Frank Spaul and Comcare
[2013] AATA 107
[2013] AATA 107
| Division | GENERAL ADMINISTRATIVE DIVISION |
| File Number | 2010/4952 |
| Re | Frank Spaul |
| APPLICANT | |
| And | Comcare |
| RESPONDENT |
DECISION
| Tribunal | G. D. Friedman, Senior Member |
| Date | 28 February 2013 |
| Place | Melbourne |
The Tribunal sets aside the reviewable decision of 3 November 2010 and substitutes the following decision:
1.Mr Spaul sustained an injury described as adjustment disorder with mixed anxiety and depressed mood on 7 September 2004 which resulted in total incapacity for work commencing on 8 September 2004;
2.Mr Spaul is entitled to compensation for incapacity under s 19 of the Safety, Compensation and Rehabilitation Act 1988 (the SRC Act) from 8 September 2004 as follows:
(a)100 per cent of his normal weekly earnings (NWE) ($1635.66) for a period of 45 weeks; and
(b)75 per cent of the appropriate figure for normal weekly earnings from the expiry of that period of 45 weeks to 2 December 2007.
3.Mr Spaul’s NWE for the purposes of s 8 of the SRC Act are to be calculated on the basis of his annual salary as follows:
With effect from Annual salary
8 September 2004 $85,327.00
1 July 2005 $88,313.45
1 July 2006 $92,022.61
1 July 2007 $95,703.51
...........................[sgd].............................................
G. D. Friedman, Senior Member
COMPENSATION – Adjustment disorder - Termination of employment – Increase in salary - Normal weekly earnings – Whether increase is an increment
Safety, Rehabilitation and Compensation Act 1988 ss 8(6), 8(9A) 8(9B), 8(9C), 8(10), 19
Comcare v Thompson [2000] FCA 790
Military Rehabilitation and Compensation Commission v Perry [2007] FCA 1586
Re Spaul and Comcare [2006] AATA 915
Re Spaul and Comcare [2011] AATA 435
Spaul v Comcare [2012] FCA 741
REASONS FOR DECISION
G. D. Friedman, Senior Member
28 February 2013
Frank Spaul was employed by Medicare Australia (formerly the Health Insurance Commission) from 1988 until Medicare Australia terminated his employment on
7 September 2004. In 2003 he had suffered from an adjustment disorder which resulted in total incapacity for work. He lodged a claim for compensation, which was heard by the Tribunal in 2006 (Re Spaul and Comcare [2006] AATA 915). In its decision the Tribunal held that the action to terminate Mr Spaul’s employment did not constitute reasonable administrative action that would have disentitled him from receiving compensation.Following the decision the parties reached agreement that Mr Spaul would receive compensation for incapacity for the period 8 September 2004 to 2 December 2007 (the day before his 65th birthday) in respect of a new injury, being aggravation of the adjustment disorder on 7 September 2004. On 3 November 2010 the respondent made a reviewable decision affirming a determination dated 13 August 2010 (which specified Mr Spaul’s normal weekly earnings (NWE) for the purposes of determining incapacity payments) and affirmed a determination dated 25 August 2010 (which referred to compensation leave and incapacity payments but did not include the injury sustained on
7 September 2004).Mr Spaul maintained that he was still an employee of Medicare Australia for the purposes of his entitlement to compensation, and disputed the salary figures used by the respondent to calculate NWE and his entitlement to compensation. On 23 June 2011 the Tribunal decided that Mr Spaul was no longer an employee of Medicare Australia and that the figures used in the calculation of his entitlement to compensation were correct (Re Spaul and Comcare [2011] AATA 435). Mr Spaul sought review by the Federal Court of Australia and on 11 July 2012 Gray J set aside the decision and remitted the matter to the Tribunal for re-hearing (Spaul v Comcare [2012] FCA 741).
LEGISLATIVE BACKGROUND
Section 8 of the SRC Act in effect during the relevant period sets out the method by which NWE are to be calculated for the purposes of determining the appropriate amount of compensation. The relevant subsections are:
…
8(6) Subject to this section, if the minimum amount per week payable to
an employee in respect of his or her employment by the Commonwealth or a licensed corporation at the date of the injury is increased, or would have been increased if the employee had continued in that employment, because of:
…
(c) the receipt by the employee of an increase in salary, wages or pay by way of an increment in a range of salary, wages or pay applicable to the employee or to his or her office, position or appointment;
the normal weekly earnings of the employee before the injury, as calculated under the preceding subsections, shall be increased by the same percentage as the percentage by which that minimum amount per week is increased, or would have been increased, as the case may be.
…
(9) The normal weekly earnings of an employee before the date of the employee’s injury, as calculated under the preceding subsections, must, while the employee continues to be employed by the Commonwealth or a licensed corporation, be increased or reduced by the relevant percentage.
(9A) For the purposes of subsection (9), relevant percentage means the same percentage as the percentage of increase or reduction in the
minimum amount per week payable in respect of employees included in a class of employees of which the employee was a member at the date of the injury as a result of:
(a) the operation of a law of the Commonwealth or of a State or Territory; or
(b) the making, alteration or operation of an award, order, determination or industrial agreement or the doing of any other act or thing, under such a law.
(9B) The normal weekly earnings of an employee before injury, as calculated under subsections (1) to (8) and as increased or reduced under subsection (9) must, if the employee has ceased, or ceases, to be employed by the Commonwealth or a licensed corporation, be further increased, with effect from each indexation date in relation to that cessation, by reference to the percentage of increase (if any) of an index that is prescribed for the purposes of this subsection over the year ending on the 31 December preceding each such indexation date.
(9C) For the purpose of subsection (9B), the indexation date, in relation to a cessation of employment, is:
(a) the 1 July next following:
(i) the date on which this Act receives the Royal Assent; or
(ii) the date of that cessation of employment;
whichever last occurs; and
(b) each subsequent 1 July.
…
(10) If the amount of the normal weekly earnings of an employee before an injury, as calculated under the preceding subsections, would exceed:
(a) where the employee continues to be employed by the Commonwealth or a licensed corporation—the amount per week of the earnings that the employee would receive if he or she were not incapacitated for work; or
(b) where the employee has ceased to be employed by the Commonwealth or a licensed corporation—whichever is the greater of the following amounts:
(i) the amount per week of the earnings that the employee would receive if he or she had continued to be employed by the Commonwealth or the licensed corporation in the employment in which he or she was engaged at the date of the injury;
(ii) the amount per week of the earnings that the employee would receive if he or she had continued to be employed by the Commonwealth or the licensed corporation in the employment in which he or she was engaged at the date on which the employment by the Commonwealth or the licensed corporation ceased;
the amount so calculated shall be reduced by the amount of the excess.
ISSUE
Following the decision of the Federal Court the only matter before the Tribunal is a determination of the correct approach to calculating Mr Spaul’s NWE during the period 8 September 2004 to 2 December 2007. This involves a decision on whether the 4.25% increase in salary for the third pay point of the position of Principal Executive Officer Class B (PEO-B) on 1 October 2004 (the October pay increase) constitutes an increment for the purposes of s 8(6) of the SRC Act.
DOES THE OCTOBER PAY INCREASE CONSTITUTE AN INCREMENT FOR THE PURPOSES OF THE SRC ACT?
Mr Grey on behalf of Mr Spaul submitted that the October pay increase is properly described as an increment in a range of salary falling within the scope of s 8(6)(c) of the SRC Act, which would result in an increase in Mr Spaul’s notional salary from $85,327 to $88,953 for the purpose of calculating his NWE. This figure would then affect the calculation of the NWE from that date forward, having regard to s 8(9B) to (9D) and s 8(10) of the SRC Act.
Mr Grey submitted that the October pay increase is accurately described as an increase in salary which was applicable to the office, position or appointment held by Mr Spaul and became payable under the HIC Managing Change Certified Agreement 2003-2005 (the 2003 Agreement) as a result of the effluxion of a passage of time, namely the period from the commencement of the 2003 Agreement to 1 October 2004. In addition the increase fits within a range, namely $81,848 to $88,953. He said that if Mr Spaul had continued in his employment with Medicare Australia, there is no doubt that he would have received the October pay increase.
It was noted on behalf of Mr Spaul that the word increment is not defined in the SRC Act, and its meaning must be derived from its ordinary meaning, to be read in context with the rest of the section of the Act. The Concise Oxford Dictionary defines increment as an increase or addition, especially one of a series on a fixed scale, and gives as an example a regular increase in salary on such a scale. The Macquarie Dictionary gives a broad meaning to the word, namely something added or gained; an addition or increase and gives a specific meaning referring to an increase in salary resulting from progression within a graduated scale of salaries, designed to reward an employee for increases in skills or experience. Mr Grey said that the latter definition is commonly found in Public Service salary structures, but there is no reason to suppose that is the only possible form of increment which is consistent with s 8(6)(c). He stated that if the legislature had intended such a technical restriction of the word, then it would have been defined in the SRC Act or elsewhere, and there is nothing else in the context of section 8 that would suggest that the word increment should be given any meaning other than its ordinary meaning.
In Comcare v Thompson [2000] FCA 790 Finn J observed that s 8(6)(c) was not drafted with the system of Australian Workplace Agreements in mind, and that any increment envisaged by s 8(6)(c) had to be in a range of salary, which required a minimum and a maximum. Mr Grey submitted that, unlike the position in Thompson, the increase applying to Mr Spaul's position on 1 October 2004 represented a step in the salary applicable to the third pay point of PEO-B which had been fixed for the duration of the 2003 Agreement for all persons occupying positions at that pay grade. If Mr Spaul had continued as an employee, he would have been entitled to that increment, simply by virtue of still serving in the relevant position at 1 October 2004.
In Military Rehabilitation and Compensation Commission v Perry [2007] FCA 1586 Bennett J held that s 8(9B) did not apply to deprive Mr Perry of the increment otherwise payable under s 8(6), and did not have retrospective effect. Mr Grey submitted that there is nothing in s 8(6)(c) that requires an increment to be awarded specifically to an individual, as opposed to an office, position or appointment of an employee. He said that Mr Spaul was an employee at the time of the 2003 Agreement and was therefore entitled to the increase on 1 October 2004. On that date, and when his employment was terminated, he met the test set out in s 8(6) that the minimum amount per week payable to him would have been increased if [he] had continued in that employment. Therefore Mr Grey submitted that the increase was an amount capable of precise prediction before Mr Spaul ceased to be an employee and therefore it met the ordinary meaning of the word increment.
Mr Grey submitted that any doubt about Mr Spaul’s entitlement to have the October pay increase treated as an increment forming part of NWE should be resolved in his favour because the SRC Act is beneficial legislation, so any ambiguity or uncertainty should be interpreted in a way that is beneficial to the worker, and because any other conclusion would permit the respondent to derive a benefit from action taken by Medicare Australia in terminating Mr Spaul’s employment, which Mr Grey maintained was unlawful. He said further that the presence of s 8(10) in the SRC Act which imposes a ceiling in situations where double counting arises in particular situations ensures that no worker could have his or her compensation entitlements calculated by reference to a figure for NWE that is greater than the earnings that the employee would receive if he or she were not incapacitated for work. He said that s 8(9A) has a wider operation than accounting for increases such as the October pay increase, but that this section would have no relevance to Mr Spaul after he ceased to be an employee in September 2004.
Mr Dube on behalf of the respondent submitted that the October pay increase was not an increment within the meaning of s 8(6), but was one that falls within s 8(9) and 8(9A). He said that there are two clear and distinct purposes within that part of s 8 which provide for increases of NWE: one refers to circumstances covered by s 8(6) which is directed to the particular employee (such as age and particular service), and the other is the system of increments. In interpreting s 8(6) regard must be had to s 8(9) and s 8(9A) which apply to increases payable to a class of employee as a result of the making, alteration or operation of an award, order, determination or industrial agreement.
Mr Dube referred to the terms of the 2003 Agreement which distinguish between increases in salary by way of movement in increments and across-the-board salary increases which are not increments. He submitted that a well-recognised principle of statutory construction is that the meaning of a particular expression in a section of an Act needs to be construed in light of the remainder of the section as well as the Act itself, and that each section in an Act has a purpose. An interpretation which would render a word, subsection, or section otiose (futile or pointless) is generally not considered to be what Parliament intended. He said that in this case if the October pay increase was an considered to be an increment in a range of salary, then the interpretation of increment would leave no purpose to be achieved by section 8(9A) because the Parliament could not have intended a situation where there was an opportunity for two increases in NWE arising from one actual salary rise in an Agreement.
CONSIDERATION
The 2003 Agreement introduced the expression Pay Point. Clause 8.3.1 provided:
The new structure provides for the introduction of additional pay points on the first pay period commencing on or after 1 October 2004 that may be accessed by employees at particular levels subject to meeting prescribed criteria.
Clause 23 of the Agreement provided for salary increase. It stated:
23.1 The parties have agreed to the following pay increases being paid to HIC employee’s base rate of pay over the life of this agreement:
…
4.25% to be paid on the first pay period commencing on or after 1 October 2004.
Clause 26 of the Agreement provided for movement in increments. Clause 26.3.1 stated:
The Managing Director may approve annual increments to be paid from 1 August each year to employees provided their performance and conduct are assessed as being satisfactory subject to their participation in the Performance Support Program and at least three months employment in H IC within the performance support program reporting cycle ending on 30 June. Where the increment is approved the employee will move to the next high point in the salary range until they reach the top salary rate applicable to the relevant classification.
The word increment is not defined in the SRC Act. The Tribunal accepts that as a principle of statutory interpretation the word should be given its ordinary meaning as provided for in the context of the legislation. The Tribunal takes into account the definitions contained in the Concise Oxford Dictionary and the Macquarie Dictionary, both of which suggest a progression within a fixed scale. The Tribunal also takes into account that the 2003 Agreement distinguishes between across-the-board salary increases (such as the October pay increase provided for in clause 23.1) and increments as provided for in clause 26.3.1.
The SRC Act appears to have been drafted with the structure and needs of the then Commonwealth Public Service in mind, and the wording used in the SRC Act was probably intended to reflect the terminology used at the time. This view appears to be consistent with the comment by Finn J in Thompson at [37]:
It may be conceded that the SRC Act is beneficial in nature and that s 8(6) is one of the instruments to be used in effectuating that end of the statute. But the subsection was crafted for, and reflected the characteristics of, a public sector that was structured in a particular fashion and which provided in known ways for the setting of the terms and conditions of employment including remuneration of public sector employees…
In Perry Bennett J stated at [27]:
The normal weekly earnings of the employee are as calculated under ss 8(1) to 8(8) of the Act. That includes the increment (s 8(6)). Section 8(6) is directed to increments in remuneration payable to an employee by reason of the attainment of a level of seniority or the passage of time, including actual increments and hypothetical increments. Section 8(6) applies to injured employees who continue to be employed by the Commonwealth and, as is apparent from ‘would have been increased if the employee had continued in that employment’, continues to operate in respect of employees after employment has ended. That is, the subsection provides that, whether in employment or whether employment has ceased, the normal weekly earnings shall be increased by the percentage by which they would have been increased before injury.
Her Honour stated at [44]:
There is a difference between increments due to the individual employee by reasons of his or her position such as the flight allowance, and the adjustment by the relevant percentage of subs (9). The reason for the replacement of a percentage determined by the operation of law or an industrial agreement by a prescribed percentage is explained in the Explanatory Memorandum. If that is what was intended, the employee, on cessation of employment, does not receive more than he or she would have earned if the employment continued and does not lose the benefit of increments due to the employee by reason of age, period of service or position or appointment.
In considering the meaning of increment the Tribunal needs to take into account the remainder of s 8. The Tribunal accepts the submission made on behalf of the respondent that if the October pay increase was considered to be an increment in a range of salary, then the interpretation of increment would leave no purpose to be achieved by section 8(9A) because Parliament could not have intended a situation where there was an opportunity for two increases in NWE (which would be covered by s 8(6)(c) and 8(9A)) arising from one actual salary rise in an Agreement such as the 2003 Agreement.
The October pay increase of 4.25% in salary provided for in the 2003 Agreement is an across-the-board pay rise for a class of employee that falls within s 8(9) and 8(9A). For this reason and using the ordinary dictionary meaning of the word increment, the Tribunal concludes that the increase is not an increment in a range of salary for the purposes of s 8(6)(c). Although the SRC Act is beneficial legislation, in the Tribunal’s view there is no ambiguity or uncertainty that would require an interpretation of increment in a way that is favourable to Mr Spaul. Similarly, the Tribunal does not accept the submission on behalf of Mr Spaul that the respondent is seeking to derive a benefit from an unlawful termination because the Tribunal has held previously that Mr Spaul is no longer an employee of Medicare Australia, and this part of the reviewable decision was not pursued at the re-hearing of the application.
Therefore the entitlement to incapacity payments for Mr Spaul for the purposes of s 8 is to be calculated on the basis of NWE as set out in the reviewable decision dated 13 August 2010.
COSTS
As Mr Spaul has been unsuccessful in the matters decided by the Tribunal, no award of costs to him is appropriate.
DECISION
The Tribunal sets aside the reviewable decision of 3 November 2010 and substitutes the following decision:
1.Mr Spaul sustained an injury described as adjustment disorder with mixed anxiety and depressed mood on 7 September 2004 which resulted in total incapacity for work commencing on 8 September 2004;
2.Mr Spaul is entitled to compensation for incapacity under s 19 of the Safety, Compensation and Rehabilitation Act 1988 (the SRC Act) from 8 September 2004 as follows:
(c)100 per cent of his normal weekly earnings (NWE) ($1635.66) for a period of 45 weeks; and
(d)75 per cent of the appropriate figure for normal weekly earnings from the expiry of that period of 45 weeks to 2 December 2007.
3.Mr Spaul’s NWE for the purposes of s 8 of the SRC Act are to be calculated on the basis of his annual salary as follows:
With effect from Annual salary
8 September 2004 $85,327.00
1 July 2005 $88,313.45
1 July 2006 $92,022.61
1 July 2007 $95,703.51
| I certify that the preceding twenty-five (25) paragraphs are a true copy of the reasons for the decision of G. D. Friedman, Senior Member. |
.......................[sgd].................................................
Associate
Dated 28 February 2013
| Date of hearing | 21 February 2013 |
| Counsel for the Applicant | Mr L Grey |
| Solicitors for the Applicant | C & M Lawyers |
| Counsel for the Respondent | Mr B Dube |
| Solicitors for the Respondent | Sparke Helmore |
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