Bhatia v Cameron Logistics Pty Ltd
[2023] NSWPIC 540
•16 October 2023
| CERTIFICATE OF DETERMINATION OF MEMBER | |
| CITATION: | Bhatia v Cameron Logistics Pty Ltd [2023] NSWPIC 540 |
| APPLICANT: | Arjun Bhatia |
| RESPONDENT: | Cameron Logistics Pty Ltd |
| MEMBER: | Catherine McDonald |
| DATE OF DECISION: | 16 October 2023 |
| CATCHWORDS: | WORKERS COMPENSATION - Calculation of pre-injury average weekly earnings (PIAWE) under schedule 3 of the Workers Compensation Act 1987 and Part 4 of the Workers Compensation Regulation 2016 clause 8C; whether the period used to calculate PIAWE should exclude the period before pay increase under an enterprise agreement; Cain v Tamworth Aboriginal Medical Service, Firth v HammondCare, Wake v State Emergency Services and Field v Secretary, Department of Education considered; Held – that the calculation of PIAWE should exclude the period before the pay increase. |
| DETERMINATIONS MADE: | The Commission finds: 1. There was a change of an ongoing nature to the applicant’s employment arrangement resulting in a financially material change to his earnings on 8 August 2023 so that the period before that date is to be disregarded in the calculation of pre-injury average weekly earnings. 2. The applicant’s pre-injury average weekly earnings are $2,324.72. |
STATEMENT OF REASONS
BACKGROUND
Arjun Bhatia is employed by Cameron Logistics Pty Ltd (Cameron) as a driver. On 29 May 2023 he suffered a hernia injury for which Cameron’s insurer accepts liability and he remains in receipt of weekly compensation. He is awaiting surgery.
The only issue for determination is the calculation of Mr Bhatia’s pre-injury average weekly earnings (PIAWE). Mr Bhatia says that his PIAWE are $2,324.72 and Cameron says that they are $2,213.29.
PROCEDURE BEFORE THE PERSONAL INJURY COMMISSION
The proceedings were listed for preliminary conference on 26 September 2023.
I am satisfied that the parties to the dispute understand the nature of the application and the legal implications of any assertion made in the information supplied. I used my best endeavours in attempting to bring the parties to the dispute to a settlement acceptable to all of them. I am satisfied that the parties have had sufficient opportunity to explore settlement and that they have been unable to reach an agreed resolution of the dispute.
Because of the narrow dispute, I directed that the parties file written submissions.
EVIDENCE
The following documents were in evidence before the Personal Injury Commission (Commission) and considered in making this determination:
(a) Application to Resolve a Dispute and attached documents (ARD), and
(b) Reply.
There is no dispute as to the amount Mr Bhatia earned on a week by week basis. After the week ending 7 August 2022, his weekly earnings were adjusted to take account of an increase provided for in Cameron’s enterprise agreement.
The enterprise agreement relied on is the Glen Cameron Nominees Pty Ltd NSW Enterprise Agreement – 2021 – 2024.[1] Clause 8.3 set out the rates of pay for the first period after the ratification of the agreement and clauses 8.4 and 8.5 dealt with annual increases in August 2021 and 2022. Clause 8.6 provided that the rate would be increased in the week commencing 7 August 2023 by 2.5% or the Consumer Price Index. The agreement deals with many other aspects of the employment relationship, such as training, overtime, drug and alcohol policy, uniforms and licences.
[1] ARD p 120.
In a review decision dated 1 August 2023, Cameron’s insurer said that the pay increase after 8 August 2023 was not associated with any change in Mr Bhatia’s role and/or duties. The insurer said that the pay increase did not result from a change in work arrangement, and therefore would not constitute a material change.
LEGISLATION
PIAWE are calculated in accordance with Schedule 3 of the Workers Compensation Act 1987 (the 1987 Act). Clause 2 provides:
“2 Meaning of “pre-injury average weekly earnings”
(1) Pre-injury average weekly earnings, in relation to an injured worker, means the weekly average of the gross pre-injury earnings received by the worker for work in any employment in which the worker was engaged at the time of the injury.
Note—
See also clauses 3–5 relating to modifications of pre-injury average weekly earnings by agreement and in relation to apprentices, trainees and persons aged under 21 years.
(2) Except as provided by this clause (or by regulations made under this clause), in calculating the pre-injury earnings received by a worker in employment for the purposes of subclause (1), no regard is to be had to earnings in the employment paid or payable to the worker for work performed before or after the period of 52 weeks ending immediately before the date of the injury (the relevant earning period).
(3) The regulations may provide for the adjustment of the relevant earning period for a worker in employment (including, for example, by extending or reducing the period)—
(a) to take into account any period of unpaid leave or other change in earnings circumstances in the employment, or
(b)to align the relevant earning period with any regular interval at which the worker is entitled to receive payment of earnings for work performed in the employment.
(4) …”
Clause 6 provides:
“6 Meaning of “earnings”
(1) The earnings received by a worker in respect of a week means the amount that is the income of the worker received by the worker for work performed in any employment during the week.”
Part 4 of Workers Compensation Regulation 2016 (the regulation) deals with PIAWE. Division 2 provides for the adjustment of the relevant earning period in certain circumstances, and that term has the same meaning as in cl 2 of Schedule 3 of the 1987 Act. Clause 8A provides:
“8A Operation of Division
(1) This Division provides for the adjustment of the relevant earning period under clause 2(2) of Schedule 3 to the 1987 Act for a worker in employment for the purposes of calculating the pre-injury average weekly earnings in relation to the worker.
(2) The relevant earning period in respect of the employment is to be adjusted in accordance with the provisions of this Division in the following order—
(a)Clause 8B (Adjustment for workers not continuously employed),
(b)Clause 8C (Adjustment for financially material change to earnings),
(c)Clause 8D (Alignment of relevant earning period with pay period),
(d)Clause 8E (Adjustment for unpaid leave),
(e)Clause 8EA (Adjustment for prescribed periods relating to COVID-19).
(3) Accordingly, a reference in a provision of this Division—
(a)to the relevant earning period is a reference to the relevant earning period as adjusted in accordance with any preceding provision applicable to the worker, or
(b)to the unadjusted earning period is a reference to the relevant earning period as so adjusted, but without regard to any adjustment under the provision in which the expression is used.”
Clause 8B provides that, for a worker not continuously employed, the relevant earning period is adjusted to exclude any period before the day on which the worker was engaged.
Clause 8C reads:
“8C Adjustment for financially material change to earnings—Schedule 3, clause 2(3)(a) of 1987 Act
(1) The relevant earning period for a worker is to be adjusted in accordance with this clause if, during the unadjusted earning period, there was a change of an ongoing nature to the employment arrangement resulting in a financially material change to the earnings of the worker (for example, a change from full-time to part-time work).
(2) The relevant earning period is to be adjusted by excluding from the period any period before the change to the earnings of the worker occurred.
There is no definition of “employment arrangement” in the Division.
Clause 8D provides for the adjustment of the relevant earning period to align with a pay period and says that the period is not to be adjusted unless the insurer is reasonably satisfied that that the amount of PIAWE is not less than the amount it would have been but for the adjustment.
Clause 8E excludes periods of unpaid leave of at least seven consecutive calendar days from the calculation and cl 8F makes adjustments for certain prescribed periods in 2020 relating to COVID-19. In broad summary, the period between 23 March 2020 and 14 June 2020 could be excluded from the calculation if a change to a worker’s employment arrangements resulted in a financially material reduction in his or her total earnings.
SUBMISSIONS
Mr Bhatia
Ms Warren of counsel prepared submissions for Mr Bhatia. After setting out the relevant legislation, Ms Warren said that cl 8C applies to the calculation of the relevant earning period in respect of Mr Bhatia and that any earnings before the “material change” in his earnings are to be excluded from the calculation. She referred to the decision of Member Wright in Cain v Tamworth Aboriginal Medical Service[2] (Cain) and the decision of Member Isaksen in Firth v HammondCare[3] (Firth).
[2] [2021] NSWPIC 193.
[3] [2022] NSWPIC 630.
Ms Warren said that the enterprise agreement under which Mr Bhatia was paid formed the basis of the employment relationship and the terms and conditions of his employment. The change in the hourly rate under the enterprise agreement was a change in the employment arrangement which resulted in a financially material change to Mr Bhatia’s earnings pursuant to cl 8C. Therefore, the relevant earning period should be adjusted from 52 weeks to 42 weeks and once so adjusted, his PIAWE are $2,324.72 (then subject to indexation).
Ms Warren said that it was appropriate to apply the decisions in Cain and Firth as a matter of comity, which she said has been held to apply in the Commission.
Cameron
Mr McManamey of counsel prepared submissions on behalf of Cameron. He said that Mr Bhatia said that his rate of pay increased on 8 August 2022 without describing the circumstances or any change in his duties, responsibilities or hours so that there was no evidence of change in the employment contract other than the rate of pay.
Mr McManamey said that the legislation was to be read as a whole giving words their usual grammatical meaning and giving all of them work to do, referring to Project Blue Sky Inc v Australian Broadcasting Authority[4] (Project Blue Sky). The legislation should be read having regard to its purpose. He accepted that the words in brackets in cl 8C are an example, and are not exhaustive of the changes that could fall within the clause, but said it must be read having regard to those words and giving them some work to do. If the regulation is interpreted as applying whenever there is a change in the rate of pay, the words in brackets have no work to do.
[4] [1998] HCA 28,(1998) 194 CLR 355.
Clause 2 of Schedule 3 of the 1987 Act provides a basis for calculating PIAWE, which is an average, anticipating that there could be increases and decreases during the period. Mr McManamey said that because changes in earnings are already contemplated in cl 2 of Schedule 3, cl 8C cannot be intended to adjust the period, simply because there is a change in the rate of pay. He referred to the decision in Cain and to Member Wright’s observation that the context of the employment arrangement should be considered with reference to a worker being a person who has entered into or works under a contract of service. Mr McManamey said that not every change in the rate of pay will be a change in the employment contract, because, for example, the contract may provide for automatic increases in pay, and in those circumstances, the change is not due to a change in the employment arrangements, but because of the arrangements already in place. Here, the change was set out in the “employment contract” – the enterprise agreement – so that the change in hourly rate was not a change in the employment contract or arrangements but because of the arrangements that were already in place.
Referring to Cain, Mr McManamey said that the Member assumed that a change of rate of pay would be a consequence of a change in the employment relationship, but did not make any finding about the circumstances. However, in that case, the employment arrangement, set a rate of pay which was later varied. That was not the case, in respect of Mr Bhatia. Mr McManamey also distinguished the cases of Firth, Wake v State Emergency Services[5] (Wake) and Field v Secretary, Department of Education[6] (Field).
FINDINGS AND REASONS
[5] [2022] NSWPIC 50.
[6] [2023] NSWPIC 214.
Recent decisions
The only issue for determination in Cain was PIAWE. Mr Cain suffered injury on 4 August 2020. His hourly pay had increased from $24 to $26 with effect from 25 June 2020. At an arbitration hearing Mr Cain’s employer submitted that cl 8C did not refer to wages but that “it was a conjunction of the employment arrangement in which there is required to be an ongoing change.” Member Wright said:
“In my view, the example listed in regulation 8C (‘a change from full-time to part-time work”) does not place a limit on the content of the ‘employment arrangement’. The term ‘employment arrangement’ in regulation 8C is not expressed to be limited by the example given. Even if this were so, a change from full-time to part-time work could also be characterised as a change in the employment contract, with the result that other changes to the employment contract would also be included in a change in the employment arrangements. In this case, a change to the hourly rate of pay, as evidenced by the payslips attached to the ARD and the Reply, and as specified in the Employment Agreement referred to below, also forms a change to the employment contract and hence the employment arrangements.”[7]
[7] At [21].
After referring to the definition of worker in s 4 of the 1987 Act, Member Wright said:
“In my view, the content of the ‘employment arrangement’ should be considered with reference to the definition of a worker as relevantly being a person who has entered into or works under a contract of service. The contract of service in my view forms part of, although not necessarily all, of the employment arrangements. The wages paid to a worker is necessarily a part of the contract of service.[8]
…
Wages or other consideration are a condition of the contract of service. A change to the hourly rate of pay is a change in the wages paid to the worker. Hence, a change in the hourly rate of pay is a change of an ongoing nature to the employment arrangement.[9]”
[8] At [23].
[9] At [26].
In addition, Member Wright reviewed Mr Cain’s employment agreement and said that the hourly rate of pay specified in that agreement, and later varied, was one of the terms and conditions of his employment contract which formed part of his employment arrangements.
Member Wright also considered the operation of cl 8C in Wake. Ms Wake’s employer contended that a period of extended long service leave at half pay in the 52 weeks before the date of injury was to be included in the calculation of PIAWE. The Member determined that PIAWE should not include the period on long service leave and said, referring to ADCO Constructions Pty Ltd v Goudappel:[10]
“I have considered the context of the PIAWE provisions referred to above in the 1987 Act. The 1987 Act is still beneficial legislation on the whole. While the 2012 amendments, relevantly in respect of weekly compensation, were less beneficial, it is possible that aspects of a less than beneficial amendment may be interpreted as beneficial, although not every provision or amendment to a provision has a beneficial purpose or is to be construed beneficially. In my view, the definition of PIAWE, including the manner of calculation, is neutral in terms of the beneficial legislation, that is it does not detract from the purpose of providing an entitlement to weekly compensation benefits, and is distinct from other aspects of the weekly compensation amendments, such as limiting the periods of weekly compensation payable. Accordingly, an interpretation based upon beneficial legislation is available having regard to the specific words and meaning applicable to clauses 2 and 6.”[11]
[10] [2014] HCA 18 at [29].
In the alternative, the Member considered cl 8C, referring to his reasoning in Cain and said that the ongoing change in the employment relationship was the worker’s return to employment on full pay at the end of her long service leave.
In Firth, Member Isaksen accepted that there was a financially material change in the worker’s earnings when her position was re-classified from a new entrant to grade 1 after completing 500 hours of work. Despite an increase in Ms Firth’s hourly rate, Member Isaksen determined that the PIAWE in respect of the period after the re-classification was lower because of a period of unpaid sick leave.
In Field, Member Sweeney considered the calculation of PIAWE for a casual teacher. Mr Field worked for two separate periods in the 52 weeks before an injury, but did not work for a period of about five months between those periods. The insurer divided his gross earnings in the 52 weeks before the injury by 52. Mr Field argued that his PIAWE should be determined by dividing his gross earnings during the 52 weeks before the injury by the number of weeks in which he performed work.
Member Sweeney held that the interpretation that permits gross weekly earnings to be divided by the number of weeks in which work actually works in the 52 week period is inconsistent with several of the clauses in the Regulation but said:
“In my opinion none of the clauses assist the applicant’s case. Uninstructed by the reasoning in Wake, I would hold that the methodology adopted by the respondent in calculating PIAWE complied with the statutory scheme. While, in my opinion, the outcome in that case does not sit comfortably with the language of Schedule 3, I do not conclude that it is plainly wrong. In the circumstances, it is appropriate that I follow it, pending determination of the issue by the Presidential unit. Accordingly, I hold that the respondent has erred in its calculation of PIAWE. The applicant’s PIAWE should be calculated by reference to the number of weeks during which the applicant performed work in the 52 week period prior to the injury.”
Consideration
The question I am required to determine is essentially the same as in Cain and I agree with Member Wright’s decision for the following reasons.
In Project Blue Sky, the majority in the High Court said:
“The primary object of statutory construction is to construe the relevant provision so that it is consistent with the language and purpose of all the provisions of the statute. The meaning of the provision must be determined ‘by reference to the language of the instrument viewed as a whole’ ...”.[12]
[12] At [69].
In Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (NT)(Alcan) [13] Hayne, Heydon, Crennan and Kiefel JJ said:
“... the task of statutory construction must begin with a consideration of the text itself. Historical considerations and extrinsic materials cannot be relied on to displace the clear meaning of the text. The language which has actually been employed in the text of the legislation is the surest guide to legislative intention. The meaning of the text may require consideration of the context, which includes the general purpose and policy of a provision, in particular the mischief it is seeking to remedy.”
[13] (2009) 239 CLR 27 at 46.
The starting point is “the ordinary and grammatical sense of the statutory words to be interpreted having regard to their context and the legislative purpose.”[14] In Military Rehabilitation, and Compensation Commission v May[15] the plurality said that “the question of construction is determined by reference to the text, context, and purpose of the Act.”
[14] French CJ in Alcan at [36]
[15] [2016] HCA 19 at [10].
The purpose of Part 4 Division 2 of the Regulation is to provide for adjustment of the earning period used to calculate PIAWE.
Clause 8C is the second of a series of provisions which cl 8A requires to be applied in order.
Clauses 8B, 8D and 8E all operate to the advantage of workers so that the averaging which results in PIAWE is not reduced by periods in which their earnings were less. Clauses 8F and 8G have a similar effect.
Clause 8C can operate to a worker’s advantage or disadvantage, Wake being an example of the latter.
There is no definition of “employment arrangement”. In Cain, Member Wright found that an employment arrangement includes the contract of service entered into by a worker and that wages form part of that contract.
Roche DP considered the essential features of a contract of employment in Drive Recruit Pty Ltd v Back[16] and said:[17]
“There are four essential features of a contract of employment (The Modern Contract of Employment, Ian Neil SC and David Chin, 2012, Lawbook Co, (Neil and Chin)). Those features are discussed in detail at pages 1–3 in Neil and Chin and may be summarised as follows:
(a) there can be no employment without a contract (Lister v Romford Ice & Cold Storage Co Ltd [1956] UKHL 6; [1957] AC 555 at 587);
(b) the contract must involve work done by a person in performance of a contractual obligation to a second person (Abdalla v Viewdaze (2003) 122 IR 215 at [23]). That is because the essence of a contract of service is the supply of the work and skill of the worker (Humberstone v Northern Timber Mills[1949] HCA 49; (1949) 79 CLR 389 at 404–405);
(c) there must be a wage or other remuneration, otherwise there will be no consideration (Ready Mixed Concrete (South East) Ltd v Minister of Pensions and National Insurance [1968] 2 QB 497 at 515), and
(d) there must be an obligation on one party to provide, and on the other party to undertake, work. The obligation required to constitute a contract of employment is that:
‘the putative employer be obliged to pay the putative employee in accordance with the terms of the contract for services reasonably demanded under it, and that the putative employee be obliged to perform such services. That is as much so where the service consists of standing and waiting as where it is active’ (Forstaff Pty Ltd v Chief Commissioner of State Revenue [2004] NSWSC 573; (2004) 144 IR 1 at [91]; see also Wilton v Coal & Allied Operations Pty Ltd [2007] FCA 725; (2007) 161 FCR 300 at [162]).
[16] [2013] NSWWCCPD 32.
[17] At [24].
The payment of a wage or remuneration is an essential condition of a contract of employment. It is part of the employment arrangement between the parties. Mr Bhatia’s employment arrangement is constituted by the enterprise agreement which applies to Cameron’s workers generally and his individual contract with Cameron under which he works as a driver (grade 6).
The ordinary meaning of the words “change of an ongoing nature to the employment arrangement resulting in a financially material change to the earnings of the worker” arguably contemplates a pay increase. The other provisions in Part 4 Division 2 generally operate so that a worker is not disadvantaged by the average and cl 8D(2) effectively says that the earning period is not to be adjusted to a worker’s detriment in its application.
Mr McManamey said that the concept of average weekly earnings anticipated changes in earnings. That averaging is already contemplated in cl 2 of Schedule 2 of the 1987 Act so that the purpose of cl 8C of the regulation cannot be intended to adjust the period simply because there is a change in the rate of pay.
Clause 2 of Schedule 3 does not deal with changes in earnings but with the period over which PIAWE are calculated. There are a number of factors which might impact on the average rate of pay over that period such as shift allowances and annual leave loading. The clause provides that regulations may be made “to take account of any period of unpaid leave or other change in earnings circumstances.”
Mr McManamey argued that all of the words in cl 8C should have work to do, including the example, the purpose of which is to give context to the words “employment arrangement”. He conceded that they were not exhaustive of the change that could fall within the cl 8C but said that they indicated that the change must be to hours, duties or responsibilities.
That interpretation requires that words be read into cl 8C, limiting the change in employment arrangements to one which does not include a pay increase, merely because of the one example given. The words a change of an ongoing nature to the employment arrangement resulting in a financially material change to the earnings of the worker contemplate a change in the rate of remuneration.
I do not agree with the submission that the increase provided for in the enterprise agreement is not a change in the employment arrangement because it was the application of an arrangement that was already in place. So far as Mr Bhatia is concerned, his remuneration changed on the date provided for in cl 8.6 of the enterprise agreement and not before.
I find that there was a change of an ongoing nature to Mr Bhatia’s employment arrangement resulting in a financially material change to his earnings on 8 August 2023 so that the period before that date is to be disregarded in the calculation of PIAWE.
I find that Mr Bhatia’s PIAWE are $2,324.72.
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