How Annual Leave Works When You're on Workers Compensation in Victoria

Understanding the Interaction Between Annual Leave and Workers Compensation

In Victoria, workers who are injured on the job and receiving workers compensation can still accrue and use annual leave, but the rules differ from normal employment. While on a workers compensation claim, your employer must continue to pay you your normal wages for any approved annual leave, but the compensation payments you receive are usually paused during that period. The key is that annual leave cannot be used to replace compensation payments; it must be taken as genuine holiday time approved by the employer.

Employer Obligations While You're on Compensation

When an employee is injured and makes a claim to WorkSafe Victoria, the employer must continue to meet certain payroll duties. If the employee requests annual leave, the employer must:

• Accrue leave at the standard rate (usually 4 weeks per year for full‑time staff).
• Pay the employee their ordinary rate of pay for the leave days, just as if they were working.
• Ensure that workers compensation payments are suspended for the days the employee is on annual leave, because the employee is receiving their normal earnings.

If the employer fails to pay the leave correctly, the employee can lodge a claim with the Fair Work Ombudsman.

When Can You Take Annual Leave?

Annual leave can be taken at any time that both the employee and employer agree, but there are practical limits while a compensation claim is active:

• Medical clearance: The treating doctor must deem the employee fit for holiday, meaning the injury does not require ongoing treatment or rest.
• WorkSafe approval: In some cases, WorkSafe may need to confirm that taking leave will not affect the recovery or the claim's integrity.
• Employer consent: The employer can refuse leave if it would interfere with the employee's rehabilitation plan or operational needs.

Because the purpose of workers compensation is to replace lost earnings due to injury, taking leave that provides the same earnings is generally allowed, but it should not be used to "double‑dip" on income.

Pay Calculations: What You Receive During Leave

When you take annual leave while on workers compensation, the payment you receive is calculated as follows:

The employer does not need to add the workers compensation rate on top of your regular wages; the compensation scheme assumes you are being paid your normal earnings during leave.

Impact on Your Compensation Claim

Taking annual leave does not reset or extend the duration of your workers compensation claim, but it can affect the total amount you receive over the life of the claim because the weeks you are on leave are not counted as weeks of compensation. If you have a limited weekly benefit amount, the weeks you are on leave will simply be omitted from the compensation schedule.

It is important to keep accurate records of the dates you take leave and to inform both your employer and WorkSafe Victoria. Failure to report can lead to overpayments that may have to be repaid later.

Common Questions and Pitfalls

Can I use accrued sick leave instead of annual leave? Yes, sick leave can also be taken, but the same principle applies: you receive your normal pay, and compensation payments are paused.

What if my employer refuses my leave request? The employer must provide a valid business or medical reason. If you believe the refusal is unreasonable, you can seek advice from WorkSafe or the Fair Work Commission.

Will taking leave affect my return‑to‑work plan? Potentially. A return‑to‑work plan is designed to gradually increase duties. Unplanned leave may disrupt that schedule, so coordinate with your physiotherapist or doctor.

Understanding these rules helps you use your earned leave without jeopardising your compensation benefits or breaching workplace policies.