ACT Department of Justice and Community Safety and Comcare and Anor
[2011] AATA 467
•4 July 2011
Administrative Appeals Tribunal
DECISION AND REASONS FOR DECISION [2011] AATA 467
ADMINISTRATIVE APPEALS TRIBUNAL )
) No 2010/2900
GENERAL ADMINISTRATIVE DIVISION ) Re ACT DEPARTMENT OF JUSTICE AND COMMUNITY SAFETY
Applicant
And
COMCARE
1ST Respondent Respondent
NEIL GOODWIN
2ND Respondent
DECISION
Tribunal Mr S. Webb, Member Date4 July 2011
PlaceCanberra
Decision The decision under review is affirmed.
....................[sgd]..........................
Mr S. Webb, Member
CATCHWORDS
WORKERS COMPENSATION - incapacity - normal weekly earnings inclusive of provision for overtime - overtime not payable during period of long service leave - meaning of 'employed' and 'earnings' – comparison of normal weekly earnings with notional earnings – no basis to reduce normal weekly earnings amount during period of long service leave – decision affirmed
ACT Fire Brigade Union Collective Agreement 2006-2010 cl 78
Long Service Leave (Commonwealth Employees) Act 1976 (Cth) s 8A
Long Service Leave (Commonwealth Employees) Regulations 1957 (Cth) reg 4DC
Public Sector Management Act 1994 (ACT) ss 152, 154, 155, 156, 158, 160
Public Sector Management Standards 2006 (ACT) ss 372, 378, 380, 389, 392, 410, 411, 438
Safety, Rehabilitation and Compensation Act 1988 (Cth) ss 4, 5, 5A, 5B, 6, 6A, 8, 9, 19, 67
Arnotts Snack Products Pty Ltd v Yacob [1984-1985] 155 CLR 171
Australian Communication Exchange Ltd v Deputy Commissioner of Taxation [2003] HCA 55
Bortolazzo and Another v Comcare (1997) 75 FCR 385
Comcare v Burgess [2007] FCA 1663
John Holland Group Pty Ltd v Robertson [2010] FCAFC 88
Re Gill and Comcare [2009] AATA 381
Re Heffernan and Comcare [2010] AATA 824
Scott v Sun Alliance Australia Ltd (1993) 178 CLR 1
REASONS FOR DECISION
4 July 2011 Mr S. Webb, Member 1.Neil Goodwin is employed by the ACT Department of Justice and Community Safety (JACS). Some years ago he was injured in employment as a fire-fighter. He claimed and was paid compensation. He continues to suffer a partial incapacity for work as a result of his injury. The present dispute arises in relation to a period of long service leave Mr Goodwin took in 2008. Comcare decided that his weekly compensation for incapacity during this period should be calculated on the basis of his average weekly hours prior to injury, including overtime. JACS was not satisfied with this result and applied for review. JACS asserts that Mr Goodwin is not entitled to payment in respect of overtime during the period of his long service leave.
2.The background facts are agreed[1] and may be shortly stated as found. Mr Goodwin was injured in 1986 and he has been in receipt of weekly compensation payments for incapacity since that time: Mr Goodwin has a partial incapacity for work to the extent that he is not able to perform certain operational duties; he is not able to work for more than 40 hours per week; and he is not able to perform overtime. Mr Goodwin’s normal weekly earnings (NWE) amount was calculated on the basis of 40 standard hours and 9 hours overtime per week prior to his injury. It appears that this amount was determined on the basis of the average amount of overtime worked by a number of comparable employees over the course of each year since 1986. In some of these years, some of the reference group of employees were absent on various forms of leave, including long service leave[2], although on the present evidence it is not possible to determine which of the reference group were absent or for what period of time during any particular year.
[1] Exhibit 1.
[2] Exhibit 3, p2.
3.Between 18 August 2008 and 19 December 2008 Mr Goodwin was absent from his employment on approved long service leave. On 14 January 2009 Comcare issued a determination concerning Mr Goodwin’s weekly compensation for incapacity that was based on his NWE amount, including the provision for overtime. JACS requested reconsideration of this decision. On 27 May 2010 Comcare affirmed the determination. JACS applied for review.
4.Comcare determined that the amounts of Mr Goodwin’s NWE during the period of leave are $1,938.06 from 18 August 2008 to 1 October 2008 and $2,015.59 from 2 October 2008 to 18 December 2008[3]. These amounts are based on 49 “Std hours”. On the agency documents and the claims lodged with Comcare it appears that Mr Goodwin’s actual work hours were 40 hours per week, whereas his “NW Hrs (including overtime hours)” are recorded as “49:00”[4]. It is an agreed fact that “At all material times [Mr Goodwin] has been paid a “top up” payment for the incapacity to perform an average of 9 hours per week overtime”[5]. The documents record Mr Goodwin’s “Actual earnings” from 4 October 2007: weekly salary - $1,501.19 and weekly overtime - $436.87[6]; and from 29 October 2008 to 31 October 2009: salary paid - $1,561.24 and overtime included in the NWE amount - $454.35[7]. These amounts were not challenged by any party and I accept that they are correct. It appears, however, that Mr Goodwin’s NWE amount changed on 2 October 2008; Comcare’s determination is consistent with this element of the Claim for Time off Work Period of Reduced Earnings form at T119. From this evidence it can be inferred that Mr Goodwin’s actual weekly salary and overtime amounts also changed on 2 October 2008 and not on 29 October 2008. I will proceed on that basis.
[3] T121 folio 180.
[4] T115 folio 173, T119 folio 177 and T120 folio 179.
[5] Exhibit 1 at [6].
[6] T117 folio 175.
[7] T119 folio 177.
5.In the course of proceedings before the Tribunal a Neutral Evaluation was conducted. The matter proceeded to hearing and the evaluation report was tendered[8].
[8] Exhibit 2.
6.Prior to hearing, however, on 9 May 2011, Comcare revised its position[9], leaving Mr Goodwin, alone, to contend for the position it had previously determined. Having heard Comcare on this point, it appears that Comcare is presently adopting a neutral stance, while attempting to assist the Tribunal to make the correct decision. The reason for this attitude appears to derive from uncertainty about the correctness of the reconsideration decision and the position for which JACS contends. Comcare was represented at the hearing, even though it did not expressly contend for any particular position or outcome of the review.
[9] See letter dated 9 May 2011.
7.The issue to be decided has a narrow compass. It is necessary to determine whether Mr Goodwin’s NWE amount should be reduced under section 8(10) of the Safety, Rehabilitation and Compensation Act 1988 (the SRC Act) during the period of his long service leave from 18 August 2008 to 19 December 2008.
8.JACS contends that Mr Goodwin is not entitled to be paid for overtime while absent on approved long service leave. By operation of clause 78 of the ACT Fire Brigade Union Collective Agreement 2006-2010 (the Collective Agreement), section 152 of the Public Sector Management Act 1994 (ACT) (the PSM Act) and section 411 of the Public Service Management Standards 2006 (ACT) (the Standards) then in force, ‘overtime payments’ are expressly not included as salary during periods of long service leave. Guidance as to the meaning of the term ‘overtime payment’ is given in section 411(4) of the Standards. As can be seen, the term has a broad meaning and includes ‘a payment, however described, for work in excess of standard hours’ and ‘any other payment in lieu of a payment for overtime’.
9.JACS says that as Mr Goodwin’s NWE during the period of his long service leave was calculated on the basis of 9 hours per week overtime his NWE amount exceeded the weekly amount he would be paid in his continuing employment, absent incapacity, during the period of his long service leave. JACS asserts that this renders Mr Goodwin better off as a result of his injury than otherwise he would have been. In JACS’ submission this is not permissible and the anomaly must be addressed and rectified under section 8(10) of the SRC Act by reducing Mr Goodwin’s NWE during the period of his long service leave. JACS contends that “no entitlement to overtime payments can be included in the calculation of NWE as Mr Goodwin would not receive, if he was not incapacitated for work, overtime pay during his period of [long service leave]”[10].
[10] Applicant’s Statement of Facts, Issues and Contentions, 13 October 2010 at [32].
10.JACS draws authority from Bortolazzo & Anor v Comcare[11] and John Holland Group Pty Ltd v Robertson[12], distinguishing Comcare v Burgess[13]. Furthermore, JACS drew notice to the change in Comcare’s stated position in respect of the decision under review and relies on the Neutral Evaluation Report.
[11] (1997) 75 FCR 385.
[12] [2010] FCAFC 88.
[13] [2007] FCA 1663.
11.For these reasons, JACS says the decision under review should be set aside and Mr Goodwin’s NWE should be reduced by the amount it exceeds the amount that otherwise would be payable during the period of his long service leave.
12.I do not agree.
13.The correct test under section 8(10) of the SRC Act is whether an incapacitated employee’s NWE amount in any week after an injury exceeds the weekly earnings that he or she would receive in continuing employment, but for incapacity or cessation of the employment. It is not whether an incapacitated employee is ‘better off’ because his or her NWE amount exceeds the amount of actual earnings in any week after an injury[14].
[14] John Holland Group Pty Ltd v Robertson [2010] FCAFC 88 at [37].
14.Even though the specific issue in dispute concerns the NWE calculus under section 8 of the SRC Act, the broader issue concerns the amount of Mr Goodwin’s weekly compensation relating to incapacity for work that is payable under section 19 during the period of his long service leave. This section applies the formulae ‘NWE – AE’ or ‘(Adjustment percentage x NWE) – AE’, where AE is the weekly amount the injured employee is able to earn in suitable employment or the amount he or she actually earns in any employment, whichever is greater[15]. Section 19(4) sets out matters to which regard must be had when assessing the AE amount in respect of suitable employment. The NWE amount is to be calculated under section 8 of the SRC Act. This section requires the calculation of NWE during a period prior to injury – the ‘relevant period’ determined under section 9, to which I will return.
[15] Section 19(2), Safety, Rehabilitation and Compensation Act 1988.
15.Sections 8(1), (2), (3), (4), (5) and (8) are directed to this calculation, pre-injury. As can be seen, these calculations require the addition of amounts resulting from the formulae set out in section 8(1) concerning ordinary hours worked, (NH x RP) + A, and section 8(2) concerning overtime hours worked, NH x OR, where NH refers to the average number of ordinary or overtime hours worked; RP and OR are the average ordinary and overtime hourly rates of pay; and A is the average amount of allowances payable. The NWE amount resulting from these calculations is subject to adjustment from time to time in certain circumstances under sections 8(6), (7), (9), (9A) to (9G) inclusive and (10).
16.Sections 8(6), (7), (9) and (9A) to (9G) inclusive operate to vary the injured employee’s NWE amount in light of changing circumstances from time to time after an injury. These sections are said to ensure that the injured worker is not worse off than he or she otherwise would have been absent injury and resulting incapacity for work. Section 8(10) provides a mechanism to reduce an injured employee’s NWE if the NWE amount exceeds the earnings that he or she would have received in continuing employment, absent incapacity for work or the cessation of employment. This section is said to ensure that an injured employee is not better off as a result of injury. The characterisations ‘worse off’ and ‘better off’ are not tests that are expressly required for the purposes of section 8, however.
17.The passage in Bortolazzo v Comcare in which Heerey J referred to the policy underlying section 8(10) is often quoted –
“The provision of compensation is to operate from week to week; see for example, the detailed formulae in s 19. The underlying policy is that an injured employee should not be worse off during the period of incapacity as a result of work-related injury. However, it follows conversely that the injured employee should not be better off.”[16]
[16] (1997) 75 FCR 385 at 388.
In John Holland v Robertson, Dowsett J (with whom Spender J agreed) said that Heerey J’s observation in Bortolazzo’s case “should not be taken as offering a guide to the way in which the legislation is to be construed. It is rather an inference based upon such construction”[17].
[17] John Holland Group Pty Ltd v Robertson [2010] FCAFC 88 at [37].
18.With this caution in mind, it is necessary to consider the terms of section 8(10):
(10) If the amount of the normal weekly earnings of an employee before an injury, as calculated under the preceding subsections, would exceed:
(a) where the employee continues to be employed by the Commonwealth or a licensed corporation—the amount per week of the earnings that the employee would receive if he or she were not incapacitated for work; or
(b) where the employee has ceased to be employed by the Commonwealth or a licensed corporation—whichever is the greater of the following amounts:
(i) the amount per week of the earnings that the employee would receive if he or she had continued to be employed by the Commonwealth or the licensed corporation in the employment in which he or she was engaged at the date of the injury;
(ii) the amount per week of the earnings that the employee would receive if he or she had continued to be employed by the Commonwealth or the licensed corporation in the employment in which he or she was engaged at the date on which the employment by the Commonwealth or the licensed corporation ceased;
the amount so calculated shall be reduced by the amount of the excess.
19.As can be seen, the section requires consideration in two stages. First one must determine whether or not the employee ‘continues to be employed by the Commonwealth or a licensed corporation’ in order to decide whether section 8(10)(a) or (b) applies. Then one must apply the comparative test between the amount of the employee’s NWE at the relevant time and the notional weekly earnings that he or she would receive at that time according to the terms of the applicable section.
continuing employment
20.The first question is whether Mr Goodwin continued to be employed for the purposes of section 8(10) during the period of his long service leave, when he was absent from his employment and not performing his usual duties.
21.It is clear enough that the terms of Mr Goodwin’s employment relationship with JACS continued at all relevant times even though he did not work during the period of his long service leave; thus, he was employed in the sense that his terms of employment were on-going. But is this sufficient for the purposes of section 8(10)(a) of the SRC Act? In Comcare v Burgess Greenwood J said that “The subsection assumes continuity of employment and the receipt of earnings and therefore a continuity of performance of the contract…. the continuity of employment contemplated by section 8(10)(a) is continuity of provision of service and receipt of earnings not simply a subsisting employer/employee relationship”[18].
[18] [2007] FCA 1663 at [24] and [26].
22.On this construction, if an injured employee is absent from his or her employment while incapacitated for work and provides no services in respect of the employment during the period of absence, the employment may be taken to have ceased during that period for the purposes of section 8(10) of the SRC Act. On that basis, section 8(10)(b) would apply during the period of absence on leave.
23.The alternative construction is that the employment is described by applicable terms and conditions of engagement under law or contract, whereby the grant of leave, being within the terms of engagement, is ancillary to the employment and does not interrupt the continuity of earnings and service, or ‘employment’ for the purposes of section 8(10). On this construction, section 8(10)(a) would apply during a period of leave.
24.It appears to me that each of these constructions delivers the same result in the present circumstances and, for that reason, this issue is not presently determinative. Nevertheless, it is necessary to decide the issue and to address the submissions of the parties on this point.
25.JACS relies on the Neutral Evaluation Report and submits that section 8(10)(a) applies in the particular circumstances. It appears that this submission proceeds, at least in part, on the assumption that the ‘relevant period’ for the purposes of section 8(1) is the period of long service leave[19], and that during this period of leave “[Mr Goodwin’s] actual duties during LSL did not require him to perform overtime”[20] and “[his] ‘RP’ [the average hourly ordinary time rate of pay] would not have included an amount for overtime”[21]. While the assessment of compensation in respect of incapacity for work under section 19 proceeds on a weekly basis, it is not correct to assume that the calculus set out in sections 8(1) and (2) is to be applied progressively, week by week, during any period of incapacity after the injury, or for the purposes of section 8(10)(a) or (b)[22]. The NWE amount determined under sections 8(1), (2), (3), (4), (5) and (8) is in respect to a ‘relevant period’ prior to the injury. The ‘relevant period’ means the period calculated under section 9. The NWE amount that results from this calculation may be varied from time to time under sections 8(6), (7), (9), (9A) to (9G). The resulting NWE amount in any particular week is the amount against which the employee’s notional earnings amount in that week must be compared for the purposes of section 8(10). It is important to note, applying section 9(4), that the calculation of the initial NWE amount at the date of the injury expressly excludes reduced earnings during a period of absence from employment for any reason. This ensures that the NWE amount reflects the actual average weekly earnings of the employee while employed and working normal weekly hours pre-injury.
[19] Exhibit 2 at [27].
[20] Exhibit 2 at [36].
[21] Exhibit 2 at [37].
[22] Applicant’s Statement of Facts, Issues and Contentions, 13 October 2010, at [32].
26.This formulation in respect to NWE is consistent with the underlying conception of employment and incapacity for work that is given expression in the terms of section 19. The detailed methodologies and calculus for the determination of weekly compensation under that section proceed, in part, on the basis that ‘the employee’s incapacity prevents the employee from working the employee’s normal weekly hours because the employee is unable to work or unable to work at the level at which the employee worked before the injury’[23]. It is necessary to assess ‘the total of the hours that the employee has been prevented from working, or working at that level’ in each week and apply an adjustment percentage under section 19(3) if the period of incapacity exceeds 45 weeks. Thereafter the formula ‘(Adjustment percentage X NWE) – AE’ applies, where the adjustment is a percentage that is determined on the basis of the proportion of ‘the normal weekly hours during that week’ for which ‘the employee is employed’[24]. Sections 19(2C) and (2D) set out formulae, including factor X, for the purposes of calculating the 45 week threshold under section 19(2B) where X, in part, is the total of the hours in that particular week ‘that would have counted towards the employee’s normal weekly hours (whether those hours are worked or not)’.
[23] Section 19(2A); section 4(9) refers.
[24] Sections 19(2B) and (3.)
27.Guidance about the meaning of the term ‘normal weekly hours’ is given in section 4(1):
normal weekly hours, in relation to an employee, means the average number of hours (including hours of overtime) worked in each week by the employee in his or her employment during the relevant period as calculated for the purpose of applying the formula in subsection 8(1) or (2).
28.The underlying purpose of these provisions can readily be seen. The quantum of compensation during the first 45 weeks of incapacity is to be calculated by reference to the average number of hours (including overtime hours) the employee worked and the applicable rates of pay each week in employment during a period prior to the injury. That period is calculated to exclude any absence from the employment that reduced the employee’s earnings. The amount of weekly compensation is determined by subtracting the amount the employee is able to earn (the AE amount) from his or her NWE. The resulting amount is payable whether or not the employee actually worked in a particular week. Once the 45 week threshold is passed, the amount of the compensation is subject to adjustment by the percentage derived from the proportion of the employee’s normal weekly hours for which he or she is ‘employed’ during each week[25].
[25] Re Heffernan and Comcare [2010] AATA 824 at [23].
29.It is quite clear that that the drafters of the SRC Act adopted complementary conceptions of employment and work for the purposes of sections 5, 5A, 5B, 6, 8, 9 and 19; this is encapsulated in the meaning given to ‘suitable employment’ at section 4(1) – ‘employment’ ‘in work’. The words ‘employment’, or ‘employed’, and ‘work’ are not given any particular meaning. While it may be accepted that their meanings in ordinary usage should apply[26], in John Holland v Robertson Dowsett J identified three shades of meaning in respect of employment when construing section 8(10): ‘being employed’ – the use by somebody of somebody; ‘that which is actually being done’ – the employee’s actual duties; and ‘the trade or calling of the employee, or the category of employees of which he or she may be a member’[27]. To my mind, these ‘shades of meaning’ are presently applicable and they are relevantly applied in relation to section 19(3): the word ‘employed’ carries the same meaning in the phrase ‘continues to be employed’ for the purposes of section 8(10) and the phrases ‘is not employed’ and ‘is employed’ for the purposes of sections 19(3)(a) and (b) to (f), respectively.
[26] Re Gill and Comcare [2009] AATA 381 at [16] to [27].
[27] John Holland Group Pty Ltd v Robertson [2010] FCAFC 88 per Dowsett J at [59] to [65].
30.The relevant conception of ‘work’ for present purposes is conveyed by the phrases ‘incapacity for work’ and ‘hours worked’ in sections 8 and 19. The phrase ‘incapacitated for work’ is given meaning at section 4(9) and refers to a lack of capacity, an inability or an incapability, to perform any work or work at the same level with a resulting loss or diminution of earning capacity[28]. The meaning of ‘work’ in ordinary usage refers to ‘something to be done, or something to do; what a person has or had to do; occupation, employment, business, task, function; action of a particular kind; doing, performance; working, operation; doings, deeds; conduct’[29].
[28] Arnotts Snack Products Pty Ltd v Yacob [1984-1985] 155 CLR 171 per Mason, Wilson, Deane and Dawson JJ at 176 - 178; Scott v Sun Alliance Australia Ltd (1993) 178 CLR 1 at 11-12.
[29] Oxford English Dictionary, 2nd Edition, 1989, online version March 2011.
31.As can be seen, there is a substantial and, to my mind, deliberate intersection between these concepts and meanings in respect to employment and work for the purposes of the Act: for present purposes ‘employment’ is consonant with and essentially includes the performance of duties or work. Section 19 provides for the payment of compensation to an employee who is incapacitated for work as a result of an injury: while the compensation is in respect of the employment-related injury, the amount of the compensation is to be determined in relation to the extent of the incapacity for work. This is to be calculated on a weekly basis in relation to the weekly amount the employee is able to earn and his or her NWE prior to the injury, as adjusted from time to time, where those earnings, unsurprisingly, conform to the long accepted calculus for earnings: the number of hours worked multiplied by the applicable rate of pay[30].
[30] Australian Communication Exchange Ltd v Deputy Commissioner of Taxation [2003] HCA 55 per McHugh, Gummow, Callinan and Heydon JJ at [34].
32.There is no reason why the notional weekly earnings contemplated by section 8(10) should conform to a different principle: the number of hours that would have been worked for the purposes of sections 8(10)(a) or (b) multiplied by the applicable rate of pay. Nor is there any good reason, for the purposes of section 8(10), why the concept of being ‘employed’ should not conform to the shades of meaning Dowsett J set out in John Holland v Robertson and the construction Greenwood J preferred in Comcare v Burgess, even though those cases turned on different facts. That is especially so when one considers the conceptual complementarity and synchronous operation of sections 8 and 19.
33.Thus, for the purposes of determining whether section 8(10) (a) or (b) applies, the following question must be answered in respect to any week in which an injured employee (including a former employee) is incapacitated for work – did the employee continue to work, providing service, and to receive earnings in the employment during that week? If the answer is Yes, section 8(10)(a) applies, and if the answer is No, section 8(10)(b) applies.
34.As Dowsett J observed in John Holland v Robertson “The Act is very much concerned with conditions in which employees work and their terms of engagement”[31]. In a case such as this, therefore, when considering the terms of section 8(10) and determining whether section 8(10) (a) or (b) applies, one cannot simply bypass the continuing nature of the employment relationship and the terms and conditions that give it form and legal force, not least with respect to the nexus between the provision of service, the performance of duties or work and the grant of leave. It is necessary to determine whether Mr Goodwin was providing service in his employment when absent on leave, performing no duties and doing no work.
[31] John Holland Group Pty Ltd v Robertson [2010] FCAFC 88 at [73].
35.Before proceeding further, there are a number of things to note about leave of absence in the context of employment, generally. Most employees, whether by agreement or statutory provision, are employed under terms that include provisions for various kinds of leave. Even though there may be a great diversity of specific terms attaching to different kinds of leave, the general conception is that the employee is permitted by an employer to be absent from his or her employment with or without pay, and without a requirement to perform duties or to work during the period of absence.
36.Commonly, provisions concerning recreation leave, personal leave and long service leave involve a temporal element, where the grant of leave, and commonly the quantum of leave, is subject to an accumulation of qualifying service[32]. Long service leave is a statutory entitlement, subject to qualifying provisions[33]. Some kinds of leave, such as maternity leave, defence service leave or emergency service leave, for example, may not require the accumulation of qualifying service but may be governed by statutory arrangements that are carried forward in agreed terms of employment. Certain kinds of leave may relate to specific circumstances in or terms of the employment, flex leave and elements of sick leave for example. Some other kinds of leave of absence may simply be granted on a discretionary basis; leave without pay is a common example of this.
[32] See Section 378, 380 and 392 of the Public Sector Management Standards 2006 (ACT) and section 158 of the Public Sector Management Act 1994 (ACT), for example.
[33] See Part VII of the Public Sector Management Act 1994 (ACT) and Part 4.18 of the Public Sector Management Standards 2006 (ACT).
37.Clearly these various arrangements for approved leave of absence from employment are incidental to a subsisting employment relationship, even though issues of entitlement may arise from other sources. These arrangements may bear upon the amount of an employee’s remuneration while absent from the particular employment: for example, payment of an additional loading in respect of annual leave is commonplace[34], so, too, is the bar on payments in respect of overtime during periods of long service leave[35]. While an employee’s employment may be said to continue without interruption during such lawful absences[36], it does not follow that the period of leave will count as service in respect of any employment-related accrual of entitlements or benefits[37]. For example, leave of absence without pay may be approved within the context of a continuing employment relationship even though the absent employee would perform no work and receive no salary during the absence, and the duration of the absence may not count as qualifying service in the calculation of accruing entitlements or benefits. Similarly, a period of absence from employment may be imposed upon an employee, by way of a temporary suspension of the employment in the context of disciplinary processes for example, during which the person would not provide service or receive pay. Greenwood J concluded in Comcare v Burgess that this latter circumstance is not consistent with continuity of employment for the purposes of section 8(10)(a)[38].
[34] See section 389 Public Sector Management Standards 2006 (ACT).
[35] See section 8A Long Service Leave (Commonwealth Employees) Act 1976 (Cth) and regulation 4DC Long Service Leave (Commonwealth Employees) Regulations 1957 (Cth) and complementary provisions at section 152 Public Sector Management Act 1994 (ACT) and section 411 Public Sector Management Standards 2006 (ACT).
[36] See section 156 Public Sector Management Act 1994 (ACT) for example.
[37] See sections 372 and 438 Public Sector Management Standards 2006 (ACT) for example.
[38] Comcare v Burgess [2007] FCA 1663 at [25]-[27].
38.Each of the kinds of absence from employment to which I have referred share one significant common feature: the employee is not required or is not permitted to perform employment duties during the period of absence. It is clear enough, that leave of absence from employment interrupts the continuity of work and the performance of duties that otherwise would be undertaken by the employee. Nevertheless, it is conceivable that the employee’s absence may constitute service in certain circumstances even though no work is done. Whether service of this kind would satisfy the test concerning continuing employment for the purposes of section 8(10) is moot. These are matters of fact and degree that must be examined in the particular circumstances of each case; either section 8(10)(a) or (b) must apply[39]. It is necessary to consider the applicable terms and conditions of employment.
[39] John Holland Group Pty Ltd v Robertson [2010] FCAFC 88 at [42].
39.In Mr Goodwin’s case, his terms and conditions of employment were set out in the Collective Agreement and were expressly subject to the PSM Act and the Standards. Under sections 155(1) and 156(3) of the PSM Act, Mr Goodwin is taken to have been in employment during the period of his absence on long service leave. The calculation of his ‘salary’ during this period of leave is subject to applicable statutory provisions[40] carried forward in the terms of the Collective Agreement that was then in force. Presently, there is no dispute that Mr Goodwin was entitled to payment of his full salary, being comprised of a certain number of hours per week at the applicable hourly rate, but he was not entitled to any payment for or in lieu of overtime during the period of his absence on long service leave.
[40] Sections 410 and 411 Public Sector Management Standards 2006 (ACT).
40.Mr Goodwin’s accumulation of qualifying service over time gave rise to his entitlement to the grant of long service leave on full pay (not including overtime), during which he was not required to work[41]: his entitlement to remuneration while absent on leave was accrued on the basis of his prior provision of service. Clearly, there is a lack of contiguity between service and earnings during the period of Mr Goodwin’s absence on leave; while absent on leave he did no work and provided no service, other than perhaps being absent on long service leave. To my mind these circumstances are not consistent with Mr Goodwin working or providing service while absent on leave, and they intrude upon the continuity of his ‘employment’ for the purposes of section 8(10).
[41] Section 160, Public Sector Management Act 1994 (ACT).
41.For this reason I am reasonably satisfied that Mr Goodwin did not continue to be ‘employed’ for the purposes of section 8(10) during the period of his absence on long service leave: he did no work and he provided no service in his employment even though the terms of employment were subsisting and he continued to receive salary payments during the period of absence on leave. In those circumstances, it follows that section 8(10)(b) applies.
comparative earnings
42.JACS asserts that Mr Goodwin’s NWE amount included provision for 9 hours overtime each week, whereas his remuneration while absent from work on long service leave did not. At first blush it appears that Mr Goodwin was better off receiving his NWE-based compensation than he otherwise would have been, absent incapacity, whereupon he would receive weekly remuneration excluding overtime while on long service leave. That is the force of JACS’ submissions.
43.But, to my mind, this raises a number of difficulties. JACS’ submission does not apply the correct test under section 8(10)(a) or (b) and it does not address the important nexus to which I have referred between the provision of service and the continuity of employment for the purposes of section 8(10). The interpretation for which JACS contends requires the express terms and applicable provisions of the SRC Act to be construed in a manner that would be productive of inconsistency and complexity. A construction of this kind does not serve or promote the purposes of the SRC Act.
the correct test
44.The comparative test that section 8(10)(b) requires is between the NWE amount as calculated under sections 8(1) to (9G) and the amount ‘per week’ of the ‘earnings’ that the employee ‘would receive’ if the employment in which he or she was engaged at the date of injury or at the date the employment ceased had continued, whichever is the greater. The reference to ‘per week’ is a reference to each week in respect of which compensation is otherwise payable[42]. The word ‘earnings’ means the amount of money which a person acquires or becomes entitled to by his labour[43], and, as I have said, is derived by multiplying the number of hours worked by the applicable rate of pay[44]. The conditional term ‘would receive’ places the assessment into a hypothetical frame.
[42] John Holland Group Pty Ltd v Robertson [2010] FCAFC 88 at [19].
[43] Oxford English Dictionary, 2nd Edition, 1989, on-line version March 2011.
[44] Australian Communication Exchange Ltd v Deputy Commissioner of Taxation [2003] HCA 55 per McHugh, Gummow, Callinan and Heydon JJ at [34].
45.For the purposes of section 8(10), Mr Goodwin’s employment ceased when he ceased work on 17 August 2008 prior to commencing his long service leave on 18 August 2008. His actual earnings in the employment in which he was engaged on 17 August 2008 did not include any amount of overtime, as he was prevented from performing overtime by incapacity resulting from injury. That is so even though he was paid weekly compensation in respect of the incapacity he suffered as a result of injury at that time. His weekly compensation payments are not ‘earnings’ for the purposes of section 8(10). The parties are agreed and I accept that Mr Goodwin’s actual earnings in employment at the date of his injury and during the relevant preceding period included 9 hours per week of overtime. For this reason an amount was calculated under section 8(2) of the Act and included in his NWE amount.
46.It follows that, had either of these employments continued during the period of long service leave, the greater amount of Mr Goodwin’s notional weekly earnings would be that which includes 9 hours overtime per week – his earnings in the employment in which he was engaged at the time of his injury, adjusted to reflect changing circumstances in relation to his actual terms of employment[45]. The calculation of his NWE amount proceeds on the same basis. The result of this assessment is that Mr Goodwin’s NWE amount and the amount of his notional earnings would be equal, being subject to the same variations from time to time, had his employment continued through the period of his long service leave. It follows, therefore, that, Mr Goodwin’s NWE amount under sections 8(1) to (9G) inclusive would not exceed his notional weekly earnings if the employment in which he was engaged at the date of injury continued.
[45] John Holland Group Pty Ltd v Robertson [2010] FCAFC 88 per Dowsett J at [75] and [76].
47.Thus, for these reasons, section 8(10)(b) does not operate to reduce Mr Goodwin’s NWE amount during the period of his long service leave and the decision under review will be affirmed.
48.As the parties proceeded, substantially, on the basis that section 8(10)(a) applied, and for completeness, it is desirable to address some of the issues raised in that context.
Section 8(10)(a)
49.The construction for which JACS contends applies a test that compares Mr Goodwin’s NWE amount with the amount that would have been payable to him while he was temporarily absent from employment and not performing duties or doing work during a period of accrued leave. This takes no account of the important nexus to which I have referred between employment and work, and service and earnings. The comparison section 8(10)(a) requires is between the applicable NWE amount at the particular time and the notional weekly earnings the employee would receive in continuing employment, providing service and receiving earnings, free from incapacity.
50.One must compare the employee’s NWE amount derived from sections 8(1) to (9G) with the amount ‘per week’ of the ‘earnings’ that the employee ‘would receive’ if he or she was not ‘incapacitated for work’. As I have said, the phrase ‘continues to be employed’ refers to a circumstance in which the person continues to provide services, performing duties and doing work in the particular employment, and to receive earnings in that employment[46]. The notional weekly earnings amount is derived by multiplying the notional number of hours the employee would have worked if free from incapacity by the applicable rate of pay.
[46] Comcare v Burgess [2007] FCA 1663 at [25]; section 5 of the Safety, Rehabilitation and Compensation Act 1988 applies.
51.Mr Goodwin’s entitlement to long service leave was in respect of accrued prior service. He provided no other service and he did not work during the period of his leave of absence from employment. If Mr Goodwin was free of incapacity it is not clear whether or not he would have taken long service leave when he did. But, to my mind, that is not determinative: even if one proceeds on the basis that he would have taken leave in those circumstances, one cannot properly assess the relative magnitude of his NWE amount and his notional weekly earnings, providing service and performing work free from incapacity, during a period in which he was doing no work. The fact that he would have received a reduced amount of weekly earnings during this period while doing no work and providing no service is not an answer to the comparative test the section imposes in respect of notional weekly earnings. The amount of Mr Goodwin’s notional weekly earnings for the purposes of section 8(10)(a) during the period of leave is the notional amount to which he would be entitled by his labour in continuing employment performing duties without the constraint of incapacity, calculated by multiplying the number of hours he would have worked by the applicable rate of pay.
52.This construction is entirely consistent with Greenwood J’s statement of the law in respect to section 8(10)(a) in Comcare v Burgess – “[the purpose of the section] is to strike a comparison of pre-injury normal weekly earnings (otherwise determined by the earlier subsections of s 8) with continuity of earnings that would have been received based upon Ms Burgess’s provision of service and receipt of earnings”[47]. Even though in that case Ms Burgess was absent from her employment because of a suspension in a disciplinary context, I see no reason why a different construction should be applied simply because Mr Goodwin was absent from his employment for a different reason and continued to receive salary payments, when both absences share one important characteristic for the purposes of section 8(10): neither Ms Burgess nor Mr Goodwin were providing services or doing any work during the period of the absence. This construction also accords with the law as stated by Dowsett J in John Holland v Robertson:
Clearly, s 8(10) seeks to limit the compensation payable to an injured employee by reference to his or her notional earnings derived from employment with the same employer had he or she not been injured. Section 8(10)(a) demands a notional enquiry which commences with the employee’s actual current employment. The enquiry is as to his or her earnings in that employment had he or she not been injured. Such enquiry would involve consideration of how, in those circumstances, the employee would have been employed, including consideration of whether he or she would have continued to perform the same duties as were being performed at the time of the accident.”[48]
[47] [2007] FCA 1663 at [26].
[48] [2010] FCAFC 88 at [74].
53.A consistent interpretation was applied by Heerey J in Bortolazzo’s case[49]. In that case Mrs Bortolazzo’s NWE amount included a provision for overtime, but her notional earnings, absent incapacity for work, would not have included any amount of overtime because the availability of overtime ceased as a result of a reorganisation of work. It was concluded, therefore, that the NWE amount exceeded the notional earnings amount and section 8(10)(a) operated to reduce the NWE by the amount of the excess.
[49] (1997) 75 FCR 385 at 388.
54.The same cannot be said in Mr Goodwin’s case: overtime was available to him when he was ‘employed’, providing service, performing duties, and receiving earnings by his labour even though he was incapacitated for such work. His ‘employment’ for the purposes of section 8(10) is properly described by the position in which he was employed by JACS, the actual duties or work he did in that position and the classification or level of the position; the relevant ‘employment’ is not properly described by a period of leave during which Mr Goodwin was absent from his erstwhile employment and performing no duties or work.
55.Thus, the amount of Mr Goodwin’s notional weekly earnings for the purposes of section 8(10)(a) is the amount that he would have earned each week performing duties and working hours without the constraint of incapacity resulting from injury - his notional weekly earnings during the period of his absence on long service leave would be derived from the duties he would have performed and the hours he would have worked if he was free from incapacity. It would be reasonable to proceed on the basis that the duties he would have performed would be the duties of his employment position or job of work plus the duties he was prevented from performing by his incapacity; and the hours he would have worked are the hours he worked performing the duties of his position or job plus the hours he was prevented from working by his incapacity – 9 hours of overtime each week.
56.It follows, on that basis, that Mr Goodwin’s NWE amount would not exceed his notional weekly earnings for the purposes of section 8(10)(a) during the period of his absence from employment on long service leave – both are calculated on the basis of 9 overtime hours per week.
nwe calculus and methodology
57.As I have said, the NWE calculus in section 8 ensures that the NWE amount reflects the actual average weekly earnings of the employee working normal weekly hours pre-injury, as adjusted from time to time. Periods of absence are expressly excluded from the initial NWE calculation. Clearly, if the corresponding notional earnings comparator for the purposes of sections 8(10)(a) in any subsequent week is based on reduced earnings during a period of absence from employment for example, the NWE amount is likely to exceed the notional earnings amount in that week. This is the result for which JACS contends: section 8(10) operates to reduce the employee’s NWE amount in just such circumstances.
58.Clearly section 8(10) seeks to limit the amount of compensation that is payable to an injured employee to the extent that the NWE amount in respect of an injury exceeds his or her notional earnings in continuing employment absent incapacity or the cessation of employment. The comparative test section 8(10)(a) requires is an assessment of the notional weekly earnings of the employee in continuing employment, free from incapacity, at the relevant time. The phrases ‘continues to be employed’ and ‘the earnings that the employee would receive’ can readily be understood if the words ‘employed’ and ‘earnings’ are given their common meaning. Construing section 8(10)(a) in this way is consistent with other complementary sections of the Act, including section 19(3) for example, and it promotes the purposes of the SRC Act to provide weekly compensation in respect of incapacity for work resulting from an injury, where the quantum of weekly compensation is calculated by subtracting the amount the injured employee is able to earn from the amount of his or her normal weekly earnings prior to the injury, as adjusted from time to time. The section does not operate to reduce an injured employee’s NWE amount on the basis of the amount he or she is entitled to be paid during periods of leave when the employee is not working and performing duties in employment.
59.The comparison of NWE and notional weekly earnings under sections 8(10)(a) or (b) requires one to consider the terms, conditions and circumstances of employment (including the actual duties or work of the employee) at the time of injury, during the relevant period, and the effect of variations in those terms, conditions and circumstances of employment from time to time during the subsequent period of incapacity for work. If that comparison does not reveal any significant disparity in NWE and notional weekly earnings, but the employee’s actual weekly earnings at a point in time are temporarily reduced in particular circumstances, it is doubtful that section 8(10)(a) would operate to reduce the employee’s NWE during the period of reduced earnings.
60.Mr Goodwin contended that the averaging principles that apply in relation to the relevant period for the purposes of sections 8(1) and (2), in this case over a full year in respect of a group of comparable employees, may be relevant considerations when assessing the employee’s notional weekly earnings for the purposes of sections 8(10)(a) or (b). As it appears to me the assessment of an injured employee’s notional weekly earnings may properly take into account factors and variables over a period that affect his or her likely earnings in a particular week or weeks. The point of comparison is not the amount that is actually earned in respect to the hours actually worked in any particular week; it is the notional amount of weekly earnings the employee would receive. The phrase ‘the amount per week of the earnings the employee would receive if he or she were not incapacitated for work’ and the hypothetical analysis it requires is sufficiently broad in purpose and meaning to permit an assessment of weekly earnings with reference to factors and variables that bear upon the likely or average weekly earnings of the employee in employment during a period.
61.It can readily be accepted that periods of absence on leave from employment may well bear upon the determination of a person’s actual weekly earnings, in respect of regular overtime, for example. It is perhaps for this reason that section 9(4) expressly excludes from the ‘relevant period’ a period of absence ‘for any reason’ from the employment that resulted in a reduction in the employee’s earnings when calculating an employee’s NWE prior to injury. Why a different approach should be adopted under section 8(10) is very far from clear. The absence of any express provision under section 8 to increase or decrease a person’s NWE on the basis of any leave of absence from the employment suggests that such variations were not intended.
62.It would be surprising, and in my view impermissible, if the amount of the weekly compensation is reduced on the basis of a temporary absence from employment on leave when the relevant period in relation to which the initial NWE calculation is to be made expressly excludes any absence that results in the reduction of the employee’s earnings. If there is ambiguity in the terms of section 8, a liberal or beneficial construction that promotes the objects of the Act is to be preferred.
inconsistent outcomes
63.Under the construction for which JACS contends an injured employee whose earnings are reduced when taking leave of absence from employment would have his or her NWE reduced during the period of absence and would receive less weekly compensation under section 19 as a result. An equivalent injured employee who ceased employment instead of taking leave would not face an equivalent reduction in NWE or weekly compensation as a result of his or her absence from employment. Why a construction that is productive of such apparent inconsistency should be preferred is far from clear. I see no reason why absence from employment should be treated differently when assessing notional weekly earnings for the purposes of section 8(10)(a) or section 8(10)(b).
64.For the purposes of section 8(10) it is not appropriate to compare an incapacitated employee’s NWE amount with the amount that he or she would be paid during a period of absence from employment during which the employee actually or notionally does no work and performs no duties. The weekly amount a person actually earns or is able to earn in suitable employment while incapacitated after an injury is properly taken into account in the calculation of weekly compensation under section 19; it does not form the basis of a proper comparison between NWE and notional weekly earnings for the purposes of section 8(10).
65.Construing section 8(10) in the manner for which JACS contends is not consistent with its express terms or the objects and purposes of the SRC Act and, being productive of stark inconsistency, it could not have been intended by the legislature or the drafters of the Act.
statutory bar on payment for overtime
66.JACS says that the statutory bar on payments in respect to overtime during the period of Mr Goodwin’s long service leave under section 411 of the Standards cannot simply be ignored.
67.There are a number of things to say about this. Section 411 of the Standards provides that ‘salary’, for the purposes of long service leave, does not include overtime payments, as defined. It is not correct to assume that an NWE amount calculated under section 8 or an amount of weekly compensation calculated under section 19 is within the meaning of ‘salary’ or ‘overtime payment’ for the purposes of the Standards or the PSM Act.
68.An NWE amount under section 8 is not a payment of any kind – it is simply an average amount of weekly earnings prior to injury that is based on average normal weekly hours, including overtime. It is not within the meaning of an ‘overtime payment’ as defined by section 411 of the Standards and it is not a payment ‘in lieu of overtime’. For similar reasons an NWE amount is not ‘salary’ for the purposes of sections 151 and 162 of the PSM Act. The NWE amount is not calculated under sections 8(1) and (2) for each week in which the employee is incapacitated after an injury. It is adjusted under sections 8(6), (7), (9), (9A) to (9G), and (10) over time in reflection of changing employment circumstances, and it is applied for the purposes of calculating weekly compensation that is payable under section 19 of the SRC Act.
69.Weekly compensation payments under section 19 are not correctly characterised as ‘salary’ under sections 151 and 162 of the PSM Act, or section 411 of the Standards; nor are they correctly characterised as ‘overtime payments’. Weekly compensation is just that; it is weekly compensation in respect of an injury that results in incapacity for work. It is properly characterised as income support in respect of an incapacitating injury that reduces the employee’s ability to earn, where the amount of the compensation is calculated by subtracting the amount that the injured employee is able to earn from the amount of his or her NWE as adjusted from time to time. The result amount of weekly compensation is not properly characterised as ‘salary’ or an ‘overtime payment’ in the context of employment under the PSM Act. It follows that the statutory bar under section 411 of the Standards in respect of overtime payments does not apply to payments of weekly compensation under the SRC Act.
conclusion
70.Thus, in sum, the construction contended for by JACS is not preferred and it is not made out.
71.For the purposes of section 8(10) of the Act, Mr Goodwin was not employed during the period of his long service leave from 18 August 2008 to 19 December 2008. His NWE amount during this period is to be assessed under section 8(10)(b). Under that section, the notional weekly earnings that he would have received, providing service during the period of his absence from employment on leave, is the amount that he would have received if he had continued to be employed in the employment in which he was engaged at the date of his injury. That amount would have included 9 hours per week overtime. I can see no reason why the resulting amount of his notional weekly earnings would be less than his NWE during the period of long service leave.
72.It follows and I am reasonably satisfied that Mr Goodwin’s NWE amount as calculated under sections 8(1) to (9G) does not exceed the amount of the earnings he would have received from 18 August 2008 to 19 December 2008 if the employment in which he was engaged at the date of his injury had continued. That being so, section 8(10) does not operate to reduce his NWE amount during the period of his long service leave.
73.The same result would be obtained by applying section 8(10)(a) if Mr Goodwin had continued to provide service and receive earnings in employment, free from incapacity, during the period of his long service leave.
74.The decision under review is affirmed.
I certify that the 74 preceding paragraphs are a true copy of the reasons for the decision herein of Mr S. Webb, Member.
Signed: ....................[sgd]............................................................
H. Choi (Associate)Date of Hearing 13 May 2011
Date of Decision 4 July 2011
Counsel for the Applicant Mr R. Cook
Solicitor for the Applicant Ms E. Clarke, ACT Government Solicitor
Counsel for the 1st Respondent Mr A. DillonSolicitor for the 1st Respondent Ms L. Tolland, Australian Government Solicitor
Counsel for the 2nd Respondent Mr A. Muller
Solicitor for the 2nd Respondent Ms S. Schoonwater, Slater & Gordon
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