Miechel and Military Rehabilitation Compensation Commission
[2014] AATA 508
•25 July 2014
[2014] AATA 508
DivisionGENERAL ADMINISTRATIVE DIVISION
File Number 2013/5665
Re Barry Miechel
APPLICANT
And Military Rehabilitation Compensation Commission
RESPONDENT
DECISION
Tribunal Deputy President S A Forgie
Date 25 July 2014
Place Melbourne
The Tribunal affirms the reviewable decision of the respondent dated 3 October 2013.
[sgd] S A Forgie
Deputy President
CATCHWORDS
PRACTICE AND PROCEDURE – COMPENSATION – amount payable during periods of incapacity – injury sustained while in Army - discharged from Army – engaged in Citizen Military Force (now Army Reserve) – no continuity of Commonwealth employment – payment as Lieutenant on discharge from Army payable
LEGISLATION
Administrative Appeals Tribunal Act 1975; section 37
Defence Act 1903; sections 30, 31, 32, 32A
Parliamentary Service Act 1999
Public Service Act 1999
Safety, Rehabilitation and Compensation Act 1988; sections 4, 5, 5A, 8, 9, 14, 19, 20, 21, 21A, 22, 23, 97A, 108DCASES
Breust v Commission for the Safety, Rehabilitation and Compensation of Commonwealth Employees [1991] FCA 241; (1991) 101 ALR 1; 30 FCR 40; 13 AAR 399
McDonald v Department of Defence [1999] FCA 882
Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355; 72 ALJR 841; 153 ALR 490
Re Mitchell and Military Rehabilitation and Compensation Commission [2005] AATA 221; 85 ALD 234
Re West and Comcare [1999] AATA 159; 29 AAR 32; 55 ALD 301OTHER MATERIALS
Chambers 21st Century Dictionary, 1999, reprinted 2004, Chambers
REASONS FOR DECISION
Mr Barry Miechel served in the Regular Army (Army) from 1 October 1969 to 23 July 1974 when he was discharged holding the rank of Lieutenant.[1] During his service, he suffered an injury to his left knee while playing football. He sought medical treatment on 18 May 1972, the day after he suffered the injury, and underwent a left lateral meniscectomy on 15 August 1972. Postoperative complications followed and he suffered a swollen and tender left knee and bruised both of his knees in unrelated incidents in 1973. Mr Miechel was discharged from the Army on 23 July 1974 when he had attained the rank of Lieutenant.
[1] Documents lodged under s 37(1) of the Administrative Appeals Tribunal Act 1975 (T documents); T17 at 41
On 12 August 1997, Mr Miechel lodged a claim for rehabilitation and compensation for a “painful left knee – osteoarthritis”.[2] On 14 January 1998, a delegate of the Military Rehabilitation and Compensation Commission (MRCC) accepted liability for post traumatic lateral compartment osteoarthritis of Mr Miechel’s left knee from 18 May 1972 being the day on which he first sought medical treatment.[3] Later, on 2 March 1998, the MRCC assessed Mr Miechel’s entitlement to compensation for incapacity resulting from his injury. It did so with effect from 18 July 1997 and assessed his entitlement having regard to his rank at the time of his discharge i.e. a Lieutenant.[4] The MRCC paid compensation from time to time as Mr Miechel suffered incapacity from his injury. He subsequently underwent a total left knee replacement on 21 January 2002 and a revision left total knee replacement – PFC knee and patellar resurfacing on 17 October 2011.[5]
[2] T documents; T3 at 10
[3] T documents; T11 at 31-32
[4] T documents; T22 at 48
[5] T documents; T41 and T77 at 103 and 177
On 11 February 2012, Mr Miechel wrote to the MRCC advising that he had suffered substantial loss of wages in the years from 1997 when he suffered the injury until 2012. The specific periods were: 1997 to February 2000; November 2001 to August 2002; November 2006 to April 2008; and March 2009 to October 2012.[6] That loss had caused great difficulties for him in his family life and in the quality of his life.[7] In those years he had held the following positions:
(1)prior to 1997, Works Overseer/CPEP Coordinator at various posts with a salary of $45,000, superannuation and a fully-maintained vehicle;
(2)from late 2002 to 2006, Outback Operations Manager for a Community Support Agency managing the Federal Government’s “Work for the Dole” contract with a salary of $50,000, superannuation and a fully-maintained vehicle; and
(3)in 2008/2009, Business Manager for the Northern Territory Emergency Response (Executive Level 2 a + b[8]) with a salary of $99,000 (also stated to be $134,000[9]), 15% superannuation and a fully-maintained vehicle.[10]
[6] T documents; T88 at 199-200
[7] T documents; T78 at 178
[8] T documents; T88 at 204
[9] T documents; T88 at 204
[10] T documents; T78 at 178 and see also T87 at 198
A delegate of the MRCC rejected Mr Miechel’s claim for compensation in respect of four specific periods from 1997 to October 2012 advising him on 21 February 2013 that:
“… [T]hese periods are where you have already been fully compensated at the Normal Weekly Earnings (NWE) for your rank and pay at discharge converted to the Military Salary as at 1 March 2001, and subsequently amended each July 1 (commencing in 2002) by an indexation factor known as the Wage Price Index (WPI).
Incapacity Payments are made at 100% of NWE for a period of 45 weeks, then the payments reduce to 75% of NWE. Your incapacity payments have been based on 75% of NWE since 14 May 1998.”[11]
[11] T documents; T95 at 222
Mr Miechel contends that his entitlement to compensation for incapacity should be calculated either with regard to the amount of his earnings in his civilian life or to those he could have been expected to have been earning had he stayed in the Army. Classmates who had remained in the Army had reached the ranks of Brigadier and Major General.[12] The MRCC decided that Mr Miechel’s entitlement to compensation had to be determined by reference to the salary of a Lieutenant, adjusted from time to time.[13] In the alternative, Mr Miechel made two further contentions. First, that his compensation should have been calculated by reference to the salary he earned in his civilian employment, which he said had been employment with the Commonwealth. Second, that it should have been calculated by reference to his employment at the rank of Captain when he was employed by the Citizen Military Force (CMF), which was to become known as the Australian Army Reserve (Army Reserve).
[12] T documents; T99 at 227
[13] T documents; T95 at 221-222
I have decided that Mr Miechel’s entitlement to compensation for incapacity must be assessed by reference to his normal weekly earnings at the rank of Lieutenant that he held in the Australian Army at the time of his injury as adjusted in accordance with s 8 of the Safety, Rehabilitation and Compensation Act 1988 (SRC Act). I am unable to have regard to his earnings as a Captain in the Army Reserve or to the increases in salary he received in his civilian employment as he is not a person who continued to be employed by the Commonwealth. My reasons are set out in the following paragraphs.
LEGISLATIVE BACKGROUND
Outline of provisions relating to entitlement to compensation in respect of incapacity for work
The starting point is s 14(1) of the SRC Act. In the context of this case, that section provides:
“Subject to this Part, Comcare is liable to pay compensation in accordance with this Act in respect of an injury suffered by an employee if the injury results in … incapacity for work ….”
There is no question that that none of the qualifications referred to in ss 14(2) and (3) applies to Mr Miechel. Furthermore, there is no question that his injury was “an injury suffered by an employee”. That term is not defined in the SRC Act but he has suffered an “injury” as that term is defined in s 5A.[14] At the time he suffered that injury, he was an “employee”, which has the meaning given by s 5 and also applies to persons 65 years or older.[15]Section 5(1) provides:
“employee means:
(a)a person who is employed by the Commonwealth or by a Commonwealth authority, whether the person is so employed under a law of the Commonwealth or of a Territory or under a contract of service or apprenticeship; or
(b)a person who is employed by a licensed corporation.”
[14] SRC Act; s 4(1)
[15] SRC Act; s 4(1)
The remaining provisions of s 5, ss 5(1A) to (16), qualify and elaborate upon that definition. Members of the Defence Force, of whom Mr Miechel was one,[16] are for the purposes of the SRC Act:
“… taken to be employed by the Commonwealth, and the person’s employment shall, for those purposes, be taken to be constituted … by the performance of duties as such a member of the Defence Force ….”[17]
Outline of provisions relating to payment of compensation for injuries resulting in incapacity
[16] As presently enacted, the Defence Force comprises three arms, one of which is the Australian Army: Defence Act 1903 (Defence Act); s 30. At the time of Mr Miechel’s service, the Defence Force also consisted of three arms, one of which comprised the Military Forces of the Commonwealth: Defence Act; s 30. The Military Forces of the Commonwealth consisted of the Permanent Military Forces and the Citizen Military Forces: Defence Act; s 31. Mr Miechel was a member of the Permanent Military Forces at the relevant time and so a member of the Defence Force.
[17] SRC Act; s 5(2)(a), (b) and (c)(i). At the time of their enactment, ss 5(2)(a) and (b) were required to bring, among others, the Australian Defence Force (ADF) within the scope of the SRC Act. That continues to be the case for the ADF although, since it was enacted in 1988, the legislation has been amended and, to a large extent, members of the Defence Force are no longer covered by its provisions but by the Military Rehabilitation and Compensation Act 2004 (MRC Act).
A.What is an incapacity for work?
Section 4(9) provides:
“A reference in this Act to an incapacity for work is a reference to an incapacity suffered by an employee as a result of an injury, being:
(a)an incapacity to engage in any work; or
(b)an incapacity to engage in work at the same level at which he or she was engaged by the Commonwealth or a licensed corporation in that work or any other work immediately before the injury happened.”
There has been no question that Mr Miechel has suffered an incapacity for work as a result of his injury and that he has been entitled to compensation for incapacity for the periods for which he has claimed that compensation. The only issue is the basis on which that compensation should be calculated.
B.Calculation of incapacity payments
Section 19 of the SRC Act provides for the assessment of the amount of compensation payable to a person who is in Mr Miechel’s position and who suffers incapacity for work as a result of an injury. At the relevant times, Mr Miechel has not been in receipt of a superannuation pension or a lump sum benefit or both and has not been maintained in a hospital. Had he been, I would have had regard to ss 20, 21, 21A and 22 and not to s 19. Section 23 does not permit me to have regard to any of these provisions after Mr Miechel turned 65 on 22 December 2013 as he suffered his injury before that date.[18]
[18] SRC Act; ss 23(1) and (2)
Section 19(1) provides that s 19 “… applies to an employee who is incapacitated for work as a result of an injury …”.[19] Section 19(2) goes on to provide 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.”
[19] SRC Act; s 19(1)
A “maximum rate compensation week” in relation to an employee is defined in s 19(2A) as:
“(a) … 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.”
The expression “normal weekly hours” is defined in s 4(1):
“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) and (2).”
Provision is made in ss 19(2B) to (2D) for a week in which part of the week exceeds the total number of hours referred to in s 19(2A)(b) i.e. 45 times the employee’s normal weekly hours. Provision has to be made for, after those hours are exceeded, the effect of s 19(3) is to reduce Comcare’s liability to pay compensation to the employee. It does so by applying an adjustment percentage to the amount taken to be the employee’s normal weekly earnings and provides:
“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 using the formula:
(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)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.”
Sections 19(5) to (14) qualify the operation of s 19(3) by establishing maximum and minimum amounts of compensation payable to an employee by reference to the Average Weekly Ordinary Time Earnings of Full-Time Adults and whether there are prescribed persons wholly or mainly dependent on the employee. Section 19(3A) qualifies the operation of s 19(3) where the amount payable to an employee in respect of his or her continued employment is reduced and a pension is payable to him or her under a superannuation scheme.
C.What do the terms mean?
C.1“Normal weekly earnings”
The expression “normal weekly earnings” (NWE) is defined in s 4(1) to mean “… the normal weekly earnings of an employee calculated under section 8.” Section 8(1) provides:
“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:
(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.”
Adjustments are made to the assessment of NWE under s 8(1). An adjustment is made, for example, in the case of a person who at the date of the injury is employed on a part-time or unpaid basis by the Commonwealth and who, at the date, also received earnings from other employment. Those other earnings are treated as the employee’s earnings from his or her employment with the Commonwealth. That is the effect of s 8(3). Another adjustment is made if an employee is required to work overtime on a regular basis. If that is the case, s 8(2) provides that the employee’s NWE before the injury shall be the amount calculated under s 8(1) together with an additional amount. The additional amount is calculated by multiplying the average number of hours of overtime worked in each week by the employee in his or her employment during the relevant period by the employee’s average hourly overtime rate of pay during that period. Provision is made in ss 8(4) and (5) for those whose relevant period is so short that it is either impractical to calculate the employee’s NWE before an injury or the figure reached on the calculation would not fairly represent the weekly rate at which he or she was paid.
Section 8(6) provides:
“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:
(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 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.”
Section 8(7) applies to an employee who continues to be employed by the Commonwealth or by a licensed corporation after the date of injury. If it should transpire that the minimum amount per week payable to the employee in respect of that employment is increased because of the promotion of that employee, his or her NWE before the injury (as calculated in accordance with ss 8(1)-(6)) is increased by the same percentage as the percentage by which that minimum amount per week is increased.
Sections 8(9) and (9A) also provide for adjustments to be made to the NWE of an employee who continues to be employed by the Commonwealth and who is a member of a class of employees whose remuneration is either increased or reduced by operation of law or by the making or alteration of an award or similar determination.
For those who do not continue to be employed by the Commonwealth, provision is made for their NWE to be further increased from time to time by indexation.[20]
[20] SRC Act; ss 8(9B)-(9G)
Limits are placed on the amounts payable to an employee if the NWE exceeds the amounts set out in s 8(1). That is provided for in s 8(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 that 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.”
C.2 “Relevant period”
The term “relevant period” is given its meaning by s 9.[21] Section 9(1) provides:
“For the purposes of calculating the normal weekly earnings of an employee before an injury, a reference to 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.”
[21] SRC Act; s 4(1)
Sections 9(2) to (3) make provision for circumstances in which there have been variations in the minimum weekly amount payable to the employee by operation of law or under an award or the like. Section 9(4) provides for the situation in which the employee’s earnings were reduced or not payable for any part of the period because he or she was absent from his or her employment for any reason.
C.3 “Suitable employment”
What amounts to “suitable employment” referred to in the assessment of an employee’s “AE” is defined in s 4(1):
“‘suitable employment’, in relation to an employee who has suffered an injury in respect of which compensation is payable under this Act, means:
(a)in the case of an employee who was a permanent employee of the Commonwealth or a licensee on the day on which he or she was injured and who continues to be so employed – employment by the Commonwealth or the licensed corporation, as the case may be in work for which the employee is suited having regard to:
(i)the employee’s age, experience, training, language and other skills;
(ii)the employee’s suitability for rehabilitation or vocational retraining;
(iii)where employment is available in a place that would require the employee to change his or her place of residence – whether it is reasonable to expect the employee to change his or her place of residence; and
(iv)any other relevant matter; and
(b)in any other case – any employment (including self-employment), having regard to the matters specified in subparagraphs (a)(i), (ii), (iii) and (iv).”
CONSIDERATION
This case turns on whether Mr Miechel’s compensation for periods of incapacity resulting from his injury are calculated by reference to his NWE in the latest two week period before he suffered that injury or in some other period.
The general rule: NWE calculated by reference to average hours worked and average hourly rate and allowances before injury
The formula that is set out in s 19(2) and that lies at the heart of any calculation of compensation for incapacity (NWE – AE), Parliament does not state that the figure used as the employee’s NWE is the amount of the employee’s normal weekly earnings in the two week period before the date of the injury during which he was continuously employed by the Commonwealth. The only explicit references to that particular period come in ss 8 and 9. Subject to certain qualifications in the remainder of the provision, s 8(1) sets out how “… the normal weekly earnings of an employee … before an injury shall be calculated …”. They are to be calculated by reference to the average number of hours worked in each week by the employee in the “relevant period”, the employee’s average hourly ordinary time rate of pay during that period and the average amount of certain allowances paid to the employee each week during that period. Section 9 then sets out how the relevant period is determined. As with s 8, I have summarised the main provisions of that section above. For the moment and subject to qualifications I have noted, 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 … 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 …”.
Does s 19 require me to read the reference to an employee’s NWE as a reference to the NWE as provided for in ss 8 and 9? If it does, it means that an employee’s NWE is assessed by reference to his or her normal weekly earnings in the latest period of two weeks before the injury as varied according to the provisions of s 19. Having regard to the whole scheme of the SRC Act and to ss 8, 9 and 19 in particular, it seems to me that it does.
Beginning with the overall scheme of the SRC Act, it is generally stated to relate to the “… rehabilitation of employees of the Commonwealth and certain corporations and to workers’ compensation for those employees and certain other persons, and for related purposes.”[22] Those benefits to employees are provided under the umbrella of what is, for all practical purposes, an insurance scheme in which Entities (which include agencies for the purposes of the Public Service Act 1999 and Parliamentary Departments within the meaning of the Parliamentary Service Act 1999 and whose employees are employed by the Commonwealth[23]) and Commonwealth authorities who have not been licensed under Part VIII of the SRC Act pay a premium to Comcare.[24] The amount of those premiums is determined in accordance with s 97A of the SRC Act. At the heart of the components used to determine the amount payable by a particular Entity or Commonwealth authority are the number of claims made by its employees, the amount of compensation paid to them and the number of injuries estimated to befall its employees in the coming year.[25]
[22] SRC Act; Long Title
[23] Definition of “Entity” in s 4(1) of the SRC Act and see FN 9 above.
[24] Those licensed under Part VIII of the SRC Act are subject to the terms of the licence agreement they reach with the Safety, Rehabilitation and Compensation Commission. Among the conditions on which they may be required to meet is that they maintain sufficient funds to discharge their duty to make payments under the SRC Act: SRC Act; s 108D(1)(c).
[25] SRC Act; s 97A
When it comes time to assess an employee’s entitlement to compensation for an injury that has resulted in incapacity for work, the focus is on the employee’s incapacity to engage in any work and, if there is capacity, incapacity to engage in work at the same level at which he or she was engaged by the Commonwealth or a licensed corporation before the injury happened if he or she retains capacity to work at all. That follows from the provisions of s 4(9) explaining that a reference in the SRC Act to an incapacity for work is a “… reference to an incapacity suffered by an employee as a result of an injury, being … an incapacity to engage in any work; or … an incapacity to engage in work at the same level at which he or she was engaged by the Commonwealth or a licensed corporation in that work or any other work or any other work immediately before the injury happened.”[26] That means that, except in the case of total incapacity, incapacity is measured by reference to an employee’s capacity to engage in work at the same level as that in which the employee was engaged immediately before the injury.
[26] See [10] above
Compensation for injuries resulting in incapacity for work is payable under s 19 in the form of weekly payments. The rate of compensation payable under s 19(2) is determined by reference, in part, to the number of hours that an employee’s incapacity prevents him or her from working his or her normal weekly hours because of his or her inability to work or because of his or her inability to work at the level at which he or she worked before the injury.
Section 19(2A) effectively sets the maximum number of weeks for which compensation can be paid to an employee under s 19(2). It sets that maximum by reference to two factors. First, it identifies a week by reference to its being a week during which the employee’s incapacity prevents him or her working his or her NWE either because he or she is unable to work or unable to work at the level he or she worked before the injury. The second factor requires a calculation of whether the number of hours that the employee has either been prevented from working, or working at that level, to be under a figure calculated by multiplying his or her normal weekly hours by 45. Applying the definition of “normal weekly hours” found in s 4(1), this means that the number that is multiplied by 45 is 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).” The reference to the “relevant period” is, under ss 4(1) and 9(1) 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.” (emphasis added). It is not a reference to the latest period of 2 weeks before the date of any period of incapacity suffered by an employee as a result of the injury.
Sections 19(2B), (2C) and (2D) refer to the way in which an employee’s compensation is calculated when he or she is suffering from incapacity but the hours that he or she is prevented from working, or working at the level at which he or she worked before the injury will exceed the total number of hours calculated under s 19(2A). I have summarised those provisions out at [12]-[16] above. They do not take the matter any further other than to continue the emphasis upon, and the link with, an employee’s level of work before the injury rather than before any period of incapacity.
That link with the employee’s work before the injury is retained in s 8 in the calculation of the NWE for an employee. What might be called the foundation formula set out in s 8(1) turns, in part on the number of hours worked each week and the ordinary time rate of pay in the relevant period i.e. the latest period of 2 weeks before the date of the injury. The figure arrived at by that formula is varied and adapted according to various scenarios. I have set them out at [20]-[22] above.
This analysis is consistent with that reached by Sundberg J in McDonald v Department of Defence[27] (McDonald) when he analysed s 8 of the SRC Act. He concluded:
“… It is quite clear from these provisions that the starting point for the calculation of an employee’s normal weekly earnings is what he was paid in the two weeks before the injury. There is in my view no reasonable argument that the employee’s ‘normal weekly earnings’ are to be based on actual earnings immediately before incapacity.”[28]
[27] [1999] FCA 882
[28] [1999] FCA 882 at [10]
Is an employee’s promotion or possible promotion relevant under s 8(6)?
The calculations of NWE allow for increases in the minimum amount that is paid to an employee in respect of his or her employment by the Commonwealth or a licensed corporation or that would have been paid had he or she remained in that employment. Increases to which regard may be had are limited to those arising in three sets of circumstances set out in s 8(6). The first two relate to the employee’s attaining a particular age and completing a particular period of service. The third relates to an increase that arises 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. Each of the circumstances links the increase with the amount payable to the employee in respect of his or her “employment by the Commonwealth … at the date of injury”. Furthermore, the third circumstance links the increase with increments in the range of payment to a particular office, position or appointment held by the employee. No allowance is made in s 8(6) for the circumstance in which an employee is promoted or, had he or she continued to be employed by the Commonwealth, might or probably would have been promoted.
This was the conclusion reached by Sundberg J in McDonald. Mr McDonald had argued that, had he remained in the then CMF, he was sure to have been promoted to the rank of sergeant. In failing to take account of that, the Tribunal had failed to apply s 8(6) in calculating his NWE. Sundberg J rejected that argument saying:
“Section 8(6)(c) requires the respondent to take into account pay increases resulting from ‘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 increase must be an increment in a range applicable to the employee specifically or to the position held. The section contemplates the existence of a pay range which the employee may ‘work up through’ over time. The increase must be achieved within that position. A pay increase resulting from a change in position would not be ‘by way of an increment in a range’. The opening words of s 8(6), which require increases in ‘the minimum amount per week payable to an employee in respect of his or her employment by the Commonwealth at the date of the injury’ to be taken into account, support this view. Thus, what is to be considered is the employee’s position at the date of the injury, not any position to which the employee may be promoted after that date. That s 8(6) is not concerned with increases in pay attributable to an employee’s promotion is confirmed by sub-s (7), which deals expressly with that subject (in a manner which does not avail the applicant).”[29]
Exception to the general rule: employee continues to be employed by the Commonwealth or by a licensed corporation after the date of injury and is promoted
[29] [1999] FCA 882 at [12]
The employee’s NWE is increased by the same percentage as the percentage by which the minimum amount payable to that employee per week is increased because of his or her promotion. At the hearing, Mr Miechel pointed to his being a Captain in the CMF. This represented a promotion from Lieutenant, which had been his rank in the Army in the two week period before his injury and on discharge. As his service in the CMF had not previously been raised by Mr Miechel, there are no records on the file regarding his service as a Captain. For the sake of considering the issue, though, I have assumed that his service in the CMF began immediately upon his being discharged from the Army as a Lieutenant.
That raises the issue of what is meant by s 8(7) when it provides for the situation in which an employee “continues to be employed by the Commonwealth or a licensed corporation after the date of an injury”. Employment by the CMF (and now the Army Reserve) was employment by the Commonwealth just as employment by the Army was, and is, employment by the Commonwealth.[30] That comes about because both are part of the Army and so part of the Defence Force as I have explained at FN 16 above. There is a question, though, whether Mr Miechel can be said to have continued to have been employed by the Commonwealth when he changed from one to the other. Other than to say that it deals with the situation in which an employee is promoted, the interpretation of s 8(7) is not a matter that Sundberg J was required to address in McDonald.
[30] See above
The ordinary meanings of the word “continue” include two meanings that are not consistent with each other. They are:
“…1 tr & intr to go on without stopping. … 3 tr & intr to carry on or start again after a break …”[31]
[31] Chambers 21st Century Dictionary, 1999, reprinted 2004, Chambers
Clearly, the submission of the MRCC depends upon the earlier meaning and that by Mr Miechel on the latter. Which prevails depends upon a broader consideration of s 8(7) and its place in s 8 in particular and in the SRC Act in general. As the majority said in Project Blue SkyInc v Australian Broadcasting Authority:[32]
“The primary object of statutory construction is to construe the relevant provision so that it is consistent with the language and purpose of all the provisions of the statute ... The meaning of the provision must be determined ‘by reference to the language of the instrument as a whole’ ... In Commissioner for Railways (NSW) v Agalianos ..., Dixon CJ pointed out that ‘the context, the general purpose and policy of a provision and its consistency and fairness are surer guides to its meaning than the logic with which it is constructed’. Thus, the process of construction must always begin by examining the context of the provision that is being construed ...
A legislative instrument must be construed on the prima facie basis that its provisions are intended to give effect to harmonious goals ...”[33]
[32] [1998] HCA 28; (1998) 194 CLR 355; 72 ALJR 841; 153 ALR 490; McHugh, Gummow, Kirby and Hayne JJ; Brennan CJ dissenting
[33] [1998] HCA 28; (1998) 194 CLR 355; 72 ALJR 841; 153 ALR 490 at [69]- [70]; 381-382; 855; 509
This was an approach taken by the Full Court of the Federal Court in Breust v Commission for the Safety, Rehabilitation and Compensation of Commonwealth Employees.[34] Mr Breust had been a full-time employee of the Australian Taxation Office (ATO) as well as a member of the Army Reserve. In a separate judgment, Davies J examined s 8 and concluded that the formula prescribed by s 8(1) refers to the employment out of which, or in the course of which, the injury or disease arose or was incurred. That interpretation is confirmed by reference to ss 8(3) and (8) and (10).[35] Section 8(10)(a) provides:
“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; …
(b)…
the amount so calculated shall be reduced by the amount of the excess.”
[34] [1991] FCA 241; (1991) 30 FCR 40; 101 ALR 1; 13 AAR 399; Davies, Beaumont and O’Connor JJ
[35] [1991] FCA 241; (1991) 30 FCR 40; 101 ALR 1; 13 AAR 399 at [9]-[11]; 43; 4-5; 402 Section 8(1) provides that, if an amount calculated as an employee’s NWE under ss 8(1)-(9) exceed certain amounts, the amount of NWE paid to the employee is reduced by the amount of the excess.
His Honour continued:
“12. This interpretation also accords with s.8(10). It would be a strange result if an employee who had been in full-time employment with the Commonwealth and who had had to give up that full-time employment because of his incapacity were to be treated as being still in employment by the Commonwealth, for the purposes of the sub-section, simply because he remained on the establishment of the Defence Force Reserve.
13. The interpretation accords, moreover, with what was said in the second reading speeches to which reference was made in the course of argument. Those speeches make it clear that ‘An employee’s normal weekly earnings will be based on his pre-injury salary’. I take this to be a statement that, in the case of a full-time employee who suffered injury or disease attributable to his employment, his normal weekly earnings are to be based upon his salary from that employment, not upon his earnings from all employments or occupations in which he may at the time have engaged.”[36]
[36] [1991] FCA 241; (1991) 30 FCR 40; 101 ALR 1; 13 AAR 399 at [12]-[13]; 43; 5; 402
Davies J then turned to what is meant by the expression “employment by the Commonwealth” saying:
“14. The principal argument against the interpretation is based on the use by s.8 in several instances of the expression ‘employment by the Commonwealth’. However, the expression seems to me to be neutral in its operation.
15. It follows that, in the case of an officer holding a full-time position with the Commonwealth, who suffers injury or disease arising out of or in the course of that employment, his normal weekly earnings are to be calculated by reference to the incidents of that employment alone. It is only in the case of an employee who suffers injury or disease arising out of or in the course of part-time employment that normal weekly earnings will take account of earnings from other employment. And in that case, the other employment will take account of earnings from any other employment, whether it be employment with the Commonwealth or outside Commonwealth employment. I reject counsels’ submissions that the Act intends to compensate an injured employee for all earnings or all earnings from the Commonwealth which may be lost. It seems to me that s.8 provides to the contrary, save in the case where the injury or disease was related to part-time employment.”[37]
[37] [1991] FCA 241; (1991) 30 FCR 40; 101 ALR 1; 13 AAR 399 at [14]-[15]; 43-44; 402-403
In view of that analysis, it follows that, when an employee “continues to be employed by the Commonwealth or a licensed corporation” and the minimum amount payable to the employee “in respect of that employment” because of promotion, he or she must continue to be employed by the Commonwealth both before and after the promotion. That means that there must be no break in that employment by the Commonwealth.[38]
[38] This conclusion is consistent with that reached by Senior Member Burton in Re West and Comcare [1999] AATA 159; 29 AAR 32; 55 ALD 301 and by Member Carstairs in Re Mitchell and Military Rehabilitation and Compensation Commission [2005] AATA 221; 85 ALD 234
Where an employee changes Departments after a promotion but continues to be an APS employee under the Public Service Act 1999 (PS Act) and with no change in employment other than the promotion and the changed duties it brings, the answer to the question whether the employee continues to be employed by the Commonwealth may be one thing. If an APS employee is promoted to a position in a Commonwealth authority (which would include a company in which the Commonwealth has a controlling interest[39]) and a determination is made that the person has ceased to be an APS employee, the answer to the question may be another. I do not need to consider these questions but raise them as illustrations of the variety of circumstances in which it may be relevant to ask whether the person continues to be employed by the Commonwealth or a licensed corporation.
[39] PS Act; s 72
In answering the question, I am mindful that, in Breust, Davies J firmly linked an employee’s entitlement to NWE to his or her pre-injury salary and so to the salary from that employee’s pre-injury employment. In doing so, he linked the concept of “employment by the Commonwealth” with employment by the Commonwealth in that particular pre-injury employment. Therefore, while his Honour acknowledged that employment in the Defence Force Reserve was employment by the Commonwealth just as employment in the ATO had been but he did not consider that Mr Breust could “… be treated as being still in employment by the Commonwealth, for the purposes of the sub-section [s8(10)], simply because he remained on the establishment of the Defence Force Reserve.”[40]
[40] See [42] above and [40] [1991] FCA 241; (1991) 30 FCR 40; 101 ALR 1; 13 AAR 399 at [12]; 43; 5; 402
Although employed by the Commonwealth as a member of the Army when he was injured and not as an employee of the ATO, Mr Miechel’s situation is no different from that of Mr McDonald. Both left the employment out of, or in the course of, which their injuries had been suffered and became members of the Army Reserve or its predecessor the CMF. Both were employed by the Commonwealth, first on a full-time basis and then on a part-time basis. Once they had resigned from the ATO, in the case of Mr McDonald, and the Army, in the case of Mr Miechel, neither could be said to be still in the employment by the Commonwealth as that was understood by Davies J in Breust. While both continued to be employed by the Commonwealth, neither continued to be employed on a full-time basis. Neither could be said to have been promoted. That is obvious in the case of Mr McDonald because the promotion structures in the ATO and the Army Reserve are quite different.
It is also true in the case of Mr Miechel where the promotion structures in the Army and the Army Reserve appear compatible but they are separate bodies with separate personnel. The modern Army consists of officers appointed to, and soldiers enlisted in, the Army together with officers and soldiers transferred to it from the Army Reserve, the Australian Navy or the Australian Air Force.[41] The Army Reserve consists of officers appointed to, and soldiers enlisted in, the Army Reserve together with officers and soldiers transferred to it from the Army, the Australian Navy or the Australian Air Force.[42] At the time that Mr Miechel was a member of the Army and joined the CMF, the structure was no different.[43]
[41] Defence Act; s 32
[42] Defence Act; s 32A
[43] See Defence Act; ss 32 and 32A
It follows that they are separate bodies with separate personnel even though, together, the Army and the Army Reserve comprise the Australian Army. Therefore, employment by one is not employment with the other and a person cannot be said to be a person who “continues to be employed by the Commonwealth” when he or she ceases to be employed by one and begins to be employed by the other.
That would mean that, even though Mr Miechel held a higher rank in the Army Reserve than he had in the Army, I cannot have regard to it under s 8(7). He is not a person who continued to be employed by the Commonwealth in the sense in which it is understood in s 8(7). Even if I were incorrect in that conclusion, Mr Miechel acknowledged at the hearing that the amount payable to him in respect of his employment in the Army was not increased when he became a Captain in the Army Reserve. Rather, it decreased. That would mean that Mr Miechel does not meet the criterion in s 8(7)(b) regardless of whether or not he continued to be employed by the Commonwealth.
As for Mr Miechel’s employment in subsequent years, it is not relevant to consider whether they could be regarded as employment by the Commonwealth. After he left the Army, he worked with his father in law as well as being a member of the Army Reserve. He was not employed by the Commonwealth when he worked with his father in law. Even if he were subsequently employed by the Commonwealth he could not be said to be “an employee who continues to be employed by the Commonwealth” once he was discharged from the Army.
DECISION
For the reasons I have given, I affirm the reviewable decision of the MRCC dated 3 October 2013.
I certify that the fifty five preceding paragraphs are a true copy of the reasons for the decision herein of
Deputy President S A Forgie,
Signed: ………[sgd]..............................................
Associate
Date of Hearing 14 July 2014
Date of Last Submission 14 July 2014
Date of Decision 25 July 2014
Self-represented Applicant Mr B Miechel
Counsel for the Respondent Ms C Dowsett
Solicitor for the Respondent Mr L Dobelsky
Moray & Agnew Lawyers
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