Injured workers: paying first week compensation

by The Findlaw Team

If an employee is injured at work and is unable to work as a result, their employer (not ACC) is responsible for paying them during their first week (or less) off work on accident leave.
This article gives an overview of the employer’s obligations to pay first week compensation under the Accident Compensation Act 2001, with some examples of how to calculate the amount of pay owed to the employee.

Legal duty to pay first week compensation

The Accident Compensation Act 2001 makes employers of employees who are injured while at work liable to pay the employee compensation for the first week of incapacity. Employees have a right to receive compensation from their employer for the loss of earnings suffered during the first week of incapacity, in respect of a:

  • Work-related personal injury; or
  • Work-related personal injury that is a motor vehicle injury.

The employer in whose employment the claimant suffered the injury is obliged to pay all the first week compensation to which the claimant is entitled. This means that if the claimant had more than one job, and suffered a loss of earnings in all their jobs in the first week, the employer in whose employment the claimant suffered the injury will be responsible to pay all of the first week compensation.

Employer can require medical evidence

Before paying the first week compensation, the employer may require the employee to meet reasonable requirements, such as producing a certificate from a registered health professional nominated and paid for by the employer.

Amount of compensation

The employer must pay the injured person 80% of the amount of the earnings lost by the employee during the first week of incapacity.

Employee cannot take sick leave for work-related injury

Because the employer is required to pay first week compensation in relation to a work-related injury, the employer cannot require the employee to take paid sick leave during that first week.

On the other hand, the Accident Compensation Act (section 306) allows employees to use any unused sick leave entitlement they may have under the Holidays Act 2003 in the first week of incapacity following an injury that is not work-related.

For more information, see the Ministry of Business, Innovation and Employment website

Calculating first week compensation

In order to calculate first week compensation, the employer responsible should find out what the employee earned during the 7 days immediately before the day on which the incapacity commenced (note that this is not necessarily be the day of the accident). Earnings will include:

  • Ordinary time;
  • Overtime;
  • Taxable allowances;
  • Taxable bonuses; and
  • Income from other employment.

The employer must then pay the employee 80% of the earnings they lost during the 7 days immediately before the incapacity commenced.

Note that 80% of the lost earnings will not necessarily be the same as 80% of the total earnings in the 7 days before incapacity. For example, if the injury only caused the employee to be unable to work for 2 or 3 days, and they were able to work for the rest of the week, they would have earned at least a portion of their income from the previous week.

Example 1

An employee has an accidental injury at work late Thursday afternoon and continues working to the end of the shift. The next day (Friday) the employee finds the injury is worse, and visits the doctor. A certificate is produced showing that the employee is unfit for work for 14 days commencing immediately (that is, from Friday) and the employee does not work on that day.
The employee will be entitled to first week compensation for the following days:

Friday (day 1): Absent due to injury on day incapacity commences.

Saturday (day 2): Not a working day.

Sunday (day 3): Not a working day.

Monday (day 4): Absent due to injury.

Tuesday (day 5): Absent due to injury.

Wednesday (day 6): Absent due to injury.

Thursday (day 7): Absent due to injury.

The employee earned $1,000 in the 7 days before the Friday on which he was unable to work. The employer must pay him 80% of this, ie $800 for the week.

On Friday, ACC will commence making weekly payments.

Example 2

An employee has an accidental injury at work late Monday afternoon but continues to work until the end of the shift. The next day (Tuesday) the employee finds the injury is worse and visits the doctor. A certificate is produced that the employee is unfit for work for 4 days commencing immediately (that is, from Tuesday). The employee returns to work on the following Monday but is again absent due to the injury on the following day (Tuesday).

The employee will be entitled to the following first week compensation:

Tuesday (day 1): Absent due to injury on day incapacity commences.

Wednesday (day 2): Absent due to injury.

Thursday (day 3): Absent due to injury.

Friday (day 4): Absent due to injury.

Saturday (day 5): Not a working day.

Sunday (day 6): Not a working day.

Monday (day 7): Worked.

Tuesday (day 8): Absent due to injury: ACC pays compensation for lost earnings due to the injury.

The employee earned $1,000 in the 7 days before the Tuesday on which she was unable to work. She was absent due to injury for 4 working days during the first week. She receives her normal pay ($200) for the day she worked during the first week following her incapacity, so her lost earnings were $1,000 minus $200, ie $800. The employer must pay her 80% of these lost earnings, ie $640.

When she is then absent due to the injury after the first week following her first day of incapacity, ACC (not her employer) will pay 80% of her lost earnings (so long as she provides ACC with a medical certificate stating that she is unfit to work due to the injury that caused her incapacity the previous week).



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