Australian Capital Territory v Comcare

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FEDERAL COURT OF AUSTRALIA

Australian Capital Territory v Comcare [2012] FCA 67

Citation: Australian Capital Territory v Comcare [2012] FCA 67
Appeal from: ACT Department of Justice and Community Safety and Comcare and Anor [2011] AATA 467
Parties: THE AUSTRALIAN CAPITAL TERRITORY
v COMCARE and NEIL GOODWIN
File number: ACD 40 of 2011
Judge: BENNETT J
Date of judgment: 10 February 2012
Corrigendum: 24 April 2012
Catchwords: WORKERS’ COMPENSATION – employee’s weekly compensation payments under s 19 Safety, Rehabilitation and Compensation Act 1988 (Cth) – normal weekly earnings adjustment under s 8(10) – application of s 8(10)(a) where employee on long service leave – scope of term “employment” in s 8(10) – comparison of normal weekly earnings with notional earnings during period of long service leave – non-inclusion of overtime payments
Legislation: ACT Fire Brigade Union Collective Agreement 2006 - 2010 cl 78
Administrative Appeals Tribunal Act 1975 (Cth) s 44
Public Sector Management Act 1994 (ACT) part 7, ss 152 and 158
Public Sector Management Standards 2006 (ACT) part 4.18 and s 411
Safety, Rehabilitation and Compensation Act 1988 (Cth) ss 8(10), 9 and 19
Cases cited: Comcare v Burgess (2007) 164 FCR 66, not followed
John Holland Group Pty Ltd v Robertson (2010) 185 FCR 566, applied
Date of hearing: 19 December 2011
Place: Canberra
Division: GENERAL DIVISION
Category: Catchwords
Number of paragraphs: 55
Counsel for the Applicant: Mr P Hanks QC with Mr R Cook
Solicitor for the Applicant: ACT Government Solicitor
Counsel for the First Respondent: Mr T Howe QC
Solicitor for the First Respondent: Australian Government Solicitor
Counsel for the Second Respondent: Mr A Muller
Solicitor for the Second Respondent: Slater & Gordon

FEDERAL COURT OF AUSTRALIA

Australian Capital Territory v Comcare [2012] FCA 67

CORRIGENDUM

1.In paragraph 3 of the Orders, the words “the Tribunal” should read “Comcare”.

I certify that the preceding one (1) numbered paragraph is a true copy of the Corrigendum to the Reasons for Judgment herein of the Honourable Justice Bennett.

Associate:

Dated:  24 April 2012


IN THE FEDERAL COURT OF AUSTRALIA

AUSTRALIAN CAPITAL TERRITORY DISTRICT REGISTRY

GENERAL DIVISION

ACD 40 of 2011
ON APPEAL FROM THE ADMINISTRATIVE APPEALS TRIBUNAL
BETWEEN:

THE AUSTRALIAN CAPITAL TERRITORY
Applicant
AND:

COMCARE
First Respondent

NEIL GOODWIN
Second Respondent

JUDGE:

BENNETT J

DATE OF ORDER:

10 FEBRUARY 2012

WHERE MADE:

CANBERRA

THE COURT ORDERS THAT:

1.The appeal be allowed.

2.The decision of the Tribunal be set aside and the following decision substituted:

(a)       The decision of Comcare is set aside.

(b)In substitution, it is decided that the compensation payable to the second respondent, Mr Goodwin, pursuant to s 19 of the Safety, Rehabilitation and Compensation Act 1988 (Cth) during the period of his long service leave between 18 August 2008 and 19 December 2008 must be calculated by reference to Mr Goodwin’s normal weekly earnings excluding overtime.

3.The matter is remitted to the Tribunal to decide according to law.

4.The first respondent pay the applicant’s and second respondent’s costs of the application.

Note:Entry…

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Details
Case
[2012] FCA 67
Decision Date

CaseChat Overview and Summary

In Australian Capital Territory v Comcare, the Federal Court was asked to consider the proper calculation of weekly compensation payments under the Safety, Rehabilitation and Compensation Act 1988 (Cth) for an employee on long service leave. The case concerned Mr Goodwin, who was receiving workers’ compensation after an injury and was on long service leave at the time. The central issue was whether Mr Goodwin’s normal weekly earnings (NWE) should include overtime payments during his period of long service leave, and consequently, whether his compensation payments should be adjusted under s 8(10) of the Act.

The legal issue before the court was whether Mr Goodwin’s NWE should be reduced during his long service leave period to reflect that he was not working and therefore not earning overtime. The court had to interpret the term “employment” under s 8(10) of the Act and determine if it included periods when the employee was on long service leave. The court considered whether Mr Goodwin was still “employed” in the sense required by s 8(10) when he was on leave, despite receiving salary payments.

The court held that Mr Goodwin was not “employed” during his long service leave because he was not performing work or providing service. Therefore, the Tribunal’s decision to not reduce Mr Goodwin’s NWE during his leave period was affirmed. The court found that the compensation payable to Mr Goodwin should not include an amount paid for working overtime, as this would render him better off due to his incapacity, which was contrary to the compensatory nature of the statutory regime. The court thus allowed the appeal, set aside the Tribunal’s decision, and remitted the matter to the Tribunal to decide according to law, ensuring that Mr Goodwin’s compensation was calculated without including overtime payments during his leave.

Orders

Orders of the court

1. The appeal be allowed.

2. The decision of the Tribunal be set aside and the following decision substituted:

(a) The decision of Comcare is set aside.

(b) In substitution, it is decided that the compensation payable to the second respondent, Mr Goodwin, pursuant to s 19 of the Safety, Rehabilitation and Compensation Act 1988 (Cth) during the period of his long service leave between 18 August 2008 and 19 December 2008 must be calculated by reference to Mr Goodwin’s normal weekly earnings excluding overtime.

3. The matter is remitted to the Tribunal to decide according to law.

4. The first respondent pay the applicant’s and second respondent’s costs of the application.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Subsection 411(4) then defined an overtime payment as, relevantly:(a) a payment, however described, for work in excess of standard hours; or(b) …(c)a payment to an officer for all of their overtime work regardless of its length or frequency; or(d) any other payment in lieu of a payment for overtime.THE TRIBUNAL DECISION In its written submissions, the ACT adequately summarised the Tribunal’s reasons as follows in [17] to [24] below: The Tribunal determined that the term “employment” as used in the SRC Act, ‘essentially includes the performance of duties or work’ (at [31]). Section 8(10)(a) of the SRC Act would only apply where, during the relevant period, the employee continued to work, providing service, to receive earnings in the employment during that week (at [33]). If the answer to that question were “no”, then s 8(10)(b) would apply. The Tribunal determined that, ‘while absent on leave [Mr Goodwin] did no work and provided no service, other than perhaps being absent on long service leave’; and ‘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 s 8(10)’ (at [40]). The Tribunal concluded as follows (at [41]):For this reason I am reasonably satisfied that Mr Goodwin did not continue to be ‘employed’ for the purpose 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. Applying s 8(10)(b) of the SRC Act, the Tribunal at [47] concluded that there was no reduction of Mr Goodwin's NWE during the period of his long service leave; so that the decision under review should be affirmed. The Tribunal then looked at the question whether there would be a reduction in Mr Goodwin’s normal weekly earnings if s 8(10)(a) had applied. It appears that the AAT would have found that the amount per week of the earnings that Mr Goodwin would have received for the purposes of s 8(10)(a) during the period of his leave would be ‘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’ (at [51]). That analysis was plainly affected by the Tribunal's understanding that Mr Goodwin could only be regarded as “employed”, for the purposes of s 8(10)(a), if he was undertaking work and providing service to the ACT. The Tribunal (at [52]) determined that its construction was consistent with the reasoning of Greenwood J in Comcare v Burgess (2007) 164 FCR 66; and with the law as stated by Dowsett J in John Holland Group Pty Ltd v Robertson (2010) 185 FCR 566 at [74].

Ratio Decidendi

Legal Principle Established

The ACT contends that, on the uncontested facts as found by the Tribunal, the Tribunal should have found that during the period of Mr Goodwin’s long service leave, the compensation payable to him under s 19 of the SRC Act should not have included an amount paid for working overtime.CONSIDERATION The issue to be decided has a narrow compass. It is necessary to determine whether Mr Goodwin’s NWE amount should be reduced under s 8(10) of the SRC Act during the leave period from 18 August 2008 to 19 December 2008. It should be noted at the outset that neither the ACT, nor Comcare, nor Mr Goodwin supports the reasoning or the conclusions of the Tribunal. All parties contend that s 8(10)(a) of the SRC Act applies. Mr Goodwin filed a notice of contention but accepts that the subject matter of that notice is not properly for consideration by the Court in these proceedings. The question is whether Mr Goodwin is entitled to be paid for overtime while absent on approved long service leave. By operation of clause 78 of the Agreement, s 152 of the PSM Act and s 411 of 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 s 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’. The ACT points out that, as Mr Goodwin’s NWE during the leave period was calculated on the basis of 9 hours per week overtime, his NWE amount exceeded the weekly amount he would have been paid in his continuing employment absent incapacity during the leave period. This renders Mr Goodwin better off as a result of his injury than he would otherwise have been as, if he were not incapacitated for work, he would not have received overtime pay during the leave period. This would be rectified under s 8(10) of the SRC Act by reducing Mr Goodwin’s NWE during the leave period. The correct test under s 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. In Burgess, Greenwood J considered the position where an employee had been suspended from employment without pay while she was receiving compensation for a work-related injury. His Honour set out the purpose of the statutory regime at [19]:The SRC Act provides for a statutory compensation regime in respect of an injury suffered by an employee if the injury results (among other things) in incapacity for work. The regime is compensatory. The expression of that compensation for incapacity for work is found in a formula that adjusts (according to a range of considerations) normal weekly earnings determined immediately prior to the injury so that an incapacitated employee receives compensation for lost earnings or at least a statutory proportion of those lost normal weekly earnings during each week the incapacity endures. Because the regime is compensatory, the determination of normal weekly earnings (as the foundation for the ultimate calculation of the compensatory payment) is to be reached having regard to whether the statutory calculation (according to s 8(1) to s 8(9) of the SRC Act) of normal weekly earnings is greater than the amount an employee would have received had he or she not been incapacitated for work by reason of the injury. If the normal weekly earnings so determined exceed those earnings, normal weekly earnings are reduced by the amount of the excess. An employee (subject to the adjustments incorporated within the formula) ought not, as a matter of statutory purpose, to be better off by way of compensation than he or she would have been had incapacity not resulted from the injury.