The following rules apply in relation to the ACC scheme:
- When the employee is taking leave for the first week of a non-work related accident, sick leave may be used.
- If an employee has a work-related accident, the employer has to pay “first week compensation” (see below) and cannot require the employee to take that time off as sick leave.
- If an employee is receiving “first week compensation” for a work-related accident, an employer and employee can agree that the employer will top up the “first week compensation” payment from 80% to 100% by reducing the employee’s sick leave entitlement by one day for each five days’ leave taken.
- If an employee has a work-related or non-work-related accident and remains on weekly compensation, the employer cannot require the employee to take time off as sick leave.
- If an employee is receiving weekly compensation from ACC, the employer has no obligation to pay the employee.
- Where the period of leave on ACC is in excess of five days (for either workplace or non-work accidents), the employer and employee can agree that the employer will top up the ACC payment from 80% to 100% by reducing the employee’s sick leave entitlement by one day for each five days’ leave taken.
To pay an employee Sick Leave for either the first week of a non-work related accident, or for topping up their ACC payments by 1 sick day per week, you can use Leave Requests to record the Sick Leave.
For the 1 day per week top up which doesn't necessarily relate to taking a particular day off, you can add the Sick Leave pay code directly to their pay if preferred. For employees working less than 5 days per week, the Sick Leave top up should be 20% of their regular earnings.
First Week Compensation
To pay the employee for "first week compensation" at 80% of their normal pay rate you'll need to add a new Pay Item.
Under Manage > Pay Items > Earnings create a new Other Earnings pay item. Name the pay item, set the Rate Multiplier to 0.8, and select Replaces Salary, as shown here:
Once you've created the pay item you can add this directly into an employee's draft pay.
The rate will automatically be set to 80% of their normal pay rate. The quantity should be set to the hours the employee would have worked that week.
The Accident Compensation Act says that the week should be paid out at the average of what the employee earned the seven days prior to the injury and what they would have earned in the seven days after the injury. Our advice from ACC is that it is also acceptable to use the average from the previous four weeks (i.e. the Ordinary Pay Rate used for annual leave). Either of these methods can be used to determine how many hours should be specified.
For more information about what to do when an employee is injured see the ACC website.