Annabelle Nicolas and Comcare
[2014] AATA 189
[2014] AATA 189
Division GENERAL ADMINISTRATIVE DIVISION File Number(s)
2013/3160
Re
Annabelle Nicolas
APPLICANT
And
Comcare
RESPONDENT
Decision
Tribunal Deputy President RP Handley
Date 4 April 2014 Place Sydney The Tribunal:
(1) Sets aside the decision under review and remits the matter to the Respondent with a direction that Ms Nicolas’s entitlement to compensation for incapacity for work under s 19 of the Safety, Rehabilitation and Compensation Act 1988 (the SRC Act) be calculated on the basis of an average working week of 20 hours.
(2) Pursuant to s 67(8) of the SRC Act, orders that the Respondent pay the costs of these proceedings incurred by the Applicant.
........................[sgd]................................................
Deputy President RP Handley
Catchwords
COMPENSATION – normal weekly earnings – normal hours – relevant period – whether because of the shortness of the relevant period it would not fairly represent the applicant’s normal weekly earnings – two years off work before the injury – had only worked for nine days on a graduated return to work program – relevant period would not fairly represent normal weekly earnings – such other period as is considered reasonable – intervening accident unrelated to the Applicant’s employment – normal hours discounted to take into account the impact on capacity to work – normal hours of 20 hours per week – decision set aside and remitted
Legislation
Safety, Rehabilitation and Compensation Act 1988 (Cth) ss 4(1), 8, 9, 19
Cases
Brady and Comcare [2013] AATA 559
Comcare v Heffernan [2011] FCAFC 131
Comcare v Thompson (2000) 100 FCR 375
Gray v Comcare (2004) 139 FCR 41
Telstra Corporation Limited v Peisley [2006] FCAFC 79
West and Telstra Corporation [2002] AATA 852
Zegura and Comcare (AAT 11555, 13 January 1997 – oral decision)
Zegura and Comcare [1998] AATA 199REASONS FOR DECISION
Deputy President RP Handley
Ms Nicolas (the Applicant) has applied to the Tribunal for a review of a decision made by Comcare (the Respondent) to calculate Ms Nicolas’ entitlement to compensation for incapacity for work on the basis of her having worked 12 hours per week.
BACKGROUND
Ms Nicolas, who was born in 1980, began working full-time for Centrelink in April 2001. On her return to work in January 2008, after the birth of her first child in March 2007, Ms Nicolas commenced part-time work for 30 hours per week. However, she also regularly worked three to four hours overtime per week.
Following a non-work related car accident on 8 December 2008, Ms Nicolas reduced her working hours. Because of injuries from the accident and also pregnancy complications, Ms Nicolas did not work at all in the period 26 February 2009 to 1 May 2011, apart from two days in April 2010, taking a combination of personal and maternity leave. In April 2009, she gave birth to her second child and in May 2009 she had spinal surgery.
On 2 May 2011, Ms Nicolas returned to work on a graduated return to work program. Under the agreed program, Ms Nicolas was expected to work 12 hours per week in the first two weeks, with those hours increasing over the following weeks until she was working 22.5 hours per week.
In early May 2011, Ms Nicolas’ insurance claim with respect to the car accident in 2008 was yet to be finalised. On 13 May 2011, she received a document from her solicitor that had been sent by Ms Nicolas’ Centrelink Rehabilitation Case Manager to Allianz Insurance providing information about her mental health, and requesting further information from Allianz. This email caused Ms Nicolas considerable anxiety, and she was subsequently diagnosed with Adjustment Disorder with Mixed Anxiety and Depressed Mood. Comcare accepted liability for this condition in its decision of 23 August 2011.
At the time of her injury on 13 May 2011, Ms Nicolas was only working 12 hours per week. In subsequent determinations by Comcare, Ms Nicolas’ entitlement to compensation for incapacity for work was calculated on the basis that her normal weekly hours were 12 hours per week. These decisions were affirmed by a review officer in a decision dated 20 May 2013. On 3 July 2013, the Applicant applied to the Tribunal for a review of this decision.
LEGISLATION AND ISSUES
The issue for the Tribunal is the identification of the period to be used in calculating Ms Nicolas’ ‘normal weekly earnings’ for the purpose of assessing her entitlement to compensation for incapacity for work under s 19 of the Safety, Rehabilitation and Compensation Act 1988 (Cth) (the SRC Act). ‘Normal weekly earnings’ are defined in s 4(1) to mean “the normal weekly earnings of an employee calculated under section 8”.
Section 8 of the Act provides relevantly:
(1) For the purposes of this Act, the normal weekly earnings of an employee (other than an employee referred to in subsection (2)) before an injury shall be calculated in relation to the relevant period under the formula:
where:
NH is the average number of hours worked in each week by the employee in his or her employment during the relevant period;
RP is the employee’s average hourly ordinary time rate of pay during that period; and
A is the average amount of any allowance payable to the employee in each week in respect of his or her employment during the relevant period, other than an allowance payable in respect of special expenses incurred, or likely to be incurred, by the employee in respect of that employment.
(2) Where an employee is required to work overtime on a regular basis, the normal weekly earnings of the employee before an injury shall be the amount calculated in accordance with subsection (1) plus an additional amount calculated in relation to the relevant period under the formula:
where:
"NH" is the average number of hours of overtime worked in each week by the employee in his or her employment during the relevant period; and
"OR" is the employee's average hourly overtime rate of pay during that period.
…
(4) Where, because of the shortness of the relevant period, it is impracticable to calculate the normal weekly earnings of an employee before an injury under subsection (1) or (2), the normal weekly earnings of the employee before the date of injury shall be taken to be the normal weekly earnings before that date of another employee performing comparable work, being normal weekly earnings from employment by the Commonwealth or a licensed corporation and calculated under subsection (1) or (2), as the case requires.
8(5) Where, because of the shortness of the relevant period, the normal weekly earnings as calculated in relation to the relevant period under subsection (1) or (2) would not fairly represent the weekly rate at which the employee was being paid in respect of his or her employment before the injury, the normal weekly earnings before the date of the injury shall be calculated in relation to such other period as Comcare considers reasonable for the purpose of arriving at an amount that does fairly represent the weekly rate at which the employee was being so paid.
The relevant period referred to in s 8(1) is defined in s 4(1) as meaning “the period calculated under section 9”. Section 9 provides relevantly:
(1) For the purposes of calculating the normal weekly earnings of an employee before an injury, a reference in section 8 to the relevant period is, subject to this section, a reference to the latest period of 2 weeks before the date of the injury during which the employee was continuously employed by the Commonwealth or a licensed corporation.
During the period 8 December 2008 to May 2011, Ms Nicolas took long periods of personal leave and maternity leave during which she often had no income from her employment. Moreover, when she did work during this time, her earnings were less than those before 2008. The Applicant submits that this enlivens subsection 9(4) of the Act:
9(4) If, during any part of the period calculated under the preceding subsections, the employee's earnings were reduced, or the employee did not receive any earnings, because of absence from his or her employment for any reason, that part of that period shall be disregarded for the purposes of calculating the relevant period.
Ms Nicolas’s Evidence
Ms Nicolas confirmed that the motor vehicle accident which took place on 8 December 2008 and in respect of which her claim for compensation was made against Allianz Australia Insurance Ltd, was settled for the sum of $660,000 inclusive of costs on 24 May 2011. She acknowledged that, in those proceedings, her solicitor submitted on her behalf that, by reason of her injuries, she had lost “at least 50% of her pre accident earning capacity”. Before the accident, she was working on the basis of a permanent part-time work agreement of 30 hours per week plus overtime subject to her family commitments.
Ms Nicolas was taken to her return to work agreement with Centrelink signed on 18 April 2011 by which she agreed to work four hours a day on three days a week – a total of 12 hours a week – for the period 2 May 2011 to 20 May 2011. Ms Nicolas said the goal was to gradually increase her working hours to 22.5 hours per week. A second return to work agreement signed on 19 May 2011 allowed for the same hours over the period 21 May 2011 to 2 July 2011.
Ms Nicolas was asked why she did not query the number of hours for which she was receiving incapacity payments until nearly two years after the acceptance of her claim. She said she had raised her concern that she should being paid for more than 12 hours per week with her Case Manager at Centrelink, Elizabeth Phillips, on numerous occasions but was told that this could not be taken further.
Submissions
Ms Fraser, for the Applicant, noted that the injury occurred on 13 May 2011 and that Ms Nicolas returned to work on 2 May 2011, only 11 days before the accident. This did not, therefore, constitute a full period of two weeks before the date of injury, which is the period referred to in s 9(1) of the SRC Act. Ms Fraser submitted that the discretion in s 8(5) should be exercised and the period before the motor vehicle accident on 8 December 2008 should be taken into account as the relevant period for the purpose of calculating Ms Nicolas’s normal weekly earnings. However, the Applicant accepts that the 30 hours a week she was working at that time, plus overtime averaging 3.3 hours per week, should be discounted to take into account the effects of the motor vehicle accident. Ms Fraser submitted that the goal of 22.5 hours per week adopted as the goal of Ms Nicolas’s return to work program with Centrelink plus 2.5 hours overtime, a total of 25 hours per week – equivalent to a discount of 25% on the hours worked before the motor vehicle accident - was consistent with the terms of the settlement of her claim for that accident.
Ms Fraser submitted that the discretion afforded by s 8(5) of the SRC Act is unconfined but the benchmark is what is fair to both parties.
Mr Dube, for the Respondent, submitted that the latest two weeks before the injury on 13 May 2011 fairly represents Ms Nicolas’s normal weekly earnings before the injury. She did not work overtime during those weeks and there is no provision in the SRC Act allowing for a component for overtime to be included in her normal weekly earnings. In Brady and Comcare [2013] AATA 559 (Brady), at [19], the Tribunal emphasised that it is only overtime during the relevant period that can be taken into account.
Mr Dube said that s 8 and s 9 of the SRC Act determine the process by which a person’s normal weekly earnings must be calculated. Section 8 does not permit the Tribunal to take into consideration the number of hours the person may work in the future, or future salary increases, for example those negotiated under a workplace agreement: Comcare v Thompson (2000) 100 FCR 375, for example at [38] (per Finn J); Brady, at [18].
Mr Dube submitted that s 8(4) and s 8(5) of the SRC Act are not applicable in this case. In the 12 months before the injury, Ms Nicolas had not worked at all except the 12 hours per week from 2 May 2011. No purpose would be served by identifying a longer period rather than the two weeks before the injury. As the Tribunal stated in Brady at [16]:
… there is no fact or circumstance, including “the shortness of the relevant period”, which make it “impracticable” to calculate her NWE before the compensable injury under s 8(1) or s 8(2) of the SRC Act.
Moreover, what Ms Nicolas was paid in the two weeks before the injury reflects both what she was paid in that period and what she was meant to be paid.
Ms Fraser said that the Applicant does not seek to rely on s 8(4) but noted that while s 8(4) is directed at practicality, s 8(5) expressly requires the decision-maker to consider whether, because of the shortness of the relevant period, the normal weekly earnings, as calculated in relation to the relevant period, would not fairly represent the weekly rate at which the employee was being paid before the injury.
Discussion
As stated above, the issue for the Tribunal is the identification of the period to be used in calculating Ms Nicolas’ normal weekly earnings for the purpose of assessing her entitlement to compensation for incapacity for work under s 19 of the SRC Act. Section 8 sets out how an employee’s normal weekly earnings are to be calculated. Section 9(1) provides that a reference to the words ‘relevant period’ in s 8 is “a reference to the latest period of 2 weeks before the date of injury”.
However, s 8(5) provides for a possible alternative where, “because of the shortness of the relevant period, the normal weekly earnings as calculated in relation to the relevant period under s 8(1) or s 8(2) would not fairly represent the weekly rate at which the employee was being paid in respect of his or her employment before the injury”. In such a case, “the normal weekly earnings before the date of injury shall be calculated in relation to such other period as Comcare considers reasonable for the purpose of arriving at an amount that does fairly represent the weekly rate at which the employee was being paid.”
In Gray v Comcare (2004) 139 FCR 41 (Gray), at [11], Gyles J said:
… The discretion which is given to Comcare pursuant to s 8(5) to select such period as it ‘considers reasonable’ is limited only by the stated purpose of arriving at an amount that does fairly represent the weekly rate at which the employee was being paid in respect of his or her employment before the injury.
In Zegura and Comcare [1998] AATA 199, at [27], Senior Member Burton said the use of the words ‘fairly represent’ does not mean that the figure which most favours the worker must be adopted: while the SRC Act is remedial legislation, this is not a construction supported by the wording of the provision.
In Gray, at [14], Gyles J commented, on the issue of normal weekly earnings:
In my opinion, the search for ‘normal weekly earnings’ in this statutory context plainly means ‘normal whilst working’. An employee does not work whilst absent on sick leave. During that period, an employee neither earns nor receives payment for work. Even if sick pay were received during that period, that would not be correctly described as earnings in the relevant sense. That is even clearer where no remuneration at all is received for the relevant period of sick leave. Section 19 would certainly work unfairly if the normal weekly earnings were depressed below a proper casual rate. In my opinion, s 8(4) and s 9(4) give support to this reasoning.
In the first Tribunal decision in Zegura and Comcare (AAT 11555, 13 January 1997 – an oral decision), Senior Member Allen said that where the discretion in s 8(5) is exercised, the relevant period will vary according to the facts and circumstances of each particular case, a comment cited with approval by Senior Member Bell in West and Telstra Corporation [2002] AATA 852, at [28]. Coincidentally, in both West and Zegura, the Tribunal determined that a period of 12 months would be the appropriate period for the calculation to fairly represent the weekly rate at which the employee was being paid.
In my view, the discretion under s 8(5) should be exercised in the Applicant’s favour. Here it was personal leave taken following the motor vehicle accident and maternity leave that led to Ms Nicolas not working, except for a few days, in the period between 8 December 2008 and 2 May 2011. When she returned to work on 2 May 2011, it was on a graduated return to work program commencing with her working four hours per day on three days a week and with the goal of increasing her hours to 22.5 hours per week over the period through to July 2011.
In my view, reliance on the nine working days prior to Ms Nicolas’s injury on 13 May 2011 for the purpose of calculating her normal weekly earnings, does not permit the calculation of an amount that would fairly represent her normal weekly earnings before the injury. Having regard to the comments made by Gyles J in Gray at [14] quoted above, it should be remembered that the calculation is of normal weekly earnings. The nine working days prior to the injury were part of a graduated return to work program agreed between Ms Nicolas and Centrelink. The goal was to lift her working hours from the 12 hours per week worked in the initial period commencing on 2 May 2011, to 22.5 hours per week by the end of July. Thus, it is evident that the parties to the return to work program did not regard 12 hours per week as her normal hours.
In determining what period would be reasonable, it should be noted that in Ms Nicolas’s case, the ‘relevant period’, which was slightly short of “the latest period of 2 weeks before the date of injury” (s 9(1)), involved her working reduced hours as part of a return to work program. As a result, her earnings were also reduced. To that extent, s 9(4) is also relevant and permits the period of reduced earnings to be disregarded for the purpose of calculating the relevant period.
The discretion in s 8(5) of the SRC Act is obviously intended to permit the decision-maker to use a different period for the calculation of normal weekly earnings because of the shortness of the relevant period if this is considered “reasonable for the purpose of arriving at an amount that does fairly represent the weekly rate at which the employee was being so paid”. As the Full Federal Court emphasised in Comcare v Heffernan [2011] FCAFC 131, an applicant’s normal working hours are to be calculated by reference to the period before the relevant work injury. Significantly, Downes J stated at [42]:
Although s 9 assumes, rather than directs, that the calculation shall be made by reference to before injury hours, that seems to be consistent with the thrust of the legislation. In nearly every case the comparator is earnings or hours before injury. There is a logic behind this. It seems natural that comparisons to provide a benchmark will logically be made with the position before injury rather than with a potentially changing comparator after injury, particularly where the determination of the comparator is, to some extent, within the control of the employee.
The difficulty in Ms Nicolas’s case is in identifying another period considered reasonable for the purpose of calculating an amount that fairly represents the weekly rate at which she was being paid. Ms Nicolas was injured in a non-work related motor vehicle accident on 8 December 2008. As a result of injuries received in that accident, and also because of complications arising from her pregnancy leading to the birth of her second child in April 2009, she only worked, it would seem, two days in the period 8 December 2008 to 2 May 2011.
At the time of the motor vehicle accident on 8 December 2008, Ms Nicolas was working 30 hours a week pursuant to a permanent part-time work agreement plus overtime subject to Ms Nicolas’s other commitments. The overtime varied from week to week but I accept the Applicant’s estimate that this averaged about 3.3 hours per week.
The settlement of Ms Nicolas’s motor vehicle accident claim against Allianz Australia Insurance Ltd included a component for reduced capacity for work. The particulars of claim included a submission that she had lost at least 50% of her pre accident earning capacity. This part of her claim was never tested with her claim being settled for a gross amount of $660,000 inclusive of costs and out of pocket expenses.
The Applicant accepts that the calculation of normal weekly earnings for Ms Nicolas must take account of her reduced earning capacity as a result of the motor vehicle accident. Ms Fraser submitted that 25 hours per week, comprising 22.5 hours part-time work plus 2.5 hours overtime, should be considered reasonable as a fair representation of her normal weekly earnings before the injury.
Firstly, I am not satisfied from the evidence that Ms Nicolas was required to work overtime on a regular basis. Overtime need not be contractually required in order for the requirements of s 8(2) to be met. The Full Court of the Federal Court stated in Telstra Corporation Limited v Peisley [2006] FCAFC 79, at [34]:
… the word ‘required’, in this context, includes situations where the employee is placed under obligation by the employer, even by a separate agreement that may not be legally enforceable but which constitutes an authority to work the additional hours.
While there is evidence before the Tribunal that Ms Nicolas worked regular overtime, there is no evidence of whether that overtime was required by her employer. As a result, s 8(2) is not relevant here and overtime should not be included in the calculation.
The question remains as to what is reasonable in this case? Reasonableness is referable in s 8(5) to the notion of fairness. As stated by the Federal Court in Gray (2004) 139 FCR 41, at [11], the discretion in s 8(5) is only limited by the purpose of arriving at a fair representation of the weekly rate that an individual was being paid prior to the injury.
There is no guidance in the Act as to the meaning of ‘fairly represents’. As noted above, that interpretation which most favours the worker is not necessarily to be preferred: Zegura [1998] AATA 199, at [27]. It was submitted on behalf of the Applicant that the Tribunal should consider the year prior to when Ms Nicolas concluded work in 2008 as a baseline for calculating her normal hours. The term ‘normal hours’ is defined in s 8 as the average number of hours worked during the relevant period. Applying this to the period selected by the Applicant as a baseline, without any reduction for the impact of the motor vehicle accident, would result in Ms Nicolas’ entitlement to compensation being calculated on the basis that she normally worked 30 hours per week. That amount of weekly hours was one which, because of the motor vehicle accident, Ms Nicolas no longer had the capacity to work.
Section 15AA(1) of the Acts Interpretation Act 1901 (Cth) provides that, in the interpretation of a statutory provision, a construction that would promote the purpose or object of the legislation shall be preferred to one that would not do so. The SRC Act is directed towards compensating Commonwealth employees for work-related injuries. A fair representation of what an employee was being paid prior to an injury would not likely be one that would result in Comcare paying compensation for that part of an Applicant’s incapacity that resulted from an intervening event, unrelated to the Applicant’s employment. Such an interpretation would be inconsistent with the purpose of the Act.
It is therefore reasonable that an amount which ‘fairly represents’ the weekly rate that an employee was being paid would be one that is discounted for any incapacity caused by a non-work-related event prior to the injury.
On this basis, doing the best I can in the absence of any reliable evidence as to her capacity to work after the 2008 injury, and using the 30 hours per week Ms Nicolas last worked in the weeks before the motor vehicle accident as a baseline for her pre-injury hours and, discounting this to allow for her reduced earning capacity as a result of the motor vehicle accident, a figure of 20 hours per week would be reasonable for the purpose of fairly representing her normal weekly earnings before the injury. I have selected this figure on the basis that it represents four hours a day on five days or week or, alternatively, five hours a day on four days a week. This takes into account that, in the period 2 May to 13 May 2011, Ms Nicolas apparently had the capacity to work four hours a day on three days a week.
Decision
The Tribunal:
(1) Sets aside the decision under review and remits the matter to the Respondent with a direction that Ms Nicolas’s entitlement to compensation for incapacity for work under s 19 of the SRC Act be calculated on the basis of an average working week of 20 hours.
(2) Pursuant to s 67(8) of the SRC Act, orders that the Respondent pay the costs of these proceedings incurred by the Applicant.
I certify that the preceding 40 (forty) paragraphs are a true copy of the reasons for the decision herein of Deputy President RP Handley ......................[sgd]..................................................
Associate
Dated 4 April 2014
Date(s) of hearing 24 March 2014 Date final submissions received 24 March 2014 Counsel for the Applicant Ms M Fraser Solicitors for the Applicant Mr M Castagnet, Castagnet Lawyers Counsel for the Respondent Mr B Dube Solicitor for the Respondent Mr P Lehmann, Comcare
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