D and C Snare Pty Ltd v Lamprey
[2005] TASSC 112
•14 November 2005
[2005] TASSC 112
CITATION: D & C Snare Pty Ltd v Lamprey [2005] TASSC 112
PARTIES: D & C SNARE PTY LTD
v
LAMPREY, Brendon Leslie
TITLE OF COURT: SUPREME COURT OF TASMANIA
JURISDICTION: APPELLATE
FILE NO/S: LCA 60/2005
DELIVERED ON: 14 November 2005
DELIVERED AT: Hobart
HEARING DATE: 7 October 2005
JUDGMENT OF: Tennent J
CATCHWORDS:
Workers Compensation – Assessment and amount of compensation – Amount of compensation during incapacity – Calculation of weekly earnings – Overtime, allowances and other payments – Whether payments pursuant to the Superannuation Guarantee (Administration) Act 1992 should be included in calculation of "normal weekly earnings".
Workers Rehabilitation and Compensation Act 1988 (Tas).
Superannuation Guarantee (Administration) Act 1992 (Cth).
Hastings Deering (Australia) Limited v Smith [2004] NTCA 13; Australian Taxation Office Superannuation Guarantee Ruling SGR 94/5; Nielsen v Taz-West Electrical Pty Ltd [2000] TASSC 54; Johns Perry Hayward v Greaves [1991] Tas R 20; Brambles Holdings Ltd v Pincott A30/1994; Glazebrook v Accident Compensation Commission [1988] VR 454; Sweeney v Inspector-General in Bankruptcy [2000] AATA 109; Re Mann and the Inspector-General in Bankruptcy 67 ALD 557; Cystic Fibrosis Association of WA v Alyson Bronwyn Williamson Appeal CM-197/03, referred to.
Aust Dig Workers Compensation [394]
REPRESENTATION:
Counsel:
Appellant: P L Jackson
Respondent: B C Hilliard
Solicitors:
Appellant: Jackson & Tremayne
Respondent: Hilliard & Associates
Judgment Number: [2005] TASSC 112
Number of paragraphs: 49
Serial No 112/2005
File No LCA 60/2005
D & C SNARE PTY LTD v BRENDON LESLIE LAMPREY
REASONS FOR JUDGMENT TENNENT J
14 November 2005
The respondent suffered an injury whilst an employee of the appellant. The appellant commenced payments of compensation pursuant to the Workers Rehabilitation and Compensation Act 1988 ("the Act"). The payments were calculated on the basis of the respondent's normal weekly earnings. The respondent applied to a commissioner of the Workers Compensation Tribunal ("the Tribunal") to have the compensation increased to include a component calculated by reference to the amounts which had been paid by the appellant employer in discharge of its obligations under the Superannuation Guarantee (Administration) Act 1992 (Cth) ("SGAA"). He was successful and it was from that decision that the employer has appealed.
Grounds of Appeal
The grounds of appeal were as follows:
"1The Tribunal erred in law in holding that for the purposes of Section 69(1)(a)(i) of the Act amounts paid by an employer for the benefit of a worker pursuant to obligations imposed on the employer by the SGAA are to be included as part of the worker's average weekly earnings over the period of twelve months ending at the commencement of the relevant period of incapacity.
2The Tribunal erred in failing to find that for the purposes of the Act, Section 69(2), 'earnings' do not include amounts paid by an employer to the benefit of a worker in compliance with the SGAA.
3The Tribunal erred at [14] in treating amounts paid by an employer to the benefit of a worker in compliance with the SGAA as equivalent to amounts that would otherwise be receivable by a worker as part of his or her wages or salary, but which are, at the option of the worker, taken in a form other than wages or salary.
4The Tribunal erred in failing to distinguish the decision of the Supreme Court of the Northern Territory in Hastings Deering (Australia) Limited v Smith [2004] NTCA 13 as being concerned with legislation that is in relevantly and significantly different terms from the relevant provisions of the Act, in particular Sections 69 and 70.
5The Tribunal erred at [23] in holding that the inclusion in the calculation of a worker's normal weekly earnings of amounts paid by an employer to the benefit of the worker in compliance with the SGAA is to be equated with the continuing payment of such amounts in compliance with the SGAA in respect of other workers employed by the employer who are not in receipt of payment of compensation under the Act.
6The Tribunal erred in failing to have regard to the effect of Australian Taxation Office Superannuation Guarantee Ruling SGR 94/5 dated 15 September 1994 ('the ruling') in the context of the Tribunal's finding (at [10]) that in the calculation of 'ordinary time rate of pay' for the purposes of Section 69(1) of the Act an employer's liability to make payments in accordance with the SGAA is to be disregarded. In consequence, the Tribunal failed to identify and, or, have regard to the incongruous and unfair result produced by:
· the fact that by virtue of the ruling an employer has no obligation to make any payment under the SGAA in respect of a worker receiving worker's compensation payments who is not attending or performing work;
· with the result that in the case of a worker whose weekly rate payment for the purposes of the Act is determined in accordance with Section 69(1)(a)(ii) of the Act, the worker receives no payment pursuant to, or in respect of, or by reference to, the liabilities imposed on the employer by the SGAA;
· but in the case of a worker whose weekly rate of payment for the purposes of the Act is determined in accordance with Section 69(1)(a)(i), the employer will be obliged to make payment of compensation to the worker at a rate that includes an amount calculated by reference to liabilities already discharged by the employer under the SGAA."
The Issue
The issue raised before the Tribunal and at issue here is whether payments made by the appellant under the SGAA during the 12 months ending at the commencement of the period of the respondent's incapacity were "earnings" of the respondent for the purpose of calculating his average weekly earnings under the Act, s69(2), in order to determine his normal weekly earnings for the purpose of the Act, s69(1)(a).
Legislative Framework
Where a worker is incapacitated for work as a result of an injury and is entitled to compensation, the Act, s69(1)(a), provides for the payment of weekly compensation in the form of:
"(a) … weekly rate payments equal to -
(i) the normal weekly earnings of the worker; or
(ii) the ordinary time rate of pay of the worker for the work in which, and for the hours during which, the worker was engaged immediately before the period of incapacity -
whichever is the greater;"
The phrase "normal weekly earnings" is defined in the Act, s69(2), to mean:
"… the average weekly earnings of the worker over the period of 12 months ending at the commencement of the period of incapacity."
There was no dispute that the term "average weekly earnings" meant the total amount of the earnings of the worker during the relevant 12-month period divided by 52.
The Act, s69(4)(a), further provides:
"(a) in fixing the amount of the weekly rate payment to a worker under this section, regard shall be had to any payment, allowance, or benefit that the worker may receive from his employer during the period of his incapacity, not being a payment, allowance, or benefit paid in respect of a period of long service leave or of any entitlement to long service leave or in lieu of the taking of a period of long service leave;"
The Act, s70(2), provides that "normal weekly earnings" are to be determined in accordance with that section. The section sets out that regard is to be had to the principle that a worker should receive no more than the worker would have received if the worker had continued in the worker's usual employment. It also provides for certain payments to be disregarded for the purpose of the calculations, such as overtime in certain circumstances, amounts paid to the worker in the discretion of the employer by way of bonus, gratuity or other similar payment, a payment to cover any special expense entailed on the worker by the nature of his employment and a payment to cover the cost of expenses for meals, travel and accommodation during employment. The exclusions referred to in the Act, s70(2), all relate to amounts paid to the employee by the employer.
The term "remuneration" is not used in either ss69 or 70.
Grounds of appeal 1, 2 and 4
Counsel for the appellant submitted that it was critical in this matter to determine what the word "earnings" meant in the context of the Act, s69. He also submitted generally that the Court needed to keep in mind that while beneficial legislation of the type being considered should be interpreted in favour of the worker, where there was an ambiguity, that did not mean the Court should rewrite the legislation.
As to the term "earnings", it is not defined in the Act and had not in this context evidently been the subject of judicial interpretation in this State. It had, however, been considered in other contexts and interstate. Counsel referred to the use of the words "receive" and "received" in s70(2). He argued that in the calculation of "normal weekly earnings", the emphasis in determining a worker's earnings was on what the worker had received over the relevant 12-month period.
Counsel submitted that there was a clear mandate in the Act, which did not appear in the legislation dealt with in the cases canvassed by the Commissioner, to exclude from the calculation of normal weekly earnings anything which might artificially inflate what the worker was to receive. He also argued that the Commissioner fell into error in relying too heavily on cases which were easily distinguishable and dealt with different concepts and terms and that the Commissioner, at par25 of his reasons, ignored the significance of the Act, ss70(2) and 69(10), when he said the cases referred to discounted the concept of earnings received.
Counsel for the appellant referred to the Act, s69(8), (9) and (10). This provides a mechanism for adjusting weekly rates subject to a guiding principle in subs(10) that the Tribunal was required to have regard to the principle that a worker should not receive, during a period of incapacity, weekly rate payments greater than he would have received were he in employment. Counsel submitted that guiding principle should apply generally and not just to subss(8) and (9). Counsel for the respondent argued that subs(10) only had relevance in relation to the process referred to in subss(8) and (9) and was not of general significance. While there can be no doubt subs(10) does begin with words which directly tie it to the two preceding subsections, it would be illogical to construe this type of legislation as being anything other than guided by that principle. The legislation exists to provide for a worker to receive compensation when he is incapacitated for work. The payment is tied to what he earned in the 12 months preceding the commencement of the incapacity. It is unlikely the Act would be construed to routinely allow the worker to receive, by way of compensation, an amount greater than he had been earning and probably what his work colleagues were continuing to earn.
While counsel for the appellant did not dispute the Commissioner's statement at par12 to the effect that "earnings" in the Act were not necessarily confined to wages and salary received, he argued that the emphasis remained upon receipt of some payment or benefit by the worker in the relevant 12‑month period which was related to the provision by the worker of his skill and labour during that period. By reference to a number of authorities, he argued that there must be a connection between the provision by the worker of his skill and labour and the reward.
In Nielsen v Taz-West Electrical Pty Ltd [2000]TASSC 54, Evans J said at par11:
"The question is, what was the appellant entitled to receive from the respondent for his labour as its employee?"
That case dealt with an employee who was also a director of his employer company. His "package" included salary and director's fees. The court was satisfied that, however they were categorised, the director's fees were a payment for his labour and should therefore be included in relevant calculations.
In Johns Perry Hayward v Greaves [1991] Tas R 20, Wright J said, at 35, in relation to the meaning of "earnings":
"In my opinion a man earns what he receives by way of recompense for the exercise of his labour or skill. I am unable to regard unemployment benefits as earnings. Certainly they are funds received in lieu of earnings but they are not recompense for time and effort expended by the recipient."
In Brambles Holdings Ltd v Pincott A30/1994 at 13, Underwood J said:
"The task is to measure the fruits of the worker's labour and skills, and to exclude from that exercise any amount that [of] profit derived from capital investment and any income attributable to the supply of materials."
In the last two cases it was submitted there was clear evidence the term "earnings" was being given a narrow meaning.
Counsel submitted that Parliament had used the terms "earnings" and "receive". It had not used terms such as income, remuneration or benefit. To confine the concept of earnings to what is actually received does not exclude benefits received by a worker in lieu of money. However, the overriding requirement must be that the money or benefit should be received.
In relation to Hastings Deering [2004] NTCA 13, the court was dealing with provisions of the Work Health Act 1986 (NT), in particular the interpretation of s49. The concept there being dealt with was one of normal weekly earnings, but by reference to "remuneration". The court concluded that in calculating normal weekly earnings, SGAA payments should be taken into account. Counsel for the appellant in the present case argued that, since the legislation and the basis for calculations was different, the case could be easily distinguished and the Commissioner should have done so.
The Commissioner said at par16 of his decision:
"Counsel for the employer suggests that this decision can be distinguished as it applied to legislation totally different from the statutory scheme in Tasmania. However, by combination of s49(1)(b)(ii) of the Work Health Act 1986 (NT) dealing with average time rate of pay and s49(1)(a), that case can be seen as dealing with the concept of earnings over the 12 month period preceding the relative injury."
As can be seen, the means by which the Commissioner purported to dispose of counsel's argument before him was to refer to two subsections of s49 in the Northern Territory legislation. I have taken the liberty of looking at s49 in its entirety. It is a definition section which in fact contains no s49(1)(b)(ii) or s49(1)(a). It does contain a definition of "normal weekly earnings" which is as follows:
"normal weekly earnings", in relation to a worker, means -
(a) subject to paragraphs (b), (c) and (d), remuneration for the worker's normal weekly number of hours of work calculated at his or her ordinary time rate of pay;
(b) in the case of a worker who had entered into concurrent contracts of service with 2 or more employers under which he or she worked full-time at one time for one employer and part-time at another time for one or more other employers - the gross remuneration for the worker's normal weekly number of hours of work calculated at his or her ordinary time rate of pay in respect of his or her full-time employment;
(c) in the case of a worker who had entered into concurrent contracts of service with 2 or more employers under which he or she worked part-time at one time for one employer and part-time at another time for one or more other employers -
(i) the gross remuneration for the worker's normal weekly number of hours of work calculated at his or her ordinary time rate of pay in respect of both or all of his or her part-time employments; or
(ii) the gross remuneration that would have been payable to the worker if he or she had been engaged full-time in the part-time employment in which he or she usually was engaged for the more or most hours of employment per week at the date of the relevant injury,
(d) where -
(i) by reason of the shortness of time during which the worker has been in the employment of his or her employer, it is impracticable at the date of the relevant injury to calculate the rate of relevant remuneration in accordance with paragraph (a), (b) or (c ); or
(ii) subject to paragraph (b) or (c), the worker is remunerated in whole or in part other than by reference to the number of hours worked,
the average gross weekly remuneration which, during the 12 months immediately preceding the date of the relevant injury, was earned by the worker during the weeks that he or she was engaged in paid employment;"
There is also a definition of "ordinary time rate of pay" which refers to calculation of certain amounts by reference to the 12 months preceding the injury. However again the underlying concept is "remuneration".
Clearly the definitions in the Northern Territory legislation are different and include, as counsel for the appellant submitted, a concept of remuneration calculated on a different basis.
Counsel submitted that the concept of "remuneration" was wider than that of "earnings". He referred to a decision in Glazebrook v Accident Compensation Commission [1988] VR 454. The Full Court was asked to consider the meaning of the term "earnings" in the context of the Victorian Accident Compensation Act 1985. Their Honours said at 457:
"'Earnings' is not defined in the Act and must be given its ordinary meaning –'money earned; wages; profits' (the Macquarie Dictionary). The ordinary meaning of 'remuneration' may be contrasted – 'that which remunerates; reward; pay'."
At 458, their Honours went on to say:
"In Pt IV of the Act compensation in the form of weekly payments payable to a worker must be ascertained by reference to the workers 'pre-injury average weekly earnings' (viz ss93 and 94). As we indicated earlier 'earnings' means 'money earned' or 'wages'. Before the applicant was injured the money he earned from week to week was reflected in the wages which he received for his services. Unless one equates remuneration with earnings, as the English Courts did after 1906, there is no warrant in the Act to deduct from the wages paid to the applicant sums paid otherwise than as a reward for his labour. In our opinion, the proper construction of the Act does not permit one to equate remuneration with earnings or to determine the meaning of 'earnings' in the Act by reference to the word remuneration. Remuneration connotes a monetary reward which may be more comprehensive than earnings, depending upon the context in which it is used."
What therefore needs to be considered is, is there a difference between earnings and remuneration. If so, is that difference significant enough that it necessarily results in a consideration of the impact of SGAA payments on compensation payments different from that in Hastings Deering (supra)?
Martin CJ in Hastings Deering (supra), in dealing with the appellant's arguments in that case, canvassed a number of cases at pars24 to 34 inclusive. In his summary he recognised the distinction between the concepts of "wages" and "remuneration". In pars35 and 36, he referred to decisions which involved a consideration of the Industrial Relations Act 1988 (Cth) and then said, at pars37 and 38:
"The authorities concerned with s 170EE of the IRA to which I have referred demonstrate a settled approach to the concept of 'remuneration' in the context of that Act.
...
The appellant submitted that the broad interpretation is understandable … because the purpose of assessing 'remuneration' in that context is to determine a one-off payment of compensation for unlawful termination. … The appellant sought to distinguish that context from the assessment of ongoing weekly benefits in the context of an income maintenance scheme."
At par36, when considering these Commonwealth industrial relations cases, his Honour referred to a comment by Marshall J in Rigby v Technisearch Ltd (1996) 67 IR 68 where he said:
"Superannuation is unquestionably, in my view, when paid into a fund by an employer on behalf of an employee, part of the remuneration of the employee. Award superannuation has grown since 1986 and in addition, the Superannuation Guarantee Scheme underpinned by the Superannuation Guarantee Charge Act 1992 (Cth) and the Superannuation Guarantee (Administration) Act 1992 (Cth) has extended compulsory superannuation coverage to employees not employed under award conditions."
Martin CJ went on, in pars39 to 42, to refer to a decision of the High Court in Re The Manufacturing Grocers' Employees Federation of Australia and Anor; Ex parte the Australian Chamber of Manufacturers and Anor (1986) 160 CLR 341. He then said at pars43 and 44:
"The observations of the High Court to which I have referred amount to an emphatic rejection of the appellant’s proposition that superannuation contributions by an employer cannot amount to a reward for services rendered because the benefit from the contributions is not immediately available in a tangible form to the employee and is deferred until retirement. The Court regarded the fact of deferment as of 'no significance'. Notwithstanding the delay in receipt of the tangible benefit, the Court regarded the superannuation contributions as 'a reward for service' that was 'earned' by the employee. Although the payments by the employer to the fund were made in the employer’s capacity as employer and not as agent acting on behalf of the employee, they were payments 'for the benefit' of the employee.
The industrial landscape of 1986 in which the High Court delivered the unanimous decision in Re The Manufacturing Grocers’ Employee Federation encompassed a claim for increase in all wages and salaries, coupled with the reserving of leave to an employer for a variation if the employer had improved the benefits of an existing employee superannuation fund by increasing the employer's contribution by an amount equal to three percent. It would be a strange consequence, and unfair to employees, if the introduction of the superannuation guarantee scheme converted the character of employer superannuation contributions from remuneration earned by the employee as reward for services rendered into merely an impost upon employers."
Counsel for the appellant canvassed further cases in his submissions. Sweeney v Inspector-General in Bankruptcy [2000] AATA 109 concerned the question of whether compulsory superannuation payments could be regarded as "income" for the purposes of bankruptcy legislation. The Tribunal in that case held such payments were not income. The senior member said at pars18 and 19:
"In this matter, the superannuation contributions are paid by the employer, by compulsion, and to a third party who holds the funds for the benefit of the bankrupt; but the bankrupt has no access to the funds until his retirement from the workforce.
In addition, these compulsory contributions are not payments made by agreement with the employee, in lieu of salary which would otherwise be regarded as income. They are made as a result of a statutory obligation upon the employer which applies to all his employees. The quantum of the employer's contribution depends upon the fact of the individual being an employee, and the level of the employee's income. It does not arise, in my view, as a result of work done or services performed by the bankrupt employee, and does not fall within sub-s139L(vii) of the Act."
Re Mann and the Inspector-General in Bankruptcy 67 ALD 557 was another case which dealt with what constituted "income" for the purposes of bankruptcy legislation. The Tribunal was there dealing with a bankrupt who had entered into a salary sacrifice arrangement with her employer pursuant to which she sacrificed some of her salary in consideration of her employer paying the amount so sacrificed to a superannuation fund. The Tribunal found the amount so sacrificed was "income" and said at 566:
"Whether salary or benefits, both are derived by Ms Mann. It seems to me that her choosing to receive a pecuniary entitlement in a form that is partly pecuniary and partly non-pecuniary, cannot lead to the conclusion that the non-pecuniary part is no longer to be regarded as income. It can be turned to pecuniary account, albeit subject to any penalties that may apply, as the amount not already paid for the benefits would be returned to Ms Mann as salary and subject to tax as salary. That would mean that it is income according to ordinary usages and concepts."
The Tribunal also said at 567:
"… the sums paid from what would otherwise be paid to Ms Mann in respect of work she had done or services she has performed and used to acquire the benefits and pay the fees under the salary sacrifice agreement are amounts that are dealt with on her behalf and at her direction.
...
Unlike the superannuation contributions considered by the Tribunal in Sweeney and Inspector-General in Bankruptcy, the contributions are not compulsory unless a salary sacrifice agreement is entered by an employee. An employee has control over his or her decision to enter such an agreement …".
Both the foregoing cases dealt with the concept of "income" under bankruptcy legislation. While they may deal with a concept which is different from "earnings", they are useful for the purpose of looking at the different ways the courts dealt with SGAA payments and payments into a superannuation fund by an employer pursuant to a salary sacrifice agreement.
The Commissioner clearly considered a number of different cases before reaching his conclusion. However, none, save that in Cystic Fibrosis Association of WA v Alyson Bronwyn Williamson Appeal No CM-197/03, dealt with the specific concept of "earnings". All others dealt with the concept of "remuneration" and "income". Cystic Fibrosis (supra) was a decision of a workers compensation magistrate in Western Australia. Counsel for the appellant submitted that the terminology in the legislation being considered was much closer to that in the Act and that while the decision was not binding on the Commissioner, he should have had significant regard to it. He argued there was nothing in the Commissioner's reasons to indicate he discounted it for any reason.
In the legislation considered in Cystic Fibrosis (supra), the term "earnings" was defined to include "wages, salary and other remuneration". Counsel argued that was an inclusive definition and intended to broaden the concept of what earnings were, which was a point of difference with the Act. Counsel also referred to the definition of "Amount B" which appeared on page 3 of the court's reasons, which he said was strikingly similar to the Act, s69(1)(a).
The magistrate in Cystic Fibrosis (supra) had before him the reasons for decision by the Work Health Court in Hastings Deering (supra). At pars20 and 21, he referred to the argument raised before him by reference to that decision. He said:
"This argument is to the effect that the amount paid by the appellant to the AMP Superannuation Fund, in respect of the respondent and by force of Commonwealth legislation, is something which falls within the definition of 'earnings' in clause 11(2) ('normal weekly earnings' under the Work Health Act of the Northern Territory) and in particular, in this State, not being wages or salary, is embraced by the concept of 'other remuneration'.
Recourse to the Oxford English Dictionary and the Macquarie Dictionary indicates that 'remuneration' means reward, recompense, repayment, payment, pay, the act of remunerating and that which remunerates. To remunerate is to reward (a person), to pay (one) for services rendered or work done, to pay, recompense, or reward for work, trouble, etc and to yield a recompense for (work, services etc). It seems to me that the notion of recompense imports, if not actual consideration, certainly some sense of quid pro quo. It is at this point that I run into some difficulty with the proposition that the appellant's payments of the superannuation guarantee charge can properly be characterised as 'remuneration' for the respondent. … I accept that if an employer sets up a superannuation scheme for its employees and voluntarily makes contributions to that scheme, then such payments might well be regarded as a reward for service. The essential nature of the superannuation guarantee charge, however, is that it is an impost on all employers. It is payable, generally speaking, in respect of all employees, whether the employees want it to be paid or not. Employees cannot take some other benefit or reward in lieu of it. There is nothing about it (except that it is based on a percentage of the worker's earnings) that is particular to the relationship between a worker and his or her employer ‑ in this case, between the appellant and the respondent. It would seem that there was some attempt to persuade the review officer that it was a term of the respondent's contract of employment that the appellant would pay the superannuation guarantee charge. Such an undertaking may have been made by the appellant, but I cannot see how it could have been anymore than mere verbiage. The appellant was obliged to pay, regardless of what was in the contract of employment.
… Despite her Worship's extensive canvassing of industrial law concepts, her invocation of the beneficial nature of workers compensation legislation, and her approval of the concept that remuneration incorporates all reward and payment for service provided by the worker, and not merely wages, I cannot bring myself to agree with her analysis.
The intendment of the Commonwealth legislation is clearly to shift from taxpayers at large to employers in particular the burden, or part of the burden, of ensuring that persons who have retired from the workforce are not entirely dependent upon the Commonwealth. Although described as a charge, the amount payable under the legislation could be perceived as a tax on employment. If in due course employers are able to reduce, or not increase, wages and salaries by reference to the amounts they must pay by way of the charge, then the scheme might be perceived as one of compulsory superannuation, effectively directed at employees. Whichever way it is viewed, it is a piece of social engineering achieved in the first instance by way of a financial and administrative imposition upon employers. If the charge continues to be payable during the incapacity of a worker, then that worker's employer is further disadvantaged. The employer must in that case pay an impost while deprived of the services in respect of which that impost is raised. It would come as no surprise to me to discover that it is indeed the case, as the appellant suggests, that under the Commonwealth legislation it was not intended that the charge would be payable during a worker's compensable incapacity.
It is true to say that the charge is a step taken by the Commonwealth to provide the respondent with a future benefit. But that step has not been taken out of any regard for, or appreciation of, the services provided by the respondent to the appellant. It has been taken to diminish the likelihood of the respondent, in the future, requiring to be paid a Commonwealth pension. Neither, in my opinion, can the appellant's payment of the charge be seen as a reward for, or recognition of, the respondent's services. It is made in compliance with a statutorily imposed scheme. The respondent may be the ultimate beneficiary of the scheme, but the present crucial relationship is that between the appellant and the Commonwealth; I cannot see how payments by the appellant to a third (or perhaps I should say fourth) party at the direction of the Commonwealth can properly be described as being paid by the appellant to the respondent as a reward for her services (ie as 'remuneration').
If, as a matter of policy, it is seen as desirable that the charge be payable during a worker's compensable incapacity then no doubt the Commonwealth could legislate accordingly. ... In my opinion, as the Act presently stands, the amount of the charge payable by the appellant in respect of the respondent is not part of the respondent's remuneration, and hence not 'earnings' within the meaning of the definition of that word in clause 11(2) of Schedule 1.
I would add that I agree (subject, of course, to the various limitations and qualifications specifically imposed by the Act - see eg the 'step down' provisions of clause 11(3) and (4)) with the review officer's observation that it is an intendment of the Act that an incapacitated worker be placed, as far as possible, in the position that he or she would have been in had there been no disability. The order made by the review officer could only be seen as advancing that intendment, however, if the respondent were required to deposit the amount of the ordered increase with AMP in the same superannuation fund. Whether or not that is administratively feasible, there is no such requirement and nor could the review officer order it."
Counsel submitted the legislation being considered in Cystic Fibrosis (supra) contained a definition of "earnings". It was defined to include wages, salary and other remuneration. While remuneration may very well include benefits which flow to the worker as an incident of a contract of employment and may include benefits received by a worker as part of the fruits of his labour, "earnings" was necessarily a narrower concept. Counsel argued that in the absence of any definition in the Act, the ordinary meaning of the word should be used.
In the present case, counsel for the appellant has argued that the High Court authorities canvassed were not relevant in the context of the Act because of the concepts with which they dealt and specifically because they dealt with "remuneration". They did not deal with "earnings", as he argues, "received", as is the scheme in the Act. This argument takes us back to the underlying argument which is, is there any relevant difference between the concept of "earnings" in the Act and the concept of "remuneration" considered elsewhere.
It is impossible to ignore that the court in Hastings Deering was dealing with different legislation and a different concept, namely that of "remuneration". It is also impossible to ignore that the cases upon which the Commissioner relied largely deal with the concept of remuneration. I accept that the concept of remuneration is wider than that of "earnings". To accept the authorities which appear to have been accepted by the Commissioner, in my view, ignores fundamental premises:
·that the Act deals with the concept of "earnings" and not "remuneration";
·that the Act repeatedly uses the word "receive" in reference to money and benefits; and
·that ss70(2) and 69(1) both refer to the principle that a worker should receive no more than he would have received were he to be still working.
I accept, therefore, that the Commissioner erred in:
·including SGAA payments in the respondent's earnings;
·failing to find they should not have been;
·failing to distinguish Hastings Deering (supra);
and hence grounds 1, 2 and 4 of the appeal should succeed.
Ground 3
With respect, I am of the view that this ground is misconceived in that it suggests the Commissioner took the view in par14 that payments under the SGAA could be equated to payments to a superannuation fund under a salary sacrifice arrangement. That does not appear to be what he said at all.
At par12, the Commissioner specifically did not accept that "earnings" in the Act was confined only to money payments received in the form of wages or salary. Counsel for the appellant, in his submissions, accepted that view. The Commissioner then went on to explain why he formed that view. He clearly accepted that payments to third parties under salary sacrifice arrangements would be earnings. However, at no stage in pars12, 13, 14 or 15 of his reasons does he even refer to SGAA payments or draw the analogy that they should be treated in the same manner as salary sacrificed payments.
This ground must in the circumstances fail.
Ground 5
At par23, the Commissioner concluded that the inclusion of SGAA payments in the calculation of what was a worker's normal weekly earnings would not breach the Act, ss69(10) or 70(2)(a), because comparable contributions would also be paid to the benefit of other employees still at work. The appellant contends that the Commissioner erred in drawing that conclusion.
In practical terms, were the result contended for by the respondent to this appeal to prevail, the respondent would receive in his hands as part of his weekly compensation an amount calculated by reference to the SGAA payments his employer had been paying up to when the incapacity began, to do with as he wished. There would be no requirement that the worker pay it to any superannuation fund. Other employees who were still at work would not get that payment to do with as they wished and had the worker remained at work, nor would he. The payments would be made to a superannuation fund.
Therefore, in terms of amounts received, the worker not working would clearly be receiving more than the worker who was working and that he would have received had he continued to work.
There is no ambiguity in the wording of s70(2)(a). It states:
"… a worker should receive no more than the worker would have received if the worker had continued in the worker's usual employment."
The Commissioner has equated the word "receive" with "paid to the benefit of". There is no such provision in the Act. A reading of s69(10) reinforces this view because it says:
"a worker should not receive, during a period of incapacity, weekly rate payments greater than the payments the worker would have received if he had worked in his usual employment during that period."
This ground of appeal must, in my view, succeed.
Ground 6
Counsel for the appellant also submitted that the ruling by the Commissioner created an anomaly depending on whether a worker's compensation was calculated by reference to the ordinary time rate of pay or normal weekly earnings. The Commissioner, at par9 of his decision, referred to the meaning of the phrase "ordinary time rate of pay" and certain observations in relation to that phrase appearing in Scott v Sun Alliance Australia Ltd (1993) 178 CLR 1. He went on to say, at par10, in relation to that phrase:
"It clearly relates only to the base rate, in isolation from any allowances, penalties, bonuses or other extra payments or benefits. For that reason alone a payment representing the value to a worker of the employer's payment of a superannuation guarantee levy or charge cannot be part of the ordinary time rate of pay."
Counsel did not argue with the finding at par10. However, what he submitted was that given the existence of the ruling of the Australian Taxation Office, being Superannuation Guarantee Ruling 94/5, which provided that in respect of a worker who was receiving workers compensation but performing no work an employer was not required to continue with SGAA payments, there was an anomaly created. That was that a worker whose benefits were calculated by reference to the ordinary time rate of pay would receive an amount which did not include any amount referable to SGAA payments, while a worker whose benefits were calculated by reference to normal weekly earnings would.
Counsel submitted that the anomaly was referred to in the decision in Hastings Deering (supra), at pars53 to 61. In that case the court held that the incongruity did not exist because of an expanded statutory definition of "ordinary time rate of pay" contained in s49(1) of the Northern Territory legislation. The Act has no such extended definition.
Counsel for the respondent submitted, in relation to this ground of appeal, that it was necessary to consider the mechanisms provided for in the Act, s69(1)(a). An employer was required to make two calculations and then use the greater. This was an attempt by Parliament to ensure that workers are treated fairly. The concepts of normal weekly earnings and ordinary time rate of pay were, however, clearly different concepts. This was a case not of fairness but statutory interpretation. Hence, he argued, the submission from counsel for the appellant that an unfairness was created ran counter to the decision in Scott's case.
With respect, I agree this is a matter of interpretation and not fairness. However, we have an acceptance that the term "ordinary time rate of pay" does not allow for the inclusion of SGAA payments. We also have a reality that, if the respondent's argument, and it follows the Commissioner's ruling, is correct, a different situation would prevail. That would see a worker entitled to payments on the basis of normal weekly earnings automatically entitled to a much greater payment because of the inclusion of an allowance for SGAA payments which he would not get if he were entitled on an ordinary time rate of pay basis.
An anomaly is clearly thereby created. The Commissioner, at par17, referred to the relevant tax ruling. It cannot be said he failed to have regard to it at all. The appellant's argument is that he failed to give effect to it, thus allowing an incongruous result to follow. I accept that while an incongruous result may have followed, it does not automatically mean that the Commissioner erred. It simply means, as was submitted by counsel for the respondent, that he interpreted the Act first rather than allow issues of what were perceived to be fairness to take priority.
This ground of appeal must therefore fail.
Orders
In summary, grounds of appeal 1, 2, 4 and 5 have succeeded while grounds 3 and 6 have failed. Having regard to the nature of the grounds which have succeeded and the substance of these findings, the orders of the Court will be:
1 That the order made by the Tribunal on 19 August 2005 be set aside.
2That there be a determination that the compensation payable by the appellant to the respondent pursuant to the Workers Rehabilitation and Compensation Act 1988, s69, in respect of any incapacity for work resulting from the injury suffered by the respondent on 12 December 2004 is not to include any amount paid or payable by the appellant in respect of the respondent's employment with the appellant pursuant to the Superannuation Guarantee (Administration) Act 1992 (Cth).
0
3
2