entitled to four weeks, equal to 20 days, of paid annual leave each year, calculated pro rata for part-timers. Because the NSW Workers Compensation Act 1987 does not stop accrual, this entitlement keeps growing while you are on workers’ compensation.
What does the NSW Workers Compensation Scheme cover?
Under the NSW Workers Compensation Scheme, an injured worker may be entitled to weekly payments replacing lost wages, medical and rehabilitation expenses, lump sum compensation for permanent impairment, and support to return to work when ready. The scheme is designed so your recovery comes first without the stress of lost income after a workplace injury.
Will taking annual leave reduce my workers’ compensation payments?
It can. In NSW you may take annual leave while on workers’ compensation, but doing so requires employer approval and may impact your weekly workers’ compensation payments, and could involve medical clearance. Because rules interact in complex ways, it is worth getting advice before you apply, so your four weeks of accrued leave works in your favour.
Does the Fair Work Act stop annual leave accrual on workers’ comp?
The Fair Work Act 2009 states that employees generally do not accrue annual leave while absent on workers’ compensation, unless state or territory laws say otherwise. NSW is the exception: the NSW Workers Compensation Act 1987 contains no such restriction, so your four weeks of annual leave under the National Employment Standards keeps accruing.
How can a lawyer help with my NSW workers’ compensation claim?
Withstand Lawyers helps injured NSW workers confirm every entitlement, from weekly payments and medical expenses to lump sum compensation for permanent impairment. Our fees are covered by the Independent Review Office (IRO), so there are no out-of-pocket expenses. We work to maximise your work injury compensation. Call 1800 952 898 for a free claim check.
About the author
Issa Rabaya · Principal Lawyer and Director
✓ Admitted to the Supreme Court of NSW and High Court of Australia ✓ LLB ✓ IRO-approved ✓ Law Society of NSW
Acts for injured people in CTP, workers compensation, TPD and public liability claims.
Why Choose Withstand Lawyers for Your Workers’ Compensation Claim?
Being injured at work is stressful enough without worrying whether your leave and entitlements are safe. That is where Withstand Lawyers comes in. With decades of combined experience, Withstand Lawyers has helped countless injured NSW workers understand their rights and recover the compensation they deserve, leading on the most serious workplace injuries. We explain how your annual leave, weekly payments and lump sum entitlements fit together, handle the paperwork, and deal with insurers so you can focus on recovery. Because our fees are covered by the Independent Review Office, there are no out-of-pocket costs. Over $60 million recovered, 99% success rate, no win, no fee.
Call Withstand Lawyers on 1800 952 898 or fill out our online form for your free claim check today.
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