FREW and COMCARE
[2011] AATA 597
•26 August 2011
CATCHWORDS – COMPENSATION – normal weekly earnings – calculating increase by reason of increase in salary by way of increment in range of pay applicable to position – question of fact determined by whether employee can demonstrate that “would have” satisfied criteria for increment if had continued in that employment – question of fact and not of speculation – decision affirmed.
COMPENSATION – workplace agreements setting rates of pay and regulating increments and the like for a range of employees in an agency – distinguished from negotiated workplace agreements between an employer and an individual employee – relevance of each depends on its terms.
COMPENSATION – performance appraisal scheme provided for under workplace agreement – relevance in determining whether employee would have received an increment in a range of pay applicable to position – determined by its terms.
ASP Ship Management Pty Ltd v Wood [2007] FCAFC 142; (2007) 161 FCR 429; 97 ALD 581
Comcare v Hart [2004] FCA 1067
Comcare v Thompson [2000] FCA 790; (2000) 100 FCR 375; 175 ALR 163; 31 AAR 389
McDonald v Department of Defence [1990] FCA 882
Military Rehabilitation and Compensation Commission v Perry [2007] FCA 1586; (2007) 164 FCR 307; 98 ALD 638
Re Mitchell and Military Rehabilitation and Compensation Commission [2005] AATA 221; (2005) 85 ALD 234
Re SRGGGG and Military Rehabilitation and Compensation Commission [2006] AATA 1151
Compensation (Commonwealth Government Employees) Act 1971
Industrial Relations Act 1988
Public Service Act 1922 s 82D
Public Service Act 1999 s 23(1)
Safety, Rehabilitation and Compensation Act 1988 ss 7(4), 8(1), 8(3), 8(6)(c), 8(7), 8(8), 8(9), 8(9A), 8(9B), 8(9C), 8(9D), 8(9E), 8(9F), 8(9G), 8(10), 9(1), 14, 19, 19(2), 19(2A), 19(3), 131(4)
Superannuation Act 1976
Workplace Relations Act 1996 ss 4(1), 170LT, 326, 328
Public Service Classification Rules 2000 r 9(1)
Centrelink Agreement 2006-2009
Centrelink Agreement 2009-2011
DECISION AND REASONS FOR DECISION [2011] AATA 597
ADMINISTRATIVE APPEALS TRIBUNAL )
) 2011/0299
GENERAL ADMINISTRATIVE DIVISION )
Re:DAVID FREW
Applicant
And:COMCARE
Respondent
DECISION
Tribunal: Deputy President S A Forgie
Place: Melbourne
Date: 26 August 2011
Decision:The Tribunal decides:
to affirm the decision of the respondent dated 21 January 2011 affirming its earlier decision dated 17 November 2010.
S A Forgie
Deputy President
REASONS FOR DECISION
Mr Frew, who is employed as an APS 5 by Centrelink, suffered an injury since described by Comcare as “aggravation of displacement of intervertebral disc lumbar”. He first sought medical treatment for it on 26 March 2007 but continued working until 9 October 2007 when he ceased work due to incapacity. By virtue of s 7(4) of the Safety Rehabilitation and Compensation Act 1988 (SRC Act), Mr Frew is deemed to have sustained his injury on 26 March 2007 being the earlier of those two days. On 11 October 2007, when he was working at his substantive level of an APS 5, he claimed compensation for that injury. On
2 February 2008, Comcare accepted liability to pay compensation to him under s 14 of the SRC Act for an injury.
On 17 November 2010, Comcare determined that Mr Frew was incapacitated for work and so entitled to compensation amounting to $942.11 per week for the period from 13 September 2010 to 8 October 2010. It calculated that amount under s 19 of the SRC Act on the basis that Mr Frew’s normal weekly earnings (NWE) were $1,256.15. Mr Frew asked Comcare to reconsider its determination on the basis that the figure used for his NWE should have been increased in accordance with Part 21.9 of the Centrelink Agreement 2009-2011 (2009 Agreement)[1]. An increase was justified, Mr Frew argued, because he had been at the top pay point of his designation as an APS 5. But for his back injury, his work would have been rated as “excellent” on a performance appraisal, as it had been in the past, and he would have been entitled to an increase in his salary. That increase, he submitted, would have been “an increase in salary … by way of an increment in a range of salary applicable to the employee or to his … office, position or appointment”. Mr Frew relied on the judgment of Finn J in Comcare v Thompson[2] (Thompson).
[1] Documents lodged under s 37, Administrative Appeals Tribunal Act 1975 (T documents) at 57
[2] [2000] FCA 790; (2000) 100 FCR 375; 175 ALR 163; 31 AAR 389
Comcare did not agree with Mr Frew and affirmed its decision on 21 January 2011. On its behalf, Mr Lenczner assumed first that the 2009 Agreement is relevant. He noted that s 8(9) had been amended since Thompson had been decided and that he had, in any event, received the benefit of s 8(9) in the calculation of his NWE. Section 8(6)(c) refers to pre-determined increases, he submitted, and not on increases that, under the 2009 Agreement, are dependent on an assessment by Mr Frew’s manager following a performance appraisal. Furthermore, Mr Lenczner submitted, an “additional pay range” could not come within the description used in s 8(6)(c) of “a range of salary”. He also relied on Thompson to support a submission that the words “increment” and “range of salary” cannot apply to a scheme of salary advancement dependent on performance appraisal and relied on Re Mitchell and Military Rehabilitation and Compensation Commission[3] (Mitchell) and Re SRGGGG and Military Rehabilitation and Compensation Commission[4] (SRGGGG). Even if s 8(6)(c) does apply to a merits based salary advancement scheme, any salary advancement applicable to
Mr Frew depended upon his having a performance appraisal.[3] [2005] AATA 221; (2005) 85 ALD 234
[4] [2006] AATA 1151
Mr Lenczner also submitted that the 2009 Agreement is not relevant to Mr Frew’s circumstances. Mr Frew was at the top of his pay point under the Centrelink Agreement 2006-2009 (2006 Agreement) and that was the agreement in force when he was injured. He could not gain any benefit from an agreement negotiated after that date. It was a negotiated agreement and had no application to his circumstances.
Although I have decided that I must have regard to the 2009 Agreement in calculating Mr Frew’s normal weekly earnings, I have also decided that it does not lead to a percentage increase in that amount under s 8(6)(c). I have decided that it does not do so because the minimum amount per week payable to him in respect of his employment at the date of the injury has not been increased by his receiving an increment. Mr Frew would have received an increment had he achieved a final performance rating of Level 3 (Fully Effective) or above. As it is, Mr Frew has not achieved that rating as he has not undergone a performance appraisal in accordance with the 2009 Agreement.
BACKGROUND
2006 Agreement
At the time Mr Frew was injured, Centrelink staff were remunerated according to the 2006 Agreement. The agreement was certified by the Australian Industrial Relations Commission under s 170LT of the Workplace Relations Act 1996 (WR Act). It remained in force for three years from 23 January 2006.
The substantive provisions of the 2006 Agreement begin with the statement:
“Centrelink’s broadbanding arrangements are structured within four work streams and are aligned with the APS classification groups and Centrelink’s work level standards. These arrangements recognise that jobs can grow in work value with increasing performance of the occupant, for instance, by adding increased responsibility, complexity or independence.
Advancement within the broadbands is based on the performance of the employee.”[5]
[5] 2006 Agreement, introduction to Part B
A. Remuneration of Centrelink employees under the 2006 Agreement
Clause 13.1 provides that an employee’s salary or rate of pay is provided for in Schedule 1 to the agreement. Schedule 1 describes the classification and remuneration arrangements that operate in Centrelink together with the broadband arrangements, the work availability barriers, annual rates of pay as increased in accordance with cl 14.1 and the equivalent classifications and groupings in the Australian Public Service (APS) generally.[6]
The tables set out in Schedule 1 show four workstreams with different groupings of employees under each. Under the Administrative/General Service work stream, for example, the groupings are: Centrelink Administrative Trainee, a Centrelink Administrative Trainee, a Centrelink Cadet-Full time study and a Centrelink Customer Service Trainee, a Centrelink Graduate Trainee, Centrelink APIS Operator and a Centrelink 1, 2, 3 and 4. The APS equivalent of a Centrelink 3 was an APS 5. As with each grouping, Schedule 1 set out pay points and their applicable annual rate of pay. Three pay points were specified. A fourth was available only to those who had achieved that pay point before the date on which the 2006 Agreement was certified.[7][6] Broadband arrangements have their foundation in the Public Service Classification Rules 2000 (PSC Rules) made under s 23(1) of the Public Service Act 1999. Under those Rules, the each Agency Head of Centrelink was required to allocate an approved classification to each group of duties to be performed in Centrelink (PSC Rules 9(1)). The classification must be the appropriate classification based on the work value requirements of the group of duties. If the group of duties involves work value requirements applying to more than one classification, the Agency Head may allocate more than one classification to the group of duties. In doing so, the Agency Head creates a broadband. (PSC Rules 9(4))
[7] 2006 Agreement, Schedule 1 and Schedule 4, [3.2]
The entry that related to a Centrelink 3 officer from 26 January 2006 was:
| Annual rate of pay | Equivalent APS classification | APS Group | Work availability zone | |
| Pay Point 1 | $51,008 | APS 5 | 5 | A |
| Pay Point 2 | $52,605 | |||
| Pay Point 3 | $54,088 | |||
| Pay Point 4* | $55,091 | |||
| * This is the APS5 former performance pay point for pay point retention purposes prescribed in schedule 4, paragraph 3.2. It is not available as an APS5 pay point under this Agreement. | ||||
The annual rates of pay shown in this table increased by 4% on and from 14 December 2006 and by a further 4% on and from 13 December 2007.[8]
[8] 2006 Agreement, cll 14.1 – 14.3
Clause 19.1 provided that:
“Performance based salary advancement to the next available pay point within a Centrelink broadband takes effect from the employee’s anniversary date each year where they have achieved a final performance rating of 3 (fully effective) or higher for the relevant performance management cycle in accordance with section 64.”
The effect of cl 19.1 is repeated in cl 64.18. Clause 64.19 provided that performance based salary advancement was not available to non-ongoing employees, employees serving a period of probation on their anniversary date, employees receiving a performance rating of either 1 or 2 and, in respect of a particular classification level, employees who have performed ongoing and/or temporary duties at that classification level for fewer than six months within the performance cycle.
B. Performance management
Part F of the 2006 Agreement is entitled “Managing for better performance”. Among others, it requires ongoing employees, as was Mr Frew at the relevant times, to participate in its performance management system.[9] Centrelink had a 12 month performance cycle dating from each employee’s anniversary date which, it would seem, would become
1 September over time.[10] Within two months of the beginning of a business plan cycle, of commencing work with Centrelink or of undertaking new or different duties, each employee was required to enter a performance agreement with his or her team leader or manager.[11] The performance agreements would:“(a) be developed by the team leader/manager and the employee;
(b)include a reasonable number of work outcomes and performance measures to address individual accountabilities and learning and development requirements;
(c)respect and consider the diversity of an employee’s circumstances; and
(d)directly reflect the contribution expected of each employee to Centrelink’s strategic direction.”[12]
[9] 2006 Agreement, cl 64.2(a)
[10] 2006 Agreement, cll 64.4 – 64.7
[11] 2006 Agreement, cll 64.8 and 64.9
[12] 2006 Agreement, cl 64.8
Each employee was required to participate in an annual performance review.[13] If he or she did not have one, his or her performance was to be assessed, and a performance rating provided on the basis of feedback from their team leaders or managers over the cycle and evidence he or she produced regarding performance against assigned duties.[14]
[13] 2006 Agreement, cl 64.10
[14] 2006 Agreement, cl 64.11
During the performance review, the team leader or manager was required to give the employee an indicative performance rating of one to five in accordance with the following performance rating scale and descriptors:[15]
[15] 2006 Agreement, cl 64.14
| Performance | Description | |
| 5 | Excellent | This level of performance indicates that the employee has achieved excellent results by substantially exceeding overall work outcomes and performance measures in the performance agreement. |
| 4 | Very Good | This level of performance indicates that the employee has achieved above expected results by exceeding overall work outcomes and performance measures in the performance agreement. |
| 3 | Fully Effective | This level of performance indicates that the employee has consistently achieved results commensurate with work outcomes and performance measures in the performance agreement. |
| 2 | Support Required | This level of performance indicates that the employee has made satisfactory progress towards meeting overall work outcomes and performance measures identified in the performance agreement, but still requires some support, development or improvement to achieve a Fully Effective level of performance. |
| 1 | Not acceptable | This level of performance indicates that the employee has not achieved acceptable results and has failed to meet any or several of the work outcomes and performance measures identified in the performance agreement. |
Where an employee was given a rating of 3 or higher while working at a temporary performance level, that rating was applied to his or her ongoing level.[16]
[16] 2006 Agreement, cl 64.15
2009 Agreement
From 16 April 2009, Centrelink staff were remunerated in accordance with the 2009 Agreement. It was made and approved under s 328 of the WR Act.
The foundation of the 2009 Agreement is that:
“Classification structures are designed to ensure that employees are remunerated according to the level of work they are performing. Centrelink’s classification structure is aligned with the APS classification groups, with reference to the APS work level standards, and includes broadbands for some work streams.”[17]
[17] 2009 Agreement, introduction to Section B
A. Remuneration of Centrelink employees under the 2009 Agreement
Clause 14 specifies that Centrelink’s classification and remuneration structures are prescribed in Schedule 1 to the Agreement. For each classification of person in an entry level program or in a work stream, Schedule 1 sets out various pay points, the annual salary upon commencement of the 2009 Agreement, the annual salary on and from 3 September 2009 and the annual salary on and from 2 September 2010 by reference to each classification. Each classification is known as a “broadband”. There are, for example, six broadbands, from APS 1 to APS 6, set out under the category of general work stream.[18] Some broadbands, and an APS 5 is one of them, include an entry described as “Additional pay range”. This last entry is explained in cl 14 of the 2009 Agreement in this way:
“… The additional pay range enables employees to access additional salary above the top pay point for a classification as prescribed in Schedule 1. The rate specified in the additional pay range is the maximum pay rate for each classification.”
[18] No reference is made in the 2009 Agreement to Centrelink officers be they classified as Centrelink 1, 2, 3 or 4. For the purposes of s 8(6), reference must be made to the position of an APS 5. Not only was that position recognised as the equivalent APS position in the 2006 Agreement, it is the position for which he would be remunerated by Centrelink were he not incapacitated for work. As Gyles J said in Comcare v Hart [2004] FCA 1067: “… [I]n order to assess what … [Mr Hart] would have earned if he were not incapacitated for work, it was necessary to form a view as to where in the hierarchy he would be employed and on what basis.”
The entry in Schedule 1 relating to an APS 5[19] reads like this:
[19] Assuming that he were not promoted, this is the position that Mr Frew would have occupied in Centrelink had he not been incapacitated for work. As Gyles J described the task in Comcare v Hart [2004] FCA 1067 at [13], “… [I]n order to assess what … [Mr Hart] would have earned if he were not incapacitated for work, it was necessary to form a view as to where in the hierarchy he would be employed and on what basis. …”. The 2006 Agreement specifically recognised that an APS 5 position was equivalent to a Centrelink 3. No further mention was made of Centrelink 1, 2, 3 or 4 officers in the 2009 Agreement and only to APS classifications. I am satisfied that an APS 5 is the position equivalent to that occupied by Mr Frew before his injury.
| APS 5 | Annual salary upon commencement of agreement | Annual salary 03/09/2009 | Annual salary 02/09/2010 |
| Pay point 1 | $57 653 | $58 950 | $61 013 |
| Pay point 2 | $59 457 | $60 795 | $62 923 |
| Pay point 3 top pay point | $61 135 | $62 510 | $64 698 |
| Additional pay range | $74 000 | ||
The annual salaries shown in this table represented an increase of 4.5% from the final salaries under the 2006 Agreement, an increase of 2.25% from 3 September 2009 and 3.5% from
2 September 2010.[20]
[20] 2009 Agreement, cll 18.2 – 18.4
Clause 21 provides for salary advancement for eligible employees[21] within Centrelink. Generally, salary advancement takes effect from the commencement of the first pay period in September each year. For some employees, it takes effect from their anniversary date[22] but that is of no consequence in this matter. Employees who are eligible for salary advancement are ongoing employees, who:
“(a) have successfully completed probation and, where applicable, their entry level program, on or prior to 30 June in that year; and
(b)in respect of a particular classification, have performed ongoing and/or temporary duties at the classification level, or higher, for at least 18 weeks within the performance management cycle; and
(c)receive the applicable performance rating as described in subclause 72.21.”[23]
[21] This covers the majority of employees within Centrelink: 2009 Agreement, cl 18.1. It covers Mr Frew.
[22] 2009 Agreement, cll 21.2 and 72.13
[23] 2009 Agreement, cl 21.3
Clause 72.21 provides that:
“Performance based salary advancement is available to employees who receive a final performance rating of 3 (fully effective) or higher and will take effect in accordance with clause 21.”
Clauses 21.4 to 21.7 specify salary advancement for those employees who have not reached the top pay point for their classification. That is not the situation in this case. Clauses 21.8 to 21.10 apply to those who are at the top pay point or within the additional pay range for their classification. That is the situation in this case. They apply to eligible employees from September 2010.[24] Clause 21.9 provides that:
[24] 2009 Agreement, cl 21.8
“Salary advancement for eligible employees will be based on the employee’s individual performance rating in accordance with subclause 72.20. Salary advancement will be applied in accordance with the table below, provided that the salary advancement does not exceed the rate specified in the additional pay range for the relevant classification in Schedule 1,
Individual Performance Rating
Pay outcome
1 – not acceptable
Nil increase
2 – support required
Nil increase
3 – fully effective
0.5% salary increase
4 – very good
1.5% salary increase
5 – excellent
2.5% salary increase
B. Performance Management System
It is clear that the salary advancement system provided for in cl 21 of the 2009 Agreement is dependent upon the employee’s performance rating. Clauses 72.20 and 72.21, to which reference is made, come within Section E of the 2009 Agreement, which is headed “Managing for better performance’. Section E provides for a Performance Management System (PMS) within Centrelink. The aim of that system is to:
“(a) provide employees with a clear understanding of their role and what is expected of them at work;
(b)measure employee business outcomes;
(c)provide incentives for improved performance through salary advancement;
(d)support Centrelink’s business planning process;
(e) link an employee’s performance, learning and development needs and Centrelink’s strategic directions;
(f)help develop a high performance culture in Centrelink; and
(g)support a work culture that seeks to improve performance through discussion and constructive feedback.”[25]
[25] 2009 Agreement, cl 72.1
The PMS requires that there is both a mid cycle and an annual review of the performance of ongoing employees.[26] A “performance management cycle” extends from 1 July in one year to 30 June in the next.[27] Performance agreements must be developed between each employee and his or her team leader or manager. They must be in place within two months of the beginning of the business planning cycle, an employee’s commencing with Centrelink, the employee’s undertaking new or different duties or commencing work at a higher classification.[28]
[26] 2009 Agreement, cl 72.17
[27] 2009 Agreement, cl 72.11
[28] 2009 Agreement, cl 72.16
The performance agreements that are developed must include a reasonable number of business outcomes and performance measures, identify and record learning and development requirements and any support needs and link the employee’s business outcomes and performance measures with Centrelink’s strategic directions.[29]
[29] 2009 Agreement, cl 72.15
During the annual review, each team leader or manager must give the employee written feedback on their performance on their business outcomes identified in the performance agreement.[30] Where an employee does not have a performance agreement at the time of the annual review, his or her performance will be assessed on the basis of feedback from his or her team leaders or managers over the cycle and evidence produced by the employee regarding his or her performance against his or her assigned duties.[31] On whichever basis the performance review is undertaken, the team leader or manager must give each employee, for whom he or she has management responsibility, a performance rating in accordance with the rating scale and descriptors set out in cl 72.20:
[30] 2009 Agreement, cl 72.18
[31] 2009 Agreement, cl 72.19
| Performance | Description | |
| 5 | Excellent | This level of performance indicates that the employee has achieved excellent results by substantially exceeding overall business outcomes and performance measures in the performance agreement. |
| 4 | Very Good | This level of performance indicates that the employee has achieved above expected results by exceeding overall business outcomes and performance measures in the performance agreement. |
| 3 | Fully Effective | This level of performance indicates that the employee has consistently achieved results commensurate with business outcomes and performance measures in the performance agreement. |
| 2 | Support Required | This level of performance indicates that the employee has made satisfactory progress towards meeting overall business outcomes and performance measures identified in the performance agreement, but still requires some support, development or improvement to achieve a Fully Effective level of performance. |
| 1 | Not Acceptable | This level of performance indicates that the employee has not achieved acceptable results and has failed to meet any or several of the business outcomes and performance measures identified in the performance agreement. |
CONSIDERATION
Legislative background
The starting point of my consideration must be the SRC Act for that is the legislation that regulates when Mr Frew is to be paid compensation and, if so, in what amount. Section 14 of the SRC Act provides for the circumstances in which Comcare is liable to pay compensation in respect of an injury where that injury results in death, incapacity for work or impairment. I am concerned only with compensation for injuries resulting in incapacity for work.
A. Calculating the maximum amount of compensation payable each week
Section 19 provides for the amount of compensation that is payable to employees during the period in which they are incapacitated provided they are not in receipt of a superannuation pension, a lump sum benefit or both.[32]
[32] If he were, his entitlement to compensation would be considered under whichever of ss 20, 21 or 21A applied to his circumstances.
Section 19(2) provides that:
“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:
NWE - AE
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.”[33]
[33] SRC Act, s 19(3)
The reference in s 19(2) to a “maximum rate compensation week” is explained in s 19(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 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.”
Once an employee has been paid compensation in accordance with s 19(2) for a period of 45 times the employee’s normal weekly hours, Comcare’s liability to pay compensation in future weeks is assessed under s 19(3).[34] The amount of compensation is calculated using the formula:
[34] If the period of 45 times the employee’s normal weekly hours ends during the course of a particular week, the employee’s entitlement to compensation for incapacity during that week is calculated according to ss 19(2B), (2C) and (2D) of the SRC Act.
“(Adjustment percentage x NWE) - AE
where:
adjustment percentage is a percentage equal to:
(a)if the employee is not employed during that week - 75%; or
(b)-(f)….
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.”
I have referred only to (a) for that is the adjustment percentage that is applicable to
Mr Frew’s circumstances.
B.Assessing an employees’ normal weekly earnings (NWE)
B.1 Basic formula
Section 19 does not specify the way in which the amount of an employee’s normal weekly earnings are to be assessed. That is left to s 8 in Part I of the SRC Act. Although there are qualifications that do not arise in this case,[35] the basic formula is set out in s 8(1). It provides that, where an employee is not required to work overtime on a regular basis, his or her:
“… normal weekly earnings … before an injury shall be calculated in relation to the relevant period under the formula:
(NH x RP) + A
where:
NH is the average number of hours worked in each week by the employee in his or her employment during the relevant period;
RP is the employee’s average hourly ordinary time rate of pay during that period; and
A is the average amount of any allowance payable to the employee in each week in respect of his or her employment during the relevant period, other than an allowance payable in respect of special expenses incurred, or likely to be incurred, by the employee in respect of that employment.”[36]
[35] A qualification arises where an employee was, at the date of injury, employed by the Commonwealth or a licensed corporation on a part-time basis and was, or was not, receiving remuneration from other employment; see ss 8(3) and (8) respectively. The qualification in s 8(8) applies also to those persons taken to have been employed by the Commonwealth, a Commonwealth authority or a licensed corporation under ss 5(4) or (6). The qualification is to the effect that the normal weekly earnings of the employee before the injury is the amount determined to be the amount per week that the employee would have been able to earn at the date of the injury if he or she had engaged in suitable employment. As to what is “suitable employment” see ASP Ship Management Pty Ltd v Wood [2007] FCAFC 142; (2007) 161 FCR 429; 97 ALD 581; French, Tamberlin and Rares JJ.
[36] SRC Act, s 8(1)
Subject to the remaining provisions of s 8, the “relevant period”, to which s 8(1) refers, is:
“… a reference to the latest period of two weeks before the date of the injury during which the employee was continuously employed by the Commonwealth or a licensed corporation.”[37]
B.2Variation in amount of NWE assessed under basic formula where employee continues to be employed by Commonwealth or licensed corporation
[37] SRC Act, s 9(1). Qualifications to the general rule are found in ss 9(2) to (4).
Where an employee continues to be employed by the Commonwealth,[38] as is Mr Frew, the figure calculated as his or her normal weekly earnings before the injury may, subject to one qualification, increase or decrease. It may increase in one or other of three ways or either increase or decrease according to a fourth.
[38] Where an employee has ceased to be employed by the Commonwealth or a licensed corporation, normal weekly earnings are calculated under ss 8(9B), (9C) and (9D).
Beginning with the fourth way, normal weekly earnings may either increase or decrease to match the fluctuations in the minimum amount per week payable in respect of other employees in the same class as the injured employee. This is achieved by reading
ss 8(9) and (9A) together. Section 8(9) provides:“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.”
Section 8(9A) explains that:
“For the purposes of subsection (9), relevant percentage means the same percentage as the percentage increase or reduction in the minimum amount per week payable in respect of the 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.”
The first of the three ways in which an employee’s pre-injury normal weekly earnings may increase is by being promoted while receiving compensation. Normal weekly earnings are increased in accordance with s 8(7):
“Subject to this section, if:
(a)an employee continues to be employed by the Commonwealth or a licensed corporation after the date of an injury; and
(b)the minimum amount per week payable to the employee in respect of that employment is increased because of the promotion of the employee;
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 the minimum amount per week is increased.”
The second way in which an employee’s normal weekly earnings may be increased is set out in s 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, ..., because of:
(a)the attainment by the employee of a particular age;
(b)the completion by the employee of a particular period of service; or
(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 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.”
There is nothing in ss 8(6), (7) or (9) to suggest that they are alternative ways in which an employee’s normal weekly earnings may be varied. In contrast to s 8(9E), to which I will come in the next paragraph, none refers to the other. Rather, they read as if their effect is cumulative. Lest it be thought that their cumulative effect might lead to an injured employee’s being paid more than an employee who is not injured and remains working,
s 8(10) provides that:“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 that the employee would receive if he or she were not incapacitated for work; …
(b)…
the amount so calculated shall be reduced by the amount of the excess.”
The third way in which normal weekly earnings may be increased is different from the other three for it is clearly intended to apply only if the other three do not. If, in the 12 months preceding 1 July each year, there has been no increase in them under ss 8(6), (7) or (9) and no decrease in them under s 8(9). This is provided for by s 8(9E) and the amount of the increase is calculated in accordance with s 8(9F). Section 8(9F) provides:
“If the normal weekly earnings of an employee before an injury must be increased because of subsection (9E), the amount by which they are increased is the percentage of increase (if any) in the index prescribed by the regulations for the purposes of this subsection over the period of 12 months ending on the 31 December immediately before the relevant 1 July.”
The regulations may specify the manner of calculating those increases.[39]
B.3Variation in amount of NWE assessed under basic formula where employee ceases to be employed by Commonwealth or licensed corporation
[39] SRC Act, s 8(9G)
Where an employee has ceased to be employed by the Commonwealth or by a licensed corporation, that employee’s normal weekly earnings may increase in one or other of three ways. There is no provision for a decrease although, as for an employee who continues in employment, a ceiling on the amount of increase in normal weekly earnings is imposed under s 8(10).[40]
[40] “If the amount of the normal weekly earnings of an employee before an injury, as calculated under the preceding subsections, would exceed:
The first way in which an employee’s normal weekly earnings may be
increased is set out in s 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 ... would have been increased if the employee had continued in that employment, because of:
(a)the attainment by the employee of a particular age;
(b)the completion by the employee of a particular period of service; or
(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 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.”
The second way in which an employee’s normal weekly earnings may be increased is set out in s 8(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.”
The “indexation date” referred to in s 8(9B) in relation to the cessation of employment is determined by reference to s 8(9C). In essence, the date is 1 July of each year. The regulations may specify the manner of calculating the further increase applicable under
s 8(9B) by reference to the movement of an index prescribed for the purpose.[41]
[41] SRC Act, s 8(9D)
As with an employee who continues to be employed by the Commonwealth or a licensed corporation, s 8(9E) provides for a variation in certain circumstances. That variation is calculated under s 8(9F) while having regard to regulations made under s 8(9G). Sections 8(7) and (9) do not apply to an employee who has ceased to be employed by the Commonwealth or a licensed corporation. Therefore, the effect of s 8(9E) is that the normal weekly earnings of such an employee will be further increased by an amount provided under s 8(9F) and in accordance with regulations made under s 8(9G) if, in the 12 months preceding 1 July in a particular year, there was no increase in them under s 8(6). That is to say, an employee in this category may not benefit from both an increment under s 8(6) and a percentage increase available under s 8(9E) as calculated according to ss 8(9F) and (9G). By way of contrast, though, that employee may benefit both from any incremental increase under s 8(6) and any percentage increase under s 8(9B) as calculated according to ss 8(9C) and (9D).[42]
[42]I note that, in considering ss 8(9) and (9A) of the SRC Act, Bennett J reached the same conclusion in Military Rehabilitation and Compensation Commission v Perry [2007] FCA 1586; (2007) 164 FCR 307; 98 ALD 638 at [36]-[46]; 315-316; 646-647. Her Honour considered three interpretations put to her during submissions addressing the amount of normal weekly earnings to which Mr Perry was entitled in 2006. He had been discharged from the Navy on 7 July 2002. The delegate had decided that Mr Perry was eligible for Flying Allowance (Qualification & Skill) at the increment 2-4 years, which was the increment applicable at the date of his discharge. He further determined that Mr Perry was not entitled to further incremental allowances and that his allowance should be increased only by the Wage Cost Index increase occurring annually on 1 July. In seeking review, Mr Perry asserted that he was entitled to an increment under s 8(6). On review, the decision-maker affirmed the decision saying “… that she was satisfied that the issue was whether s 8(9B) of the Act applied and not s 8(9).” On review, the Tribunal had decided that s 8(9B) did not operate with retrospective effect to exclude the operation of s 8(6). That reflected the arguments put to it. On appeal, the arguments were broadened to draw in the proper interpretation of the whole of s 8. Three interpretations were put to Bennett J as to the way in which s 8(9B) should be interpreted and, in particular, whether s 8(6) continues to apply to an employee no longer employed by the Commonwealth or a licensed corporation. Her Honour preferred the second interpretation, which she described as differentiating:
B.4A ceiling on the amount calculated as an employee’s normal weekly earnings
Whether an employee continues to be, or has ceased to be, employed by the Commonwealth or a licensed corporation, s 8(10) imposes a ceiling on the amount of normal weekly earnings calculated under the provisions to which I have referred above. The qualification is:
“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 – which 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 he or she was engaged at the date on which the employment by the Commonwealth or the licensed corporation had ceased;
the amount so calculated shall be reduced by the amount of the excess.”
The essential criteria in assessing NWE for an employee continuing to be employed by the Commonwealth or a licensed corporation
It is apparent from these provisions that the amount of compensation payable to an employee in respect of incapacity takes as its benchmark what it describes as the “normal weekly earnings” received by that employee before the injury. It then adjusts that figure by reference to certain factors. Therefore, for an employee who continues to be employed by the Commonwealth, as Mr Frew is, or by a licensed corporation:
(1)An employee’s NWE is calculated by reference to the last period of two weeks before he or she was injured.[43] It is not calculated by reference to a period before he or she ceased to work due to incapacity as a result of an injury. Cessation of work may or may not coincide with the date of the injury but, whether it does or not, it is irrelevant for the calculation of NWE. In this case, the date of injury is taken to be 26 March 2007.
(2)While an employee continues to be employed by the Commonwealth or a licensed corporation, his or her NWE must be increased or decreased to reflect the percentage increase or decrease of remuneration paid to “employees included in the same class of employees of which the employee was a member at the date of the injury”.[44]
(3)Provision is made for an employee who is promoted while incapacitated and his or her NWE is increased accordingly.[45]
(4)Provision is made for an employee whose earnings have increased, or would have increased for one or other of three reasons set out in s 8(6).
(5)Provision is made for an employee whose NWE has neither increased nor decreased over the previous 12 months by providing for an increase according to s 8(9E).
(6)An NWE calculated under s 8 cannot exceed the amounts prescribed in
s 8(10).[43] SRC Act, s 8(1) when read with s 9(1)
[44] SRC Act, ss 8(9) and (9A)
[45] SRC Act, s 8(7)
May I have regard to the 2009 Agreement?
At the time Mr Frew was injured, his remuneration was determined under the 2006 Agreement. Mr Lenczner has submitted that I am not entitled to look to the 2009 Agreement for Mr Frew was at the top of his pay point under the 2006 Agreement when he was injured. He could not gain any benefit from an agreement negotiated after that date. Furthermore, as a negotiated agreement, it was not an agreement to which regard could be had under s 8(6)(c) of the SRC Act. He relied on the judgment of Finn J in Thompson.
Thompson was a case in which Mr Thompson, who was an Assistant Director-General at the National Library of Australia (NLA), became incapacitated for work in 1985. At first, he received total incapacity payments under the Compensation (Commonwealth Government Employees) Act 1971. When he retired from the Australian Public Service (APS) and began to receive payments under the Superannuation Act 1976. When the SRC Act came into operation, he began to receive weekly payments under s 131(4) of that legislation. At the time, the annual salary for an Assistant Director, who equated with a Level 2 in the Second Division of the APS, was set by a Determination made under s 82D of the Public Service Act 1922. That Determination was varied over the years and then replaced by the Senior Executive Service (Salaries and Specific Conditions) Award 1995 (1995 Award) made by the Industrial Relations Commission (IRC) under the Industrial Relations Act 1988. That, in turn, was replaced by the Continuous Improvement in the Australian Public Service Enterprise Agreement 1995-1996 (CI Agreement), which was certified by the IRC. The CI Agreement displaced the 1995 Award where there was an inconsistency between the two. In 1996, the WR Act established Australian Workplace Agreements (AWA). Finn J found that, in 2000, the earnings of the majority of employees in the Senior Executive Service (SES), which equates with the former Second Division of the APS, were then fixed by their individual AWAs rather than by the CI Agreement or the 1995 Award. The salary for the position held by Mr Thompson at the time of his injury, had increased over time as a result of rises in salary ranges in industrial awards and determinations. Relying on s 8(6)(c), Comcare increased the amount it calculated as his NWE. Later, in 1998, the person who by then occupied Mr Thompson’s former position negotiated a salary increase directly with the NLA with the result that he would receive a 3% increase in salary in each of the following two years. In determining Mr Thompson’s NWE, Comcare refused his request to have regard to the earnings then earned by the person occupying his former position in the NLA as a result of his AWA.
Finn J had to decide whether s 8(6)(c) of the SRC Act could accommodate itself to salary increases obtained by SES officers as a result of individually negotiated AWAs. His Honour found that it could not because:
“ Whatever else may be said of individually negotiated salary increases in a scheme devoid of a fixed ceiling by way of maximum, those increases cannot be characterised as ‘increments in a range of salary’. As Sundberg J indicated in McDonald v Department of Defence [1993] FCA 882 at [12], [t]he section contemplates the existence of a pay range which the employee may “work up through” over time’. Such a range, and an increment within it, cannot be manufactured in the manner proposed by the Tribunal. Formally, the Tribunal’s reasoning process is that the range is determined by the increase negotiated, which increase provides the increment in the range which is the increase received for s 8(6)(c) purpose. …”[46]
[46] [2000] FCA 790; (2000) 100 FCR 375; 175 ALR 163; 31 AAR 389 at [35]; 381-382; 169; 395
Finn J went on to observe that s 8(6)(c):
“… 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. It is unnecessary to describe that world other than to say that it embodied the characteristics of prescribed entitlements and allowances that were externally fixed (in the sense of not being agreed with the individual employee) and that applied ‘across the board’ to positions of a particular type, level or designation or else applied in designated circumstances …It was in that environment that s 8(6) was intended to do its work. And it could do so intelligibly. To the extent that that environment still subsists – as it does for much the greater number of employees in the library – the subsection is capable of doing the work envisaged for it.
What was not envisaged at the time of the SRC Act … was a quite different system of securing individual salary increases. The machinery provided by s 8(6)(c) allowing for incapacitated ex-employee participation in subsequent salary increases is simply inappropriate to the AWA system because of the very presuppositions that informed, and are expressed in, the language in which it is cast.”[47]
[47] [2000] FCA 790; (2000) 100 FCR 375; 175 ALR 163; 31 AAR 389 at [7]-[38]; 382; 169-170; 396
If I were faced with an AWA in this case and if it contained terms of the sort found in the AWA considered by Finn J in Thompson, I would reach the same conclusion. I would do so on the basis of s 8(6)(c) and having regard to his Honour’s interpretation of that provision. It seems to me that Mr Lenczner would have me reach that conclusion whenever I am faced with an AWA or a negotiated agreement without regard to its terms. If I have understood him correctly and if he were correct, that would not necessarily mean that an employee who has an AWA could never come within the terms of s 8(6)(c). I do not think that is the outcome intended by Finn J.
Justice Finn focused on the words of the section. It is possible to imagine an AWA providing for various salaries payable to a particular employee from a fixed minimum to a fixed maximum (and so for a range of salaries) and prescribing the criteria that must be met by that employee to move from one salary to another within that range. It would be an AWA that would meet the criteria in s 8(6)(c) and it would not seem to be unrealistic to think that an employee in receipt of compensation could be a party to such an agreement. After all, s 8 does not assume that all employees for whom an NWE must be calculated are no longer working. The opening words of s 8(6) are broad enough to encompass an employee who continues to work in a less than full-time capacity for the Commonwealth or a licensed corporation. Section 8(7) makes specific reference to an employee who not only continues working for the Commonwealth or a licensed corporation but receives a promotion.
As it is, I do not find that the 2009 Agreement is an AWA but a union collective agreement made under s 328 of the WR Act. The two types of agreement are different. An AWA is an agreement provided for in s 326 of the WR Act.[48] Section 326(1) provides:
“An employer may make an agreement (an Australian workplace agreement or AWA) in writing with a person whose employment will be subject to the agreement.”
An AWA is only one of six agreements provided for under Division 2 of Part 8 of the WR Act. The others are employee collective agreements, union collective agreements, union greenfields agreements, employer greenfields agreements and multiple-business agreements.[49] When grouped together, the five of these are known as “collective agreements”.[50] When grouped with an AWA, they are known as “workplace agreements”.[51] Therefore, an AWA and a union collective agreement may each be a workplace agreement but a union collective agreement may not be an AWA. If it can be said that Thompson was decided on the basis that the agreement under consideration was an AWA, its principles would be inapplicable in this case.
[48] WR Act, s 4(1)
[49] WR Act, ss 327-331
[50] WR Act, s 4(1)
[51] WR Act, s 4(1)
It cannot be said that it was decided on that basis. To do so would have been to put form over substance and that is not the approach Finn J adopted. His Honour described the AWA as an agreement providing for “individually negotiated salary increases in a scheme devoid of a fixed ceiling by way of maximum, [and in which] those increases cannot be characterised as ‘increments in a range of salary’”. It is not a description that applies to the 2009 Agreement for two reasons.
The first is that the 2009 Agreement is not an agreement reached after individual negotiation between Mr Frew and Centrelink. In stating the parties upon whom the agreement is binding cl 2.2 makes clear that the 2009 Agreement has been negotiated and agreed upon by Centrelink in consultation with various unions[52] each representing an unspecified number of Centrelink employees employed under the Public Service Act 1999.[53] Clause 2.3 makes it clear that the 2009 Agreement applies to all employees within Centrelink unless they are officers in the SES or parties to an AWA made before 7 April 2009, being the date of the agreement.
[52] The unions are the Community and Public Sector Union, the Media Entertainment and Arts Alliance and the Association of Professional Engineers, Scientists and Managers, Australia: 2009 Agreement, cl 2.2
[53] The agreement does not apply to those employees in the SES.
The second reason is that the 2009 Agreement does provide for a range of salary, wages or pay applicable to employees in various offices in the sense that there is a minimum and maximum amount payable in respect of each. The various amounts or levels described as pay points within each band or classification of Centrelink’s employees are incremental amounts that may be paid to an employee within a particular band or classification. I have set out the range payable to those described as an APS 5 at [18] above.
That brings me to Mr Lenczner’s second submission centring on Mr Frew’s being remunerated at the top pay point for an APS 5 when he was injured. When read together, ss 8(9) and (9A) provide for an employee’s NWE to be increased or decreased by the “percentage increase or reduction in the minimum amount per week payable in respect of the employees included in a class of employees of which the employee was a member at the date of the injury as a result of …(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.” Mr Frew belongs to a class of employees described as those holding a position in Centrelink at the level of APS. The 2009 Agreement is relevant in so far as it provides for an increase in the salary paid to an officer at the APS 5 level in Centrelink. Putting aside for the moment Mr Frew’s argument that he should be paid an amount in the Additional Pay Range, the relevant pay point under the 2009 Agreement is pay point 3 for an employee classified as an APS 5.
Is the “additional pay range” part of the range of salary applicable to Mr Frew or to his office, position or appointment?
Turning to Mr Frew’s argument, he argues that he is entitled to be paid an amount in the “additional pay range” applicable to APS 5. Mr Lenczner submitted that this pay range could not be considered for it does not come within the expression “range of salary … applicable to the employee or to his or her office, position or appointment.” I do not agree with Mr Lenczner’s submission. While described as an “additional pay range” rather than a “pay point” to which a numerical value is assigned, the additional pay range still represents “a fixed ceiling by way of maximum” payable to employees at the APS 5 level. Clause 14 of the 2009 Agreement specifically states that “The rate specified in the additional pay range is the maximum pay rate for each classification”, which, in this instance, is APS 5. To adapt the words of Sundberg J in McDonald v Department of Defence,[54] the pay points and the additional pay range together represent amounts of remuneration that an APS 5 “may ‘work up through’ over time.”[55] An employee may only “work up through” the pay points and the additional pay range by achieving a final performance rating of 3 (Fully Effective) or better following a performance appraisal. A rating of that sort takes them from one increment to the next and it makes no difference whether the increment is described as a pay point or in terms of a specified percentage of his or her salary being 0.5%, 1.5% or 2.5% provided the increase does not take the total remuneration paid under the 2009 Agreement beyond $74,000. For these reasons, the additional pay range, rather than pay point 3, should be regarded as representing “a fixed ceiling by way of maximum” payable to employees at the APS 5 level.
[54] [1990] FCA 882
[55] [1990] FCA 882 at [12]
I note that Mr Lenczner relied on the decisions of SRGGGG and Mitchell. Both are distinguishable from this. In SRGGGG, the Tribunal found that the increase in salary under consideration would not take place unless SRGGGG had been, or would have been, promoted to the rank of Lieutenant from that of Sub-Lieutenant. The increase was not “an increment in a range of salary applicable to the employee or to his or her office, position or appointment” as is the situation I am concerned with. Mitchell was also concerned with a situation in which the increase in salary could only have been paid on Mr Mitchell’s first completing a technical course and being promoted from Leading Aircraftman Aviation Fitter 2 to Leading Aircraftman Aviation Technician 1, completing a year of service at that level and then being conditionally promoted to the rank of Corporal. Mr Mitchell was injured before he completed the technical course. The Tribunal decided that the increase was not an increment within the rank. The increase, had it occurred, would have resulted from a promotion. Promotions are the subject of s 8(7) and not of s 8(6)(c).
Would Mr Frew’s salary have been increased because of the receipt of an increase by way of an increment in the range of salary applicable to him or to his office, position or appointment?
On the basis of the performance provisions in the 2009 Agreement, I find that progression from one increment to another in the “range of salary … applicable to the employee or to his or her office, position or appointment” as an APS 5 is dependent upon an employee’s achieving a final performance rating of 3 (Fully Effective) or better following a performance appraisal. I have no reason for doubting Mr Frew’s view that, had he been performing duties at Centrelink, he would have achieved a final performance rating of
5 (Excellent) in his performance appraisal. Had that been the case, he would have been entitled to a 2.5% increase in the salary he formerly received at pay point 3 of the range of salary payable to an APS 5.
That, however, does not bring Mr Frew within s 8(6)(c). That provision refers to two scenarios in which regard may have to be had to an increase of the sort described in paragraph (c). They are apparent from the opening words preceding the paragraph. The first scenario assumes that the employee has remained in employment by the Commonwealth or a licensed authority. The second assumes that he or she has not continued in that employment. The first scenario requires an examination of whether the minimum amount per week payable to an employee at the date of the injury “is” increased. The second requires an examination of whether that minimum amount “would have” increased had the employee continued in that employment. It may be that the result of both examinations will lead to the same result but they are separate examinations.
As he remains an employee of Centrelink, Mr Frew’s circumstances equate with the first scenario. The question becomes: “Is the minimum amount per week payable to him in respect of his employment with Centrelink at the date of the injury increased because he has received an increase by way of an increment in a range of salary applicable to him or his position?” The answer must be “no” because he has not achieved a final performance rating of 3 (Fully Effective) or better following a performance appraisal that is required under the 2009 Agreement before an increment can be paid to him. For the same reason, the answer would have been the same if Mr Frew had ceased to be an employee of Centrelink and his circumstances equated with the second scenario.
DECISION
For these reasons, I affirm the decision of the respondent dated 21 January 2011 affirming its earlier decision dated 17 November 2010.
I certify that the sixty one preceding paragraphs are a true copy of the reasons for the decision herein of
Deputy President S A Forgie,
Signed: .......................................................................
Leah Berardi, Associate
Date of Hearing 14 June 2011
Date of Decision 26 August 2011
ApplicantMr D Frew
Counsel for the Respondent Mr J Lenczner
Solicitor for the Respondent Ms N Kelidis
Thomsons Lawyers
(a) …
(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)…
(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.”
“38. … between the normal weekly earnings of the individual employee as calculated under subs (6) and the increase or reduction applicable to the employee as a member of a class of employees by operation of subs (9). The further increase on cessation of the employment by reference to the Wage Cost Index replaces the increase due to the class by application of subs (9). This accords with the apparent intention of the amendment as described in the Explanatory Memorandum.”
Having earlier in her reasons recognised that s 8(9) applies to a situation in which, unlike Mr Perry, an employee continues to be employed by the Commonwealth or a licensed corporation, Bennett J set out her reasons:
“44. It is not logical that the intention was to make the normal weekly earnings of an employee who ceased employment higher than those of an employee who remains in employment. There is no point in making the earnings higher and then reducing the excess by application of subs (10). Contrary to the third construction, subs (6) clearly provides that increments payable under that subsection remain payable to the individual employee upon cessation of employment. … 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). … 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.
…
46. The second construction satisfies the direction in s 15AA of the Acts Interpretation Act. I am of the view that the second construction applies to subs (9B) and that it is neither an unreasonable nor an unnatural construction (Newcastle City Council v GIO General Ltd (1997) 191 CLR 85 at 113 per McHugh J). Section 8(9B) does not apply to deprive Mr Perry of the increment. … That is, Mr Perry is entitled to continue to receive the increment as part of the calculation of the normal weekly earnings.”
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