Dimoff and Mermaid Marine Australia Ltd
[2008] AATA 442
•27 May 2008
Administrative Appeals Tribunal
DECISION AND REASONS FOR DECISION [2008] AATA 442
ADMINISTRATIVE APPEALS TRIBUNAL )
) No 2007/4073
GENERAL ADMINISTRATIVE DIVISION ) Re JOHN DIMOFF Applicant
And
MERMAID MARINE AUSTRALIA LTD
Respondent
DECISION
Tribunal Deputy President S D Hotop Date27 May 2008
PlacePerth
Decision The Tribunal sets aside the decision under review and remits the matter to the respondent for reconsideration in accordance with the direction that the amount of compensation payable to the applicant by way of incapacity payments in accordance with s31 of the Seafarers Rehabilitation and Compensation Act 1992 (Cth) (“the Act”) be calculated on the basis that the amount of his “normal weekly earnings”, within the meaning of s13(1) of the Act, is $2,629.83.
The Tribunal orders, pursuant to s92(2) of the Act, that the costs of these proceedings incurred by the applicant be paid by the respondent in accordance with Section 6.8 of the Tribunal’s Guide to the Workers’ Compensation Jurisdiction.
..........[Sgd S D Hotop]......
Deputy President
CATCHWORDS
COMPENSATION – seafarers – applicant employed by respondent on casual basis – applicant injured in course of employment – applicant incapacitated for work – respondent accepted liability to pay compensation to applicant – incapacity payments – applicant’s normal weekly earnings – casual loading payable fortnightly to applicant under contract of employment – casual loading included in amount payable to applicant by way of salary under contract of employment – decision under review set aside
Seafarers Rehabilitation and Compensation Act 1992(Cth), s13(1)
Commissioner for Government Transport v Kesby (1972) 127 CLR 374
REASONS FOR DECISION
27 May 2008 Deputy President S D Hotop Introduction
1. On 15 December 2004 John Dimoff (“the applicant”) was injured in the course of his employment with Mermaid Marine Australia Ltd (“the respondent”).
2. At the time he was so injured, the applicant was employed by the respondent as a casual Chief Engineer on a full-time basis.
3. On 6 January 2005 the applicant made a claim for compensation under the Seafarers Rehabilitation and Compensation Act 1992 (Cth) (“the Act”) in respect of injuries suffered by him in the abovementioned incident, and the respondent subsequently accepted liability under the Act to pay such compensation to the applicant.
4. On 31 May 2007 a determination was made, on behalf of the respondent, in respect of the amount of the applicant’s “normal weekly earnings” for the purpose of calculating the amount of compensation payable to the applicant by way of incapacity payments in accordance with s31 of the Act. In that determination a casual loading of 12.3% paid fortnightly to the applicant was not included as part of his “normal weekly earnings”.
5. Following a request by the applicant’s solicitors for a reconsideration of the abovementioned determination, on 20 August 2007 a reviewable decision was made, on behalf of the respondent, affirming that determination.
6. On 20 August 2007 the applicant’s solicitors lodged with the Tribunal an application for review of the abovementioned reviewable decision.
The Issue
7. The issue for the Tribunal’s determination is the amount of the applicant’s “normal weekly earnings” in accordance with s13(1) of the Act.
The Relevant Legislation
8. Section 13(1) of the Act provides:
“For the purposes of this Act, if an employee who is a seafarer suffers an injury, the employee’s normal weekly earnings are an amount equal to the amount payable weekly to the employee by way of salary under the contract of employment that applied to his or her employment immediately before the injury happened.”
The Evidence
9. The evidence before the Tribunal comprised:
· the documents (T1-T23, pp1-124) lodged by the respondent in accordance with s37 of the Administrative Appeals Tribunal Act 1975 (Cth); and
· a bundle of pay notices relating to the applicant’s employment with the respondent, as from the fortnight ending 24 February 2004 (Exhibit R1).
The Contract of Employment
10. The terms of the relevant contract of employment, for the purposes of s13(1) of the Act, were set out in a “letter of appointment” signed on behalf of the respondent and by the applicant (T3, pp11-12). That letter relevantly stated:
“…
All work associated with the Company operated vessels will be paid according to the relevant Maritime award, agreement or MOU in place that covers the scope of works and operating area of the vessel.
…”
11. The relevant agreement was the “Mermaid Marine Vessel Operations Pty Ltd – Australian Institute of Marine and Power Engineers Certified Agreement 2002-2005” (“the Certified Agreement”). The Certified Agreement relevantly provided:
“…
CLAUSE 8 – PERFORMANCE APPRAISAL
8.1 The Employer may use a Performance Appraisal system during the term of this agreement. Where it is proposed to implement a system of performance appraisal there will be full consultation with the Union and Engineer Officers employed by the Employer, on all aspects of the system.
8.2 When the Employer implements a Performance Appraisal System, the following shall apply:
…
8.2.2 Performance Assessment – Each Chief Engineer will be appraised by, Mermaid Marine Vessel Operations Pty Ltd’s Marine Superintendent or his nominee and each Chief Engineer will assess each Engineer Officer under his supervision.
8.2.3 Performance Range – Once a performance level has been established the Employee’s salary may be adjusted accordingly, within the following ranges:
Chief Engineer 0 to 12%
…
Where no assessment takes place the Employee will be paid the following increment:
Chief Engineer 5%
…
CLAUSE 13 – REMUNERATION AND CREWING
13.1 The salaries have been fixed on the basis that except where otherwise provided in the agreement they take into account all aspects and conditions of employment.
13.2 Except where expressly provided otherwise in this agreement the amount payable to an employee pursuant to this clause shall constitute the whole of an employee’s remuneration. Without limiting the generality of the foregoing, no additional or other payments shall be payable in respect of overtime or any penalty or disability of any kind or any other feature incident or condition of employment.
13.3 The rates of salary for parts of a year shall be computed as follows:
13.4 The fortnightly rate by dividing the annual rate by 26.
13.5 The daily rate by dividing the fortnightly rate by 14.
…
CLAUSE 15 – TWO-CREW DUTY SYSTEM
15.1 Two crew duty system will operate providing for the appointment of two crews to each vessel, one on duty and the other off duty or in transit.
15.2 To compensate for public holidays, intervals of leave, annual leave and time spent travelling in off duty time, an engineer officer will accrue an entitlement to time off at the rate of 1.153 days leave for each day spent on duty under the two crew duty system.
…
CLAUSE 17 – CASUAL EMPLOYMENT
…
17.3 Whilst working as a casual, such employees shall receive in addition to their salary:
17.3.1 A loading of 12.3% shall apply and be paid in each fortnightly pay. The 12.3% loading is comprised of:
ØLSL 1.67%
ØMedical 2.5%
ØShort term Loading 5.0%
ØContingencies 3.13%
17.3.2 Casual officers will not be subject to a performance appraisal and will therefore receive in their remuneration the average of the assessment scale, ie:
For Chief Engineers 5%
First Engineers 5%
Second, Third & Electrical Engineers 4%
17.3.3 Accrue leave at a ratio of 1.153 days for each duty day worked.
...
NOTE: Clause 17 applies to all casual employment regardless of the schedule under which the Engineer officer is engaged or the duration of the employment.
…
CLAUSE 21 – PAYMENT OF WAGES
21.1 Wages shall be paid at intervals of fourteen (14) days, twenty eight (28) days or a calendar month.
21.2 A pay notice showing the full details of gross pay, deductions, net pay and leave accrued and taken shall be provided with each payment of wages.
…
CLAUSE 59 – DUTY CYCLES
59.1 Duty cycles shall in the main be in accordance with the appropriate schedule. It is recognised however, that a significant part of Mermaid Marine’s offshore oil and gas activity will involve periods of duty which may be significantly less than the duty cycles set out in the schedules.
59.2 In order to provide employees with a fair system of leave taking along with a degree of predictability and meeting the business needs of the company, the following swing system will take precedence where duty cycles are less than that set out in the attached schedules.
59.2.1 Where a duty cycle is less than fourteen (14) consecutive days, an employee on his return home shall be available for a return to duty at short notice.
59.2.2 Where a duty cycle is fourteen (14) days or more, an employee shall be entitled to a period of leave at least equal to the period of duty just completed.
59.2.3 An employee shall be entitled to at least two (2) periods of leave of thirty five (35) days duration in any twelve month period….
…” (T20)
The relevant “aggregate annual rates of pay for engineer officers” were set out in Schedule 7 to the Certified Agreement. It is common ground that, in the case of the applicant at the relevant time, the relevant amount specified in Schedule 7 was $121,773.00.
A Concession by the Respondent
12. At the hearing the respondent conceded that the casual loading of 12.3%, which has been paid fortnightly to the applicant at all material times in accordance with clause 17.3.1 of the Certified Agreement, should be treated as part of the applicant’s “salary”, and “normal weekly earnings”, within the meaning of 13(1) of the Act. The Tribunal notes that that proposition was rejected in the abovementioned determination and reviewable decision.
13. In the Tribunal’s opinion that concession was rightly made because the casual loading was, in accordance with clause 17.3.1 of the Certified Agreement, payable to the applicant on a regular fortnightly basis – specifically, “in each fortnightly pay” – and it, therefore, possessed the ordinary characteristics of a salary payment: see Commissioner for Government Transport v Kesby (1972) 127 CLR 374 at 378, 387, 388.
What was the Amount of the Applicant’s “Normal Weekly Earnings”, within the meaning of s13(1) of the Act?
14. The applicant submitted (as the Tribunal understands it) that his “normal weekly earnings” at the relevant time comprised the amount that he was in fact receiving by way of salary in accordance with clause 17.3 of the Certified Agreement immediately before he was injured on 15 December 2004, namely:
· one fifty-second of the aggregate annual rate of pay ($121,773.00 ÷ 52) - $2,341.79; plus
· accrued leave pay at the rate of 1.153 of the above weekly amount - $2,700.08; plus
· casual loading of 12.3% - $620.15.
15. The Tribunal does not accept the applicant’s submission for the following reasons.
16. The applicant’s “normal weekly earnings” are, in accordance with s13(1) of the Act, an amount equal to “the amount payable weekly” to him “by way of salary” in accordance with the Certified Agreement immediately before he was injured on 15 December 2004.
17. In accordance with the Certified Agreement, an annual amount of $121,773.00 – that is, a weekly amount of $2,341.79 – was payable to the applicant by way of salary at the relevant time. In addition, a casual loading of 12.3% - that is, $288.04 per week – was payable to him, in accordance with clause 17.3.1 of the Certified Agreement, at that time. In the Tribunal’s opinion, both of the abovementioned weekly amounts were payable to the applicant “by way of salary under the contract of employment”, within the meaning of s13(1) of the Act, and, accordingly, were included in his “normal weekly earnings”, within the meaning of that subsection, at the relevant time.
18. In the Tribunal’s opinion, no additional amounts were payable weekly to the applicant by way of salary in accordance with the Certified Agreement. Although the applicant, in accordance with clause 17.3.3 of the Certified Agreement, was accruing leave “at a rate of 1.153 days for each duty day worked”, the Tribunal notes that, in accordance with clause 15.2 of the Certified Agreement, an equivalent accrued leave entitlement applied to permanent engineer officers. The Tribunal further notes that clause 13 of the Certified Agreement, which provided for payment of the salaries set out in the Schedules, also provided (in subclause 13.2):
“Except where expressly provided otherwise in this agreement the amounts payable to an employee pursuant to this clause shall constitute the whole of an employee’s remuneration…”
The word “employee” was defined in clause 3 of the Certified Agreement to mean:
“a person employed by Mermaid Marine Vessel Operations Pty Ltd who is bound by this Agreement”
and it, accordingly, included not only permanent employees but also casual employees, such as the applicant.
19. Pursuant to clause 13.2 of the Certified Agreement, the total remuneration payable to the applicant comprised:
· the “salary” payable in accordance with clause 13 as set out in Schedule 7; and
· the casual loading of 12.3% payable in accordance with clause 17.3.1; and
· other amounts expressly provided for in the Certified Agreement, for example, the various allowances provided for in clause 19.
The only parts of that total remuneration which, in the Tribunal’s opinion, possessed the ordinary characteristics of a payment “by way of salary” – namely, periodicity, regularity, uniformity (see Commissioner for Government Transport v Kesby (above)) – within the meaning of s13(1) of the Act were:
· the “salary” payable in accordance with clause 13 and Schedule 7; and
· the casual loading of 12.3% payable in accordance with clause 17.3.1.
20. The Tribunal notes that, according to the applicant’s submission, the amount paid to him by way of salary under the Certified Agreement at the relevant time totalled approximately $5,662 per week (see paragraph 14 above). Under clause 13 and Schedule 7 of the Certified Agreement, however, the amount payable to a permanent Chief Engineer by way of salary at that time was (in the absence of a performance assessment under clause 8) $2,341.79 ($121,773.00 ÷ 52) per week. It cannot, in the Tribunal’s opinion, have been the intention of the Certified Agreement that there be such a great difference between the amount of salary payable to a casual Chief Engineer and the amount of salary payable to a permanent Chief Engineer under that Agreement. In the Tribunal’s opinion, the intention of the Certified Agreement, as provided in clause 17.3, was that the main, if not the only, difference between the amount of salary payable to a casual Chief Engineer and the amount of salary payable to a permanent Chief Engineer was (in the absence of a performance assessment under clause 8) the casual loading of 12.3% payable to the former.
21. The Tribunal has also had regard to the various pay notices, relating to the applicant’s employment with the respondent, which were tendered in evidence (Exhibit R1). According to those pay notices:
· in the fortnight commencing 15 December 2004 (the date of the applicant’s injury) and ending 28 December 2004 the applicant’s gross pay (including the casual loading of 12.3%) was $5,224.23;
· in the period from 30 June 2004 to 28 December 2004 the applicant’s gross pay (including the casual loading of 12.3%) was $49,656.66;
· in the period from 29 December 2004 to 22 March 2005 (being the latest period covered by the pay notices which are in evidence) the applicant’s gross pay (including the casual loading of 12.3%) was $31,114.20.
Although the information contained in those pay notices is by no means determinative of the present matter, the Tribunal notes that the amounts paid weekly to the applicant, as specified in those pay notices, were far less than the amounts claimed in the applicant’s submission (see paragraph 14 above) and were, instead, approximately equivalent to the amount which the Tribunal has found was payable to the applicant by way of salary under the Certified Agreement (see paragraph 17 above).
Finding
22. The Tribunal finds (as indicated in paragraphs 17 and 19 above) that the amount payable weekly to the applicant “by way of salary under the contract of employment” that applied to his employment with the respondent immediately before he was injured on 15 December 2004 was $2,629.83 comprising:
· the amount of $2,341.79 payable weekly to him in accordance with clause 13 and Schedule 7 of the Certified Agreement; and
· the amount of $288.04 (being a casual loading of 12.3%) payable weekly to him in accordance with clause 17.3.1 of the Certified Agreement.
Accordingly, the Tribunal finds that, for the purposes of the Act, the amount of the applicant’s “normal weekly earnings”, within the meaning of s13(1) of the Act, was $2,629.83.
Decision
23. For the above reasons the Tribunal sets aside the decision under review and remits the matter to the respondent for reconsideration in accordance with the direction that the amount of compensation payable to the applicant by way of incapacity payments in accordance with s31 of the Act be calculated on the basis that the amount of his “normal weekly earnings”, within the meaning of s13(1) of the Act, is $2,629.83.
I certify that the 23 preceding paragraphs are a true copy of the reasons for the decision herein of Deputy President S D Hotop
Signed: ..............[Sgd Ms C Skinner].................................
AssociateDate of Hearing 3 April 2008
Date of Decision 27 May 2008
Advocate for the Applicant Mr C Prast
Solicitor for the Applicant Slater & Gordon
Counsel for the Respondent Mr J Lenczner
Solicitor for the Respondent Sparke Helmore
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