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” 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.
First Week Compensation
To pay the employee for "first week compensation" at 80% of their normal pay rate you add a new Pay Code.
Under Setup > Maintain Pay Code click New Pay Code to create the new pay code. Give the pay code the name ACC and select Gross Earnings as the Tax Type, select Hours as the units and select the pay code rate is based on the employee's Normal Rate.
Enter the Rate Multiplier as 0.8.
Once you've added the Pay Code then you can add this pay code to an employee's pay and enter the quantity as the normal number of hours they work in the pay period.
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).
Long-Term ACC Absences
If the employee is going on longer term ACC payments you will also need to ensure that they continue to accrue leave for this period. To do so:
- On the Employee Setup screen under the Leave tab make sure that the employee has Accrue Leave Based On set to Normal Hours per Week and set the value of hours per week they would otherwise have been working.
- When running a pay for the employee remove any gross earnings pay codes (e.g. Ordinary Time or Salary) and include the pay code Extended Unpaid Leave with the quantity set to the normal hours they would be paid and the rate set to zero. The employee will accrue annual leave for the pay period based on their Normal Hours per Week.
- If the employee was originally set to Accrue Leave Based on Hours Worked, make sure you set them back to that when they return from their ACC leave.
For more information about what to do when an employee is injured see the ACC website.
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