Understanding ACC and Work-Related Injuries
New Zealand operates a no-fault comprehensive injury prevention and recovery scheme administered by the Accident Compensation Corporation (ACC). This scheme covers all New Zealand citizens and residents, as well as visitors, who suffer a personal injury, regardless of how or where it occurred [Source: Accident Compensation Act 2001, s 3(1)]. For work-related injuries, ACC provides support and financial assistance, including contributions towards lost earnings. A "work-related personal injury" is defined as a personal injury that arises out of and in the course of employment [Source: Accident Compensation Act 2001, s 26(1)].
Employer's Obligation: First Week Payment
When an employee is incapacitated (unable to work) due to a work-related personal injury and would normally be working, their employer is responsible for making payments for the first week of incapacity [Source: Accident Compensation Act 2001, s 105(1)]. This payment is commonly referred to as the "first week payment" or "first week compensation."
The amount payable by the employer for this first week is the employee's ordinary weekly pay or average weekly earnings, whichever is higher, for that period [Source: Accident Compensation Act 2001, s 105(2)]. This payment is distinct from sick leave entitlements.
ACC Weekly Compensation
After the first week of incapacity, if an employee is still unable to work due to a work-related personal injury, they may be entitled to "weekly compensation" from ACC [Source: Accident Compensation Act 2001, s 103(1), s 104(1)]. Weekly compensation is designed to contribute to an injured person's lost earnings.
Weekly compensation is generally calculated at 80% of the employee's average weekly earnings before the injury [Source: Accident Compensation Act 2001, s 106(1)]. While ACC provides 80% of earnings, there is no general legal requirement for employers to "top up" this payment to 100% of an employee's pre-injury earnings, unless specifically agreed upon in an employment agreement or workplace policy [Source: Accident Compensation Act 2001 does not mandate employer top-ups; this is a matter of contractual agreement].
Interaction with Leave Entitlements
Sick Leave
An employee cannot simultaneously claim sick leave for a period during which they are receiving weekly compensation from ACC for the same injury, as sick leave entitlements are intended to compensate for earnings lost due to illness or injury not otherwise covered [Source: Holidays Act 2003, s 28(1) outlines sick leave entitlements]. However, an employee may, by agreement with their employer, use available sick leave to supplement their ACC weekly compensation payment, effectively topping up their earnings from 80% to 100%.
Annual Leave
Similarly, an employee cannot claim annual leave for a period during which they are receiving weekly compensation from ACC for the same injury [Source: Holidays Act 2003, s 20(1) outlines annual leave entitlements]. An employee may, by agreement with their employer, use annual leave to supplement their ACC weekly compensation.
Accrual of Leave while on ACC
For up to 12 months while an employee is receiving weekly compensation for a work-related personal injury, their entitlements to annual leave and sick leave continue to accrue as if they were working normally [Source: Holidays Act 2003, s 16(1)(e) for annual leave; Holidays Act 2003, s 65(1)(e) for sick leave]. This ensures that an employee's leave balances are not negatively impacted during their recovery period for a significant duration.
Employment Relationship and Good Faith
The Employment Relations Act 2000 requires employers and employees to deal with each other in "good faith" [Source: Employment Relations Act 2000, s 4]. "Good faith" involves actively and constructively engaging with each other, being responsive, and not misleading or deceiving each other [Source: Employment Relations Act 2000, s 4(1A)].
When an employee sustains a work-related injury, the employer's good faith obligations typically include maintaining communication, considering suitable alternative duties, and facilitating a return to work where possible and appropriate [Source: Employment Relations Act 2000, s 4(1A) principles, interpreted through case law and common employment practice]. The employment agreement remains in force while an employee is on ACC, subject to its terms and the general principles of the Employment Relations Act 2000 [Source: Employment Relations Act 2000, s 60 (nature of employment agreements)]. An employer cannot dismiss an employee solely because they have a work-related injury, as this could be considered an unjustified dismissal, particularly if the employee can perform the job or suitable alternative work with reasonable accommodations [Source: Employment Relations Act 2000, s 103A(2) defines unjustified dismissal, which includes dismissals without substantive justification or fair process].
When to Seek Independent Legal Advice
Individuals requiring specific guidance regarding their work-related injury, ACC entitlements, or employment rights should consult with an employment lawyer or seek assistance from Community Law Centres for free advice.
Key Resources
- ACC Website
- Employment New Zealand
- Legislation New Zealand (for relevant Acts like Accident Compensation Act 2001, Employment Relations Act 2000, Holidays Act 2003)
- Community Law Centres