ACC vs Income Protection: A Simple NZ Employee Guide

ACC provides no-fault cover for qualifying personal injuries in New Zealand. A covered injury can happen at work, at home, on the road or while playing sport; eligibility depends on the circumstances and ACC’s decision. ACC is not a general health-insurance or illness-income scheme.

ACC’s weekly-compensation guidance says an eligible PAYE employee may receive up to 80% of pre-injury income, before tax and deductions. “Up to 80%” is not a guarantee: cover, incapacity, earnings and individual circumstances affect the actual decision and calculation.

ACC may also contribute to treatment and rehabilitation for a covered injury. The support available is specific to the accepted claim.

ACC’s introduction to the scheme explains that ordinary illness and conditions related to ageing are not covered. Some conditions can still fall within ACC’s legislation, including certain treatment injuries, work-related gradual-process injuries and mental injuries, so employees should ask ACC rather than assume that a diagnosis is either covered or excluded.

When ordinary illness prevents an employee from working, available income may initially come from paid sick leave, other agreed leave, employer support, savings or another entitlement. Employment New Zealand explains the current eligibility and carry-over rules in its sick-leave guidance.

Sick leave and income protection solve different time periods. Sick leave is an employment entitlement; income protection is an insurance benefit assessed under a policy.

The answer depends on whether the injury happened at work. ACC’s employer guidance says an employer pays 80% of regular income for the first calendar week when the injury happened at work. For an injury outside work, an employee can ask to use sick or annual leave.

From week two, an eligible employee can apply for ACC weekly compensation after the claim is approved. Employees and employers should use ACC’s actual decision and calculation rather than treating the headline percentage as an entitlement estimate.

Group income protection is insurance arranged through an employer scheme. It can provide an eligible income benefit when illness or injury prevents an insured employee from working and the policy requirements are satisfied.

There is no universal payment percentage or duration. The disability definition, insured income, maximum benefit, waiting period, benefit period, exclusions, evidence requirements and employee eligibility all depend on the selected policy and scheme design.

A waiting period is the period an insured employee must satisfy before an eligible benefit can begin. Employers often consider sick leave and other payroll support when selecting it, but the correct structure depends on the workforce and policy.

An income-protection policy may reduce its payment when ACC or another source provides income. This is usually described as an offset. The actual interaction depends on the policy wording and the employee’s circumstances.

For a covered injury, ACC may be the first income-support pathway and the insurer then applies the policy’s ACC-offset rules. For ordinary illness, ACC weekly compensation generally does not apply merely because the employee cannot work; an income-protection claim may still be possible after the waiting period.

Use the ACC versus group income protection employer guide for policy-design questions, or try the ACC and illness income-gap tool for a simplified illustration. The tool does not calculate an ACC entitlement or insurance payment.

Employees should confirm whether the event is an injury or illness, obtain the required medical information, ask ACC or the insurer what evidence is needed and avoid relying on a benefit estimate until a decision is made.

Employers should explain who is eligible for the group scheme, the waiting period, where the policy summary is kept and who can help with a claim. They should not promise that ACC or the insurer will accept a claim.

For help reviewing an existing arrangement, visit Scheme Review. To discuss a new income-protection scheme, contact Employee Lab.

ACC — Calculating weekly compensation for employees.

ACC — Income for your employee while they recover.

ACC — Introduction to ACC.

Employment New Zealand — Taking sick leave.