The Fair Work Commission has to pay vice president Michael Lawler his $435,000 annual salary even if he is stripped of case work, president Iain Ross says.
Justice Ross confirmed to a Senate estimates hearing in Canberra on Thursday he approved more than 200 days of sick leave for his deputy.
But he did not know Mr Lawler was spending the time off supporting his partner, former Health Services Union boss Kathy Jackson, defend herself in court.
Justice Ross also denied he told Mr Lawler he was entitled to unlimited leave.
The president admitted he has limited power to discipline his deputy other than to reduce his case load, which he has done.
"If I don't allocate any matters to him, I still have to pay him $435,000 a year," Justice Ross said.
Mr Lawler has said there is "absolutely nothing wrong with taking leave to help your partner defend herself against unjust attacks".
"In fact, I would have thought most Australians would regard that as an honourable and decent thing to do," Mr he told ABC TV's Four Corners program this week.
But Justice Ross disagreed, telling senators he only approved the 215 days of leave in 2014 and 2015 on the basis Mr Lawler was medically unfit to do his job.
The commission president also revealed he did not consent to the recording of phone conversations between himself and Mr Lawler that were aired during the ABC program.
Justice Ross welcomed the federal government's decision to appoint an independent investigator to look into complaints about Mr Lawler's leave.
The recordings are also properly a matter for consideration in that investigation and by NSW authorities, he said.
Justice Ross said he had been informed by another member of the commission that Mr Lawler had recorded a conversation with them in his chambers without their knowledge.
The president told the Senate hearing that during the most substantial period of leave, he asked Mr Lawler about an outstanding decision before the commission that was overdue.
Another commission staff member forwarded a freedom of information request to him about the same time.
Mr Lawler claimed Justice Ross was harassing him and the contact exacerbated his illness.
"The vice president informed me that my actions had led him to voluntarily admit himself into a psychiatric institution," Justice Ross said.
Justice Ross had tried to treat Mr Lawler with care and understanding.
"Consequently, I am profoundly disappointed by his actions," he said.
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