Heffernan and Comcare
[2010] AATA 824
•26 October 2010
Administrative Appeals Tribunal
DECISION AND REASONS FOR DECISION
[2010] AATA 824
ADMINISTRATIVE APPEALS TRIBUNAL )
) No: 2010/1450
GENERAL ADMINISTRATIVE DIVISION )
ReDaniel Heffernan
Applicant
And Comcare
Respondent
DECISION
TribunalMr RP Handley, Deputy President
Date26 October 2010
PlaceSydney
DecisionThe Tribunal sets aside the decision under review and remits the matter to Comcare with a direction that the words ‘normal weekly hours’ in s 19(3) of the Safety, Rehabilitation and Compensation Act 1988 should be interpreted by reference to the week in respect of which Comcare is liable to make incapacity payments to the injured employee.
....................[sgd]......................
Mr RP Handley
Deputy President
CATCHWORDS
COMPENSATION – Commonwealth employees – compensation for injuries resulting in incapacity – whether normal weekly hours should be calculated by reference to employee’s hours before or after injury - definition not confined unless contrary intention – beneficial legislation – not strained construction – normal weekly hours interpreted by reference to the week in respect of which compensation payable – decision under review set aside
WORDS AND PHRASES – ‘Normal weekly hours’
RELEVANT ACTS
Safety, Rehabilitation and Compensation Act 1988 (Cth): ss 4, 8, 9, 19
Safety, Rehabilitation and Compensation and Other Legislation Amendment Act 2001 (Cth)
CITATIONS
Deputy Commissioner of Taxation (NSW) v Mutton (1988) 79 ALR 509
Comcare Australia v Pires (2005) 143 FCR 104
OTHER AUTHORITIES
Australia, House of Representatives, Debates (27 April 1988)
REASONS FOR DECISION
| 26 October 2010 | Mr RP Handley, Deputy President |
Mr Heffernan (the applicant) has applied to the Tribunal for a review of a decision made by Comcare on 7 April 2010 to reduce his weekly compensation payments.
The material facts are not in dispute. Mr Heffernan injured his lower back in the course of his employment as a production chemist with the Australian Nuclear Science and Technology Organisation (ANSTO) in December 2002. He subsequently made a claim for compensation, liability for which was accepted by Comcare. Mr Heffernan suffered further aggravations of this injury in the course of his employment in 2005. He again claimed compensation, and liability was accepted for ‘aggravation of lumbar sprain’. On 1 August 2006, Mr Heffernan underwent spinal surgery and then participated in a return to work program. From 1 January 2007, he was redeployed by ANSTO into the position of development chemist. On 20 March 2009, Comcare also accepted liability for ‘sciatica’ and, on 22 September 2009, for ‘adjustment reaction with anxious mood’.
As a production chemist, Mr Heffernan had worked the standard ANSTO working week (36.75 hours) plus overtime, shift and on-call allowances totalling, on average, 43.52 hours of which about seven hours was overtime. As at the deemed date of injury on 12 April 2005, his normal weekly earnings were $1,465.63 for a 43.52 hour week. Since his redeployment, Mr Heffernan has only worked the standard 36.75 hour week.
The effect of Mr Heffernan now being employed as a development chemist is that his normal weekly hours have been reduced. Comcare contends that in calculating Mr Heffernan’s entitlement to weekly compensation under s 19(3) of the Safety, Rehabilitation and Compensation Act 1988 (the SRC Act), his normal weekly hours should be calculated by reference to the hours worked by him during the ‘relevant period’ prior to his being injured, that is 43.52 hours, rather than the 36.75 hours after his redeployment. This has the effect of reducing the weekly compensation paid to him pursuant to the formula in s 19(3).
Relevant Legislation
Compensation for injury resulting in incapacity for work is addressed in s 19 of the SRC Act.
…
(2)Subject to this Part, Comcare is liable to pay to the employee in respect of the injury, for each week that is a maximum rate compensation week during which the employee is incapacitated, an amount of compensation worked out using the formula:
where:
"AE" is the greater of the following amounts:
(a) the amount per week (if any) that the employee is able to earn in suitable employment;
(b)the amount per week (if any) that the employee earns from any employment (including self‑employment) that is undertaken by the employee during that week.
"NWE" is the amount of the employee’s normal weekly earnings.
(2A)For the purposes of subsection (2), a week is a maximum rate compensation week, in relation to an employee to whom this section applies, if:
(a)it is a week during which the employee’s incapacity prevents the employee working the employee’s normal weekly hours because the employee is unable to work or unable to work at the level at which the employee worked before the injury; and
(b) the total number of hours that the employee has been prevented from working, or working at that level, during that incapacity, in that week and in all previous weeks, if any, to which paragraph (a) applies, does not exceed 45 times the employee’s normal weekly hours.
(2B)If, before the end of a particular week, the total of the hours that the employee has been prevented from working, or working at that level, in that week and in previous weeks, will exceed the total number of hours worked out in accordance with paragraph (2A)(b), then:
(a)subsection (2) applies in respect of the part of the week before that total number of hours is exceeded in accordance with subsection (2C); and
(b)subsection (3) applies in respect of the remainder of the week in accordance with subsection (2D).
(2C)For the purposes of paragraph (2B)(a), the compensation payable in respect of the part of the week to which that paragraph refers is an amount worked out using the formula:
where:
"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.
"NWH" means the number of normal weekly hours worked by the employee before his or her injury.
"X" is the total of the hours in that particular week:
(a)that would have counted towards the employee’s normal weekly hours (whether those hours are worked or not); and
(b)that elapse before the total number of hours worked out in accordance with paragraph (2A)(b) exceeds 45 times the employee’s normal weekly hours.
(2D)For the purposes of paragraph (2B)(b), the compensation payable in respect of the part of the week to which that paragraph refers is worked out using the formula:
where:
"NWH" means the number of normal weekly hours worked by the employee before his or her incapacity.
"reduced rate compensation entitlement" is the rate of compensation that would have been applicable for the whole week had subsection (3) applied throughout the whole week.
"X" is the total of the hours in that particular week:
(a)that would have counted towards the employee’s normal weekly hours (whether those hours are worked or not); and
(b)that elapse before the total number of hours worked out in accordance with paragraph (2A)(b) exceeds 45 times the employee’s normal weekly hours.
(3)Subject to this Part, Comcare is liable to pay compensation to the employee, in respect of the injury, for each week during which the employee is incapacitated, other than a week referred to in subsection (2), of an amount calculated using the formula:
where:
"adjustment percentage" is a percentage equal to:
(a)if the employee is not employed during that week—75%; or
(b)if the employee is employed for 25% or less of his or her normal weekly hours during that week—80%; or
(c)if the employee is employed for more than 25% but not more than 50% of his or her normal weekly hours during that week—85%; or
(d) if the employee is employed for more than 50% but not more than 75% of his or her normal weekly hours during that week—90%; or
(e) if the employee is employed for more than 75% but less than 100% of his or her normal weekly hours during that week—95%; or
(f) if the employee is employed for 100% of his or her normal weekly hours during that week—100%.
"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.
The following definitions are to be found in s 4(1):
(1) In this Act, unless the contrary intention appears:
…
"normal weekly earnings" means the normal weekly earnings of an employee calculated under section 8.
"normal weekly hours", in relation to an employee, means the average number of hours (including hours of overtime) worked in each week by the employee in his or her employment during the relevant period as calculated for the purpose of applying the formula in subsection 8(1) or (2).
…
“relevant period” means the period calculated under section 9.
Subections 8(1) and (2) state:
(1)For the purposes of this Act, the normal weekly earnings of an employee (other than an employee referred to in subsection (2)) before an injury shall be calculated in relation to the relevant period under the formula:
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.
(2)Where an employee is required to work overtime on a regular basis, the normal weekly earnings of the employee before an injury shall be the amount calculated in accordance with subsection (1) plus an additional amount calculated in relation to the relevant period under the formula:
where:
"NH" is the average number of hours of overtime worked in each week by the employee in his or her employment during the relevant period; and
"OR" is the employee’s average hourly overtime rate of pay during that period.
Section 9(1) states:
(1)For the purposes of calculating the normal weekly earnings of an employee before an injury, a reference in section 8 to the relevant period is, subject to this section, a reference to the latest period of 2 weeks before the date of the injury during which the employee was continuously employed by the Commonwealth or a licensed corporation.
The Respondent’s Submissions
Mr Howe, for the Respondent, submitted that the ‘normal weekly hours’ to which reference is made in s 19(3) must be accorded the meaning attributed to those words by the definition in s 4(1). That is the average number of hours worked in each week by the employee during the relevant period as calculated in accordance with the formula in subss 8(1) and (2). Mr Howe said the s 4(1) definition contemplated that its application will not be confined to subss 8(1) and (2) “unless the contrary intention appears”. The question, therefore, is whether there is a contrary intention. In the New South Wales Court of Appeal decision in Deputy Commissioner of Taxation (NSW) v Mutton (1988) 79 ALR 509, at 512-513, Mahoney J noted that there is no simple formula for determining what is a contrary intention, but it may be inferred from a particular provision with reference to the legislative intention.
Mr Howe noted that in the Second Reading Speech for the Commonwealth Employees’ Rehabilitation and Compensation Bill 1988 (which was enacted at the SRC Act), the then Minister for Social Security (Mr Brian Howe) said:
Where appropriate, the Bill will encourage employees to return to work on a gradual basis by allowing their income to increase according to the number of hours worked. For example, an employee who returns to work for 50 per cent of the number of hours he or she worked before the injury would be entitled to an amount of compensation which, combined with the income from their employment, would provide the employee with 85 per cent of his or her normal weekly earnings. (Australia, House of Representatives Debates (27 April 1988) p 2192.)
Mr Howe said the amendments made to s 19 by the Safety, Rehabilitation and Compensation and Other Legislation Amendment Act 2001 by the inclusion of subss 19(2A) to (2D) were introduced to address a contingency not otherwise dealt with by the Act, where the 45th week from the time of an employee’s injury ends halfway through a calendar week. While recognising that the SRC Act is beneficial legislation and a construction benefiting the employee should generally be preferred, he noted the decision in Comcare Australia v Pires (2005) 143 FCR 104 where, at 115, Jacobson J emphasised that any perceived unfairness “must give way to the proper construction of the Act”. Extrinsic material could not be used to justify a ‘strained construction’. Mr Howe noted that the SRC Act does not seek a perfect outcome in terms of income maintenance. For example, s 19(5) caps weekly compensation payable at 150 per cent of average weekly earnings.
Prior to November 2009, Comcare’s policy in the case of an employee whose employment hours changed after their date of injury, was to align the employee’s weekly hours with their new employment circumstances. Mr Howe said this policy had been in place since April 1990. However, relying on legal advice, from November 2009, Comcare ceased to adopt that policy on the ground that the reference to ‘normal weekly hours’ in s 19(3) should be interpreted according to the definition in s 4(1), meaning the employee’s hours before the date of injury. This is the case even if the employee has been deployed to a new position and is working the maximum hours in that position.
The Applicant’s Submissions
Mr McManamey, for the Applicant, submitted that the ‘normal weekly hours’ to which reference is made in s 19(3) are the normal weekly hours in the period after the employee was injured. The definition of ‘normal weekly hours’ in s 4(1) is stated to be applicable unless the contrary intention appears. Section 8 provides the formula for calculating the ‘normal weekly earnings’ of an employee before an injury. The ‘relevant period’ for the purpose of s 8 is defined in s 9(1) as the latest period of two weeks before the injury. If Parliament’s intention was to define ‘normal weekly hours’ in s 4(1) as the hours worked in the period before the injury in accordance with s 9, it would have been an easy matter to have said so. As it is, the relevant period in respect of ‘normal weekly earnings’ after the injury is therefore unclear.
Mr McManamey submitted that the meaning of the words ‘normal weekly hours’ is therefore ambiguous and, because the SRC Act is beneficial legislation, that ambiguity should be resolved in favour of the Applicant. He noted that in subss 19(2C) and (2D), the words ‘normal weekly hours’ are specifically defined as hours worked before the injury. He contended that the fact that this definition is included reveals an acceptance that ‘normal weekly hours’ can refer to different periods of time and is not limited to a period before the injury – otherwise the definitions in subss 19(2C) and (2D) would be redundant.
Mr McManamey noted that s 19(3) uses the words ‘normal weekly hours’ on a number of occasions by reference to the words ‘during that week’. The focus is the employee’s normal weekly hours during the week for which compensation is payable. Thus, s 19(3) is an exception to the application of the definition in s 4(1). This is an example of where a contrary intention exists. Such an interpretation is consistent with the legislative intention of encouraging injured employees to return to work and compensating them for their losses according to a sliding scale that rewards the employee the greater the percentage of normal weekly hours worked.
Mr McManamey noted that to adopt the interpretation advocated by Comcare would result in Mr Heffernan being penalised because his normal weekly hours before the injury were greater than his normal weekly hours since the injury. Employers would be able to save on workers compensation payments by redeploying an injured worker in a position where the normal weekly hours are less.
Discussion
The issue for the Tribunal is whether the words ‘normal weekly hours’ in s 19(3) should be interpreted according to the definition in s 4(1) or should be accorded some other meaning. The Applicant contends that the meaning of the words in s 19(3) refers to the normal weekly hours of suitable employment in which the employee is currently engaged after the injury.
As the parties have pointed out, the s 4(1) definition of ‘normal weekly hours’ applies unless the contrary intention appears. The s 4(1) definition refers to the average weekly hours worked by the employee ‘during the relevant period’ for the purpose of applying the formula in subss 8(1) or (2). The subss 8(1) or (2) formulae are for calculating the normal weekly earnings of an employee before an injury, and the relevant period to which reference is made is, in accordance with s 9(1), the two weeks before the injury.
By contrast, the formula in s 19(3) is for the purpose of calculating the incapacity payments for which Comcare is liable in the period beyond 45 weeks after the date of injury. Incapacity payments for the first 45 weeks are calculated in accordance with subss 19(2) to (2D) and by reference to the employee’s normal weekly earnings before the injury.
Section 19(3) refers to Comcare’s liability to pay compensation for each week during which the employee is incapacitated other than a week referred to in s 19(2). The s 19(3) formula requires the determination of an ‘adjustment percentage’, which is multiplied by the employee’s weekly earnings before the injury (worked out pursuant to the s 4(1) definition of ‘normal weekly earnings’ by reference to s 8) minus the amount per week the employee earns in the particular week. The adjustment percentage is stated in s 19(3) to be a percentage based on whether or not the employee is employed in that week and, if employed, on the percentage of the person’s normal weekly hours during which the person is employed “during that week”. The focus is on the week in respect of which Comcare is liable and the percentage of normal weekly hours in which the person is employed during that week.
As Mr McManamey pointed out, compensation is payable to the employee in accordance with a sliding scale which rewards the employee for working a greater percentage of his or her normal weekly hours.
In my view, the wording of s 19(3) demonstrates a contrary intention and it is sufficiently clear that the s 4(1) definition of ‘normal weekly hours’ is not applicable. To the extent that there is an ambiguity in the meaning of those words - the SRC Act being beneficial legislation - the words should be interpreted in favour of the Applicant so that the Applicant is not penalised by reason of his working in a position with fewer ‘normal weekly hours’ than the position he held before the injury, noting that his present position is one into which he was redeployed by his employer.
Thus, in my view, the words ‘normal weekly hours’ in s 19(3) should be interpreted as meaning the employee’s normal weekly hours in his or her employment after the injury, the reference in s 19(3) being to Comcare’s liability to pay compensation to the employee “during that week”. I do not accept that this is a ‘strained construction’ as the Respondent suggests, but rather it is one which accords with the plain meaning of the words in s 19(3) and is consonant with the objective of encouraging the rehabilitation of the injured employee.
Conclusion
The Tribunal sets aside the decision under review and remits the matter to Comcare with a direction that the words ‘normal weekly hours’ in s 19(3) should be interpreted by reference to the week in respect of which Comcare is liable to make incapacity payments to the injured employee.
I certify that the 24 preceding paragraphs are a true copy of the reasons for the decision herein of Mr RP Handley, Deputy President.
Signed: ..............[sgd]............................................................
A Veness, Associate
Date of Hearing: 15 October 2010
Date of Decision: 26 October 2010
Applicant representative: Ms S Ryan, Turner Freeman Lawyers
Applicant counsel: Mr B McManameyRespondent representative: Mr T Giugni, Australian Government Solicitor
Respondent counsel: Mr T Howe
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