Sick leave and ACC payments

What an employee is entitled to if they have an accident or injury that is covered by ACC.

If an employee has an accident or injury covered by the Accident Compensation Corporation (ACC) scheme, the following apply:

  • If an employee has a work-related or non-work related accident and gets weekly compensation, the employer can’t make the employee take time off as sick leave or as annual holidays.
  • If an employee is getting weekly compensation from ACC, the employer doesn’t have to pay the employee.
  • If the period of leave on ACC is more than five days, the employer and employee can agree that the employer will top up the ACC payment from 80 to 100% by using one day of the employee’s sick leave for every five days’ leave taken.

Non-work related accident

When the employee is taking leave for the first week of a non-work accident, they can use sick leave and/or annual leave if they have any.

Work-related accident

If an employee has a work-related accident, the employer has to pay “first week compensation” equivalent to 80% of the employees’ earnings and can’t make the employee take the time as sick leave or as annual leave.

If an employee is getting “first week compensation” for a work-related accident, an employer and employee can agree that the employer will top up the first week from 80 to 100% by using one day of the employee’s sick leave for every five days’ leave.

An employee's annual leave is calculated as if the employee were still working.

When the employee ends their job after a period of being on ACC, the employer needs to pay any outstanding annual leave in the final pay based on gross income. The “first week compensation” paid by the employer is included in gross income. ACC compensation payments are not earnings, and are not included in gross income.

Since annual leave is calculated at the higher of the average weekly earnings for the 12 months before termination or the ordinary weekly pay, if the employee has been unpaid by the employer for over a year the average weekly pay equals zero. The employer then needs to use the ordinary weekly pay, which is the amount the employee would receive for an ordinary working week. 

Many employees will still have an ordinary weekly pay even after being off work on ACC for a lengthy period, which is normally covered in the employment agreement. If there is nothing specified in the employment agreement, then the pattern of work and payment from when the employee was last working would decide what an ordinary weekly pay is for the employee. For example, an employee who works 40 hours a week at an hourly rate of $20 per hour would have an ordinary weekly pay of $800 despite being off work on ACC for over a year. 

If it is genuinely not possible to determine ordinary weekly pay (for example, an employee with variable and unpredictable hours of work), the four-week average formula is applied to calculate the ordinary weekly pay. Because this formula involves an average of the earnings in the four weeks prior to termination, for an employee who is off work for more than four weeks, this would equal zero. For these employees, although they will have an entitlement to their unused weeks of annual leave, those weeks will have no monetary value. 

Calculating annual holiday payment rates

Calculating final pay

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