Am I Entitled to Annual Leave and Long Service Leave Whilst on Workers Compensation in NSW?
Worker's Compensation
3 February 2026
In this guide, we break down everything you need to know about Annual Leave and Long Service Leave Whilst on Workers Compensation in NSW.
The short answer is yes, employees receiving workers compensation payments, even if they are off work, are entitled to accrue annual leave during their absence as well as long service leave.
The employer argued that an employee was not entitled to accrue annual leave whilst on workers compensation
Do you accrue long service leave while on workers compensation NSW?
Yes, you generally accrue both annual and long service leave while on workers compensation in NSW. This means that the time you spend off work recovering from a work-related injury continues to count towards your long service leave eligibility.
Such leave accrues whilst you remain employed. If you are terminated, then your entitlement to accrue long service leave ceases.
However, it’s important to note that specific details and exceptions might apply depending on your industry or individual circumstances.
Example: Annual leave on workers compensation
In a decision of the Federal Court in the matter of NSW Nurses and Midwives Association -v- Anglican Care (2014) FCCA2580 Justice Emmert made a decision in a case where the worker was receiving workers compensation for a period of 18 months due to a workplace injury and a dispute arose after employment was terminated as to whether or not the worker was entitled to be paid any annual leave entitlements.
The employer argued that an employee was not entitled to accrue annual leave whilst on workers compensation. Justice Emmert found that Section 130 of the Fair Work Act 2009 states that an employee is prevented from taking or accruing leave whilst they are absent from work due to illness or injury unless a relevant state compensation law permits the taking and accruing of leave.
Section 49 of the Workers Compensation Act 1987 (NSW) does allow for taking or accruing leave whilst on Workers Compensation. For those reasons Justice Emmert found that annual leave was accrued whilst receiving workers compensation payments, as long as you remain an employee. It is most likely that long service leave is also accrued.
However, where employment has been terminated then long service leave and annual leave ceases to accrue. Employees, therefore, can on being terminated receive payment of accrued annual leave and long service leave whilst they have been off work on workers compensation benefits.
It should be noted that an employer is legally entitled to terminate an employee six months after an injury if the employee has not returned to their pre-injury duties.
Thank you for reading our article. We hope it helped your understand some of the key questions regarding obtaining Annual Leave while on Workers Compensation in NSW. Should you have any further questions, please complete a free case assessment or find more information in our comprehensive Workers Compensation Claims Guide and FAQ guide.
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