Darrell Hartas v Telstra Corporation
[2015] AATA 147
•13 March 2015
[2015] AATA 147
Division GENERAL ADMINISTRATIVE DIVISION File Number
2014/2938
Darrell Hartas
APPLICANT
And
Telstra Corporation Limited
RESPONDENT
Decision
Tribunal Dr James Popple, Senior Member
Date 13 March 2015 Place Canberra The decision of Telstra Corporation Limited on 28 May 2014 is affirmed.
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James Popple, Senior Member
Catchwords
COMPENSATION — Commonwealth employees — payment for permanent incapacity — payment adjusted for hours employee is able to earn — whether ability to earn affected by subsequent injury — compensation payable ‘as a result of an injury’ — ability to earn calculated but for subsequent injury — decision affirmed.
Legislation
Safety, Rehabilitation and Compensation Act 1988, ss 5A, 14, 19 and 21
Reasons for decision
James Popple, Senior Member
13 March 2015
Summary
I affirm the decision of Telstra Corporation Limited (Telstra). Telstra was correct when it reduced the amount of compensation payable by the amount that the employee would have been able to earn if not for a later injury, unconnected to the injury for which Telstra was liable.
Background
On 19 August 2002, Mr Darrell Hartas made a claim for workers’ compensation in relation to his then employment with Telstra. On 27 August 2002, Telstra (through its insurer) accepted liability, under s 14 of the Safety, Rehabilitation and Compensation Act 1988 (the SRC Act) for Mr Hartas’s discogenic lumbar back pain (the compensable injury).
On 23 August 2004, the trustees of Mr Hartas’s superannuation fund approved his claim for a total and permanent invalidity benefit. On 24 September 2004, Telstra terminated Mr Hartas’s employment. On 18 October 2004, Mr Hartas’s lump sum benefit was paid into his superannuation rollover account.
On 15 June 2012, Mr Hartas was medically cleared to undertake a two-week work trial from 25 June 2012 delivering flowers for a florist. He continued in that job after the trial period. On 9 August 2012, Telstra advised Mr Hartas that his rehabilitation program was complete as he had returned to work for up to 15 hours per week. Mr Hartas worked consistently for the florist from December 2012.
Telstra has been making fortnightly compensation payments to Mr Hartas, under s 21 of the SRC Act. From 1 August 2013 until 26 March 2014, Telstra reduced the amount of compensation it paid by the amount of Mr Hartas’s actual earnings from his job with the florist during each fortnight.
On 24 March 2014, Mr Hartas advised Telstra that he had been diagnosed with a hernia and that he had ceased work pending an operation. On 3 April 2014, Telstra made a determination of Mr Hartas’s entitlement to compensation payments for the ten weeks beginning on 27 March. That determination reduced the amount of each payment taking account of Mr Hartas’s average weekly earnings over the previous eight weeks. Mr Hartas had the hernia operation, and later returned to work for the florist.
Mr Hartas requested a reconsideration of Telstra’s determination and, on 28 May 2014, Telstra affirmed its earlier determination. On 10 June 2014, Mr Hartas applied to the Tribunal, under s 64 of the SRC Act and s 29(1) of the Administrative Appeals Tribunal Act 1975, for review of that decision.
Decision under review
The decision under review is Telstra’s decision on 28 May 2014 to affirm its determination of Mr Hartas’s entitlement to incapacity payments.
Issue
The issue in this review is whether Telstra was correct in its calculation of Mr Hartas’s entitlement to incapacity payments for the ten weeks after he ceased work for the florist. That depends on the proper application of ss 19 and 21 of the SRC Act.
The relevant provisions of the SRC Act
Section 21 of the SRC Act relevantly provides:
21 Compensation for injuries resulting in incapacity where employee is in receipt of a lump sum benefit
(1) Compensation payable to an employee who is incapacitated for work as a result of an injury is determined in accordance with this section if:
(a) the employee is retired from his or her employment (whether the employee retired voluntarily or was compulsorily retired); and
(b) the employee receives a lump sum benefit under a superannuation scheme as a result of the employee’s retirement.
…
(3) The amount of compensation is the amount worked out using this formula:
where:
amount of compensation means the amount of compensation that would have been payable to the employee for a week if:
(a) section 19, other than subsection 19(6), had applied to the employee; …
Mr Hartas retired from his employment with Telstra and received a lump sum benefit under a superannuation scheme as a result of his retirement. So, because of s 21(1), the compensation payable to him is determined in accordance with s 21. Section 21(3), in a part not quoted above, defines the “weekly interest on the lump sum”. And, because of the date on which Mr Hartas retired, s 21(4) provides that a different amount is used in the formula instead of “5% of the employee’s normal weekly earnings”.
Mr Hartas does not dispute those parts of Telstra’s calculations. His disagreement is with Telstra’s calculation of the “amount of compensation” in the formula in s 21(3)—that is, the amount of compensation that would have been payable had s 19 applied to him.
Section 19 of the SRC Act relevantly provides:
19 Compensation for injuries resulting in incapacity
(1) This section applies to an employee who is incapacitated for work as a result of an injury, other than an employee to whom section 20, 21, 21A or 22 applies.
(2) Subject to this Part, Comcare is liable to pay to the employee in respect of the injury, for each week that is a maximum rate compensation week during which the employee is incapacitated, an amount of compensation worked out using the formula:
where:
AE is the greater of the following amounts:
(a) the amount per week (if any) that the employee is able to earn in suitable employment;
(b) the amount per week (if any) that the employee earns from any employment (including self-employment) that is undertaken by the employee during that week.
NWE is the amount of the employee’s normal weekly earnings.
(2A) For the purposes of subsection (2), a week is a maximum rate compensation week, in relation to an employee to whom this section applies, if:
(a) it is a week during which the employee’s incapacity prevents the employee working the employee’s normal weekly hours because the employee is unable to work or unable to work at the level at which the employee worked before the injury; and
(b) the total number of hours that the employee has been prevented from working, or working at that level, during that incapacity, in that week and in all previous weeks, if any, to which paragraph (a) applies, does not exceed 45 times the employee’s normal weekly hours.
…
(3) Subject to this Part, Comcare is liable to pay compensation to the employee, in respect of the injury, for each week during which the employee is incapacitated, other than a week referred to in subsection (2), of an amount calculated using the formula:
where:
adjustment percentage is a percentage equal to:
(a) if the employee is not employed during that week—75%; …
AE applies in relation to the whole of that particular week and has the same meaning as in subsection (2).
NWE is the amount of the employee’s normal weekly earnings.
…
Because Telstra is a “licensed authority” for the purposes of the SRC Act (see s 4 and Part VIII), the references to Comcare in ss 19(2) and (3) are references to Telstra.
Calculating the amount of compensation
Although s 19(1) means that s 19 does not apply directly in this review (because Mr Hartas is an employee to whom s 21 applies), it applies indirectly because the amount of compensation in the formula in s 21(3) is calculated as if s 19 did apply to him. Nothing in the evidence before me suggests that any of the ten weeks in question in this review was “a maximum rate compensation week” as that term is defined in s 19(2A). So, the formula to apply is that set out in s 19(3). Mr Hartas does not dispute Telstra’s calculation of the adjustment percentage (75%) or NWE; he disputes only Telstra’s calculation of AE.
The parties agree that there is no connection between the compensable injury—Mr Hartas’s discogenic lumbar back pain—and his hernia. They also agree that, during the ten weeks in question, Mr Hartas was prevented (by his hernia) from working even at the level at which he had been working before the hernia: that is, 15 hours per week.
Calculating AE
Telstra calculated AE by calculating Mr Hartas’s average weekly earnings over the eight weeks before his hernia. This, Telstra says, is what is meant by paragraph (a) of the definition of AE in s 19(2): “the amount per week (if any) that the employee is able to earn in suitable employment”. Telstra says that the reference to what an employee is able to earn is a reference to what they could earn having regard to the compensable injury, disregarding subsequent (unconnected) injuries. So, for Mr Hartas, that would be the amount that he would have been able to earn each week from his job with the florist, if not for the hernia.
Mr Hartas says that the amount of compensation should not be reduced by the amount that he “is able to earn in suitable employment” because, as Telstra does not dispute, he was not able to earn anything in suitable employment during the ten weeks in question.
I think that Telstra’s interpretation of the meaning of the definition of AE in s 19(2) is the correct one: the amount that an employee is able to earn in suitable employment should be calculated having regard only to the continuing effect of the compensable injury. This follows from s 21(1), which provides that compensation is payable “to an employee who is incapacitated for work as a result of an injury” (emphasis added). It also follows from s 19(3), which provides for the payment of compensation “in respect of the injury” (emphasis added). Given the general scheme of the SRC Act, and the definition of “injury” in s 5A, I think that these references to “injury” (and others in ss 19 and 21) must be to the injury that gave rise to the liability to pay compensation: the compensable injury.
Conclusion
In calculating AE, Telstra can disregard any later, unconnected injury. For the purposes of paragraph (a) of the definition of AE in s 19(2) of the SRC Act, the amount per week that Mr Hartas was able to earn in suitable employment is the amount that he would have been able to earn each week from his job with the florist, if not for the hernia.
I certify that the preceding 20 (twenty) paragraphs are a true copy of the reasons for the decision herein of Senior Member Popple ...............................[sgd].........................................
Associate
Dated 13 March 2015
Date of hearing 10 March 2015 Applicant In person Counsel for the Respondent Mr Charlie Clarke Solicitors for the Respondent Sparke Helmore
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