Bi-Lo Pty Limited v Onslow & Choice HR Pty Limited
[2005] NSWWCCPD 63
•7 July 2005
WORKERS COMPENSATION COMMISSION
APPEAL AGAINST A DECISION OF THE COMMISSION CONSTITUTED BY AN ARBITRATOR
CITATION:Bi-Lo Pty Limited v Onslow & Choice HR Pty Limited [2005] NSW WCC PD 63
APPELLANT: Bi-Lo Pty Limited
FIRST RESPONDENT: Andrea Maree Onslow
SECOND RESPONDENT: Choice HR Pty Limited
INSURER: Appellant: Allianz Australia Workers Compensation (NSW) Limited
Second Respondent: GIO Workers Compensation (NSW) Ltd
FILE NUMBER: WCC595-04
DATE OF ARBITRATOR’S DECISION: 21 May 2004
DATE OF APPEAL DECISION: 7 July 2005
SUBJECT MATTER OF DECISION: Section 40 of the Workers Compensation Act 1987; “probable earnings” and “comparable employment”.
PRESIDENTIAL MEMBER: Dr Gabriel Fleming
HEARING:On the papers
REPRESENTATION: Appellant: Sparke Helmore
Lawyers
First Respondent: Bale Boshev Lawyers
Second Respondent: Rankin Nathan
Lawyers
ORDERS MADE ON APPEAL: The decision of the Arbitrator, dated 21 May 2004, is revoked and the following decision is made in its place:
Ms Onslow is not entitled to payment of weekly compensation pursuant to section 40 of the Workers Compensation Act 1987.
BACKGROUND TO THE APPEAL
On 20 May 2004 a Commission Arbitrator determined that Bi-Lo Pty Ltd were liable to pay Andrea Onslow workers compensation at the rate of $242.00 per week from 16 September 2003 to 20 May 2004 under section 40 of the Workers Compensation Act 1987 (‘the 1987 Act’). The Arbitrator also ordered that weekly payments were to continue after that time, in accordance with the 1987 Act.
Ms Onslow’s entitlement to compensation arose as a result of injury to her back, which occurred when she was at work. In coming to his decision the Arbitrator found that:
· Ms Onslow suffered two injuries in the course of her employment. The first injury to her back occurred on 25 August 2000 when she was employed by Bi-Lo Pty Limited as a Check-out Operator. Ms Onslow earned $12.41 per hour and worked for approximately 30 hours per week, giving her a gross weekly income of $372.30 as at 25 August 2000.
· The second injury was one of a series of exacerbations of the first, and occurred on 16 September 2003 when Ms Onslow was working for Choice HR Pty Limited, a labour hire company that facilitated her employment at the ‘Steggles’ factory as a ‘sausage packer’. She earnt $22 per hour and worked for approximately 35 hours per week, giving her a gross weekly income of $770.00 as at 16 September 2003.
· Ms Onslow has not worked since 16 September 2003.
· The first injury, in 2000 was the main cause of Ms Onslow’s ongoing incapacity to work. Bi-Lo, her employer at that time, is therefore liable to compensate Ms Onslow.
· Ms Onslow is currently capable of earning $528.00 per week, based on the hourly rate she received at Steggles, i.e. $22.00, for a 24-hour week.
· Ms Onslow’s weekly loss of income as a result of her injury is therefore $242.00 per week, based on lost earnings of 11 hours per week at $22.00 per hour.
· Choice HR Pty Limited is not liable to pay Ms Onslow workers compensation benefits.
Choice HR Pty Limited is not affected by this appeal and has therefore not filed any submissions.
Bi-Lo submit that the Arbitrator wrongly calculated Ms Onslow’s entitlement to weekly compensation. It argues that Ms Onslow’s weekly earnings should be reduced by reference to the amount she was earning at Bi-Lo at the time of the initial injury on 25 August 2000, i.e. $372.30 per week. Instead, the Arbitrator calculated the amount that Ms Onslow would have been earning, but for the injury, by reference to her earnings at Steggles in September 2003, i.e. $770.00 per week. The proper calculation, submit Bi-Lo, would result in an award of $nil compensation to Ms Onslow as she has not suffered a loss.
The application meets the requirements of section 352 of the Workplace Injury Management and Workers Compensation Act 1998 (‘the 1998 Act’). Leave to appeal is granted.
I am satisfied that I have sufficient information to proceed ‘on the papers’, without holding any conference or formal hearing, and that this is the appropriate course in the circumstances (section 354(6) of the 1998 Act).
DID THE ARBITRATOR INCORRECTLY ASSESS MS ONSLOW’S WEEKLY EARNINGS IN ‘COMPARABLE EMPLOYMENT’?
This issue concerns the proper application of section 40 of the 1987 Act, which provides as follows:
“40 Weekly payments during partial incapacity—general
(1) Entitlement
The weekly payment of compensation to an injured worker in respect of any period of partial incapacity for work is to be an amount not exceeding the reduction in the worker’s weekly earnings, but is to bear such relation to the amount of that reduction as may appear proper in the circumstances of the case.
(2) Calculation of reduction in earnings of worker—general
The reduction in the worker’s weekly earnings is (except as provided by this ection) the difference between:
a) the weekly amount which the worker would probably have been earning as a worker but for the injury and had the worker continued to be employed in the same or some comparable employment (but not exceeding $1,000), and
(b) the average weekly amount that the worker is earning, or would be able to earn in some suitable employment, from time to time after the injury (but not exceeding $1,000).
(2A)Calculation of reduction in earnings of worker—workers rejecting suitable employment
If the worker has unreasonably rejected suitable employment, the reduction in the worker’s weekly earnings is the difference between:
(a) the current weekly wage rate for the worker’s pre-injury employment (but not exceeding $1,000), and
(b) the current weekly wage rate for some suitable employment for the worker from time to time after the injury (but not exceeding $1,000).
(2B) For the purposes of subsection (2A), a worker unreasonably rejects suitable
employment if:
(a) a period of 28 days has elapsed since the worker was offered suitable employment by any person and the worker has unreasonably refused or not accepted the offer (whether or not the offer was available during the whole of that period), or
(b) the worker obtains suitable employment with any person but subsequently unreasonably discontinues that employment.
(3) Ability to earn in suitable employment
The determination of the amount that an injured worker would be able to earn in some suitable employment is subject to the following:
(a) the determination is to be based on the worker’s ability to earn in the general labour market reasonably accessible to the worker,
(b) the determination is to be made having regard to suitable employment for the worker within the meaning of section 43A.
(4) Rehabilitation—unemployed (or not fully employed) workers
An injured worker who duly undertakes rehabilitation training under section 38 is not to be disadvantaged under this section by any increase in the amount that the worker would be able to earn merely because of that training, unless the worker unreasonably refuses an offer of suitable employment for which the worker has been trained. The Commission may determine any dispute about the operation of this subsection.
(5) Maximum rate of compensation
The weekly payment of compensation to an injured worker in respect of any period of partial incapacity for work is not to exceed the weekly payment that would be payable to the worker if it were a period of total incapacity for work.
6) Adjustment of compensation—indexation
If it appears proper in the circumstances of the case, the weekly payment of compensation to an injured worker in respect of any period of partial incapacity for work may (subject to subsection (5)) be adjusted to take account of any adjustment because of the operation of Division 6 in the weekly payment that
would be payable to the worker if it were a period of total incapacity for work.
(7) Adjustment of maximum amounts—application
If an amount mentioned in subsection (2):
(a) is adjusted by the operation of Division 6, or
(b) is adjusted by an amendment of this section,
the weekly payment of compensation applicable to a worker injured before the date on which the adjustment takes effect is, for any period of partial incapacity for work occurring on and after that date, to be determined by reference to that amount as so adjusted. Such an adjustment does not apply to the extent that the liability to make weekly payments of compensation in respect of any such period of incapacity has been commuted.
(8) Exemption
This section does not apply to any period of partial incapacity for work during which the worker is compensated under this Act as if the worker’s incapacity for work were total.”
“Suitable Employment”, for the purpose of section 40, is defined in section 43A of the 1987 Act.
“43A Suitable employment
(1) For the purposes of sections 38, 38A and 40:
suitable employment, in relation to a worker, means employment in work for which the worker is suited, having regard to the following:
(a) the nature of the worker’s incapacity and pre-injury employment,
(b) the worker’s age, education, skills and work experience,
(c) the worker’s place of residence,
(d) the details given in the medical certificate supplied by the worker,
(e) the provisions of any injury management plan for the worker,
(f) any suitable employment for which the worker has received rehabilitation training,
(g) the length of time the worker has been seeking suitable employment,
(h) any other relevant circumstances.
(2) In the case of employment provided by the worker’s employer, suitable employment includes:
(a) employment in respect of which:
(i)the number of hours each day or week that the worker performs work, or
(ii)the range of duties the worker performs,
is suitably increased in stages (in accordance with a rehabilitation plan or return-to-work plan or otherwise), and
(b) if the employer does not provide employment involving the performance of work duties—suitable training of a vocationally useful kind provided:
(i) by the employer at the workplace or elsewhere, or
(ii) by any other person or body under arrangements made with the employer, but only if the employer pays an appropriate wage or salary to the worker in respect of the time the worker attends the training concerned.
(3) However, in any such case, suitable employment does not include:
(a) employment that is merely of a token nature and does not involve useful work having regard to the employer’s trade or business, or
(b) employment that is demeaning in nature, having regard to subsection (1) (a) and (b) and to the worker’s other employment prospects.
(4) A worker is to be regarded as suitably employed if:
(a) the worker’s employer provides the worker with, or the worker obtains, suitable employment, or
(b) the worker has been reinstated to the worker’s former employment under Part 7 of Chapter 2 of the Industrial Relations Act 1996.”
In the leading case of Mitchell v Central West Health Service (1997) 14 NSWCCR 527 (‘Mitchell’) the Court of Appeal, Mason P, Beazley JA and Grove A-JA at 529, set out five steps for determining entitlement pursuant to section 40 of the 1987 Act, as follows:
“...the Court is required:
1.To determine the weekly amount the worker would probably have been earning if uninjured (section 40(2)(a))…
2.To determine ‘the average weekly amount that the worker is earning or would be able to earn in some suitable employment from time to time after the injury’ (section 40(2)(b)). Section 40(3) provides that the determination of this amount is subject to the following:
‘(a) the determination is to be based on the worker’s ability to earn in the general labour market reasonably accessible to the worker;
b) the determination is to be made having regard to suitable employment for the worker within the meaning of section 43A’…3.To subtract the figure derived from (2) from the figure derived from (1) (section 40(2)).
4. To decide whether and to what extent the reduction calculated as above bears ‘such relation to the amount of that reduction as may appear proper in the circumstances of the case’ (section 40(1))…
5. To make an award in the amount arrived at in step (4).”
In his ex tempore reasons the Arbitrator did not clearly set out the method by which he calculated Ms Onslow’s entitlement pursuant to section 40 of the 1987 Act.
Bi-Lo argue that:
“ The decision of the Compensation Court in the matter of Australian Wire Industries Pty Limited v Nicholson (1985) 1 NSWCCR 50, determined that the general rule in calculating a worker’s probable earnings but for the injury pursuant to Section 40(2)(a) is to assume that the worker would have continued in the employment he or she was in at the time of the injury and to have earned income at the level at the time of the injury. . . .
Section 40(1) notes that the amount awarded is to be an amount not exceeding the reduction in the worker’s weekly earnings. It is clear from the terms of Section 40 that there must not be an overcompensation in the sense of a worker being placed in a better financial position compared with pre-injury earnings by reason of an award pursuant to Section 40.”
Bi-Lo submit that Ms Onslow’s “two occupations are not comparable in that the worker’s employment with Bi-Lo Pty Limited was as a part time permanent employee and her employment with Choice HR Pty Limited was as a casual working shift work, and as a lent worker under the control of a labour hire company”.
Ms Onslow submits that the Arbitrator’s award does not overcompensate her for her injury. Her employment with Bi-Lo and, subsequently, her comparable employment with Steggles, were unskilled and did not require formal training. Secondly, Ms Onslow argues that the Arbitrator had a discretion to find that her earning capacity, but for the injury, was $770 per week and, in the circumstances of this case, was correct to do so (NSW Harness Racing Club Ltd v Forrest (1995) 12 NSWCCR 217; Lloyd v Northern Rivers Charity Racing Association (2001) 22 NSWCCR 577).
The leading case on the approach to be taken to the calculation of a worker’s probable earnings, but for injury, is Australian Wheat Board v Pantaleo (1984) 3 NSWLR 530 (‘Pantaleo’ judgment of Kirby P at 538 – 541);see also Australian Wire Industries Pty Limited v Nicholson (1985) 1 NSWCCR 50, Kesen v Luke Singer Pty Limited (1989) 18 NSWLR 566; Kraturn Pty Limited v Quinn (1990) 6 NSWCCR 326; Farrell v Metromix Pty Limited [2001] NSWCA 166. In Pantaleo Kirby P concluded that the determination of ‘comparable employment’ was essentially a question of fact, to be determined in each case where:
“. . . the decision-maker is not to be limited to assuming that the worker remained employed in exactly the same employment. He is entitled to have regard to the fact that employment changes, for many reasons. It may change because an employer dies or becomes insolvent. It may change because of the very fact that workers are injured and must be repositioned in alternative work. It may change because workers may progress up or down the employment ladder, by reason of seniority in years, additional experience or achievement in added professional or educational qualifications.
…
Where the hypothesis required by [section 40(2)(a)] leads to the conclusion that there is a real prospect (as distinct from a fanciful speculation) that but for injury the worker would have moved from the same employment to some other employment, the question is then raised as to whether that other employment is ‘comparable’” (at 540).
Having made the hypothetical calculations required of section 40(2) of the 1987 Act it is necessary for the decision maker to then exercise the discretion in section 40(1) to order an amount of weekly compensation that does not exceed the worker’s reduction in weekly earnings but is at the same time “proper in the circumstances of the case”. Kirby P in Pantaleo said that it “. . . is here that artificialities that may result from the hypotheses required in the first stage [of the calculation] can be adjusted, by reference to realities of law and fact proved in the evidence of the particular case” (at 541).
There is little of relevance to the facts of this case to be found in NSW Harness Racing Club Ltd v Forrest (1995) 12 NSWCCR 217 (‘Forrest’) or Lloyd v Northern Rivers Charity RacingAssociation (2001) 22 NSWCCR 577 (‘Lloyd’). In Forrest the Court of Appeal held that in certain circumstances where it was difficult to estimate a worker’s probable earnings if he/she remained uninjured, for example, in the case of a young person starting out on a career or a traineeship, it may be appropriate to estimate probable earnings in some comparative employment, based on other evidence of the availability and likelihood of other employment. In Lloyd the worker was apprenticed as an electrician, albeit working in the racing industry as a jockey. Ms Onslow, while still a relatively young worker, has not been engaged in training or skill development to secure higher paid employment or to change career paths. There is no evidence that her employment at Steggles was in any way a progression from her work at Bi-Lo. Steggles simply provided her with more hours of work and the flexibility to work shifts and therefore earn the appropriate penalty rates.
The Arbitrator has erred in the application of these principles to the facts of this case. There is no reference in the reasons for decision to any consideration of what was “comparable employment” for the purpose of calculating Ms Onslow’s probable earnings, but for her injury. Similarly, although the award was based on the employment at Steggles, there is no reference to the discretion in section 40(1) of the 1987 Act in relation to the making of an award that is “proper in the circumstances of the case”.
The application of the above principles to the facts of this matter may be set out in accordance with the five step approach in Mitchell as follows:
STEP 1. The weekly amount Ms Onslow would probably have been earning if uninjured (section 40(2)(a) of the 1987 Act) is the amount she was earning at Bi-Lo at the time of her injury, i.e. $372.30 per week, plus an adjustment in accordance with the award (increase in the hourly rate from $12.41 to $13.35). Following her original injury in 2000 she left her part-time employment as a check out operator with Bi-Lo of her own volition. She then obtained the equivalent of a full time workload (35 hours) as a process-worker at Steggles. While after leaving Bi-Lo Ms Onslow did move to other employment, the proposition that this employment was comparable to her work at Bi-Lo is not convincing. The decision-maker is not restricted to considering exactly the same employment as ‘comparable work’ and the facts of each case must be examined (‘Pantaleo at 540). Ms Onslow’s employment at Bi-Lo and Steggles both required no formal training and were of a casual nature, however the nature of the work was entirely different. While at Steggles she was paid at a higher rate, including shift penalty rates. Ms Onslow’s work at Steggles involved “stuffing sausages” and handling chicken carcasses. It may be precisely because of the nature of that work, as compared to working on a check-out in a supermarket that, while albeit still unskilled, it was better paid. The work at Steggles was not work that Ms Onslow had ‘progressed’ to because of a career path or achievement of greater experience or expertise.
STEP 2.The average weekly amount that Ms Onslow was earning in ‘suitable employment’ after the injury was $528.00, based on working 24 hours per week at Steggles for $22 per hour.
STEP 3. Subtracting $528.00 from $372.30 (and allowing for adjustment in accordance with the award) clearly does not arrive at any reduction in her weekly earnings following her injury.
STEP 4. There is no reason to exercise the discretion in section 40(1) of the 1987 Act.
STEP 5. Ms Onslow is not entitled to payment of weekly compensation for partial incapacity pursuant to section 40 of the 1987 Act.
DECISION
The decision of the Arbitrator, dated 21 May 2004, is revoked and the following decision is made in its place:
Ms Onslow is not entitled to payment of weekly compensation pursuant to section 40 of the Workers Compensation Act 1987.
COSTS
The parties have not made any submissions as to costs of the appeal. They are urged to come to an agreement as to costs in accordance with the relevant provisions of the 1998 Act (see sections 341-345).
Dr Gabriel Fleming
Deputy President
7 July 2005
I CERTIFY THAT THIS IS A TRUE AND ACCURATE RECORD OF THE REASONS FOR DECISION OF DR GABRIEL FLEMING, DEPUTY PRESIDENT OF THE WORKERS COMPENSATION COMMISSION.
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