Miko Chun and Comcare
[2012] AATA 471
•25 July 2012
Administrative Appeals Tribunal
ADMINISTRATIVE APPEALS TRIBUNAL )
) No: 2011/5321
General Administrative Division )
Re: Miko Chun
Applicant
And: Comcare
Respondent
DIRECTION
TRIBUNAL: Ms N Bell, Senior Member
DATE: 27 July 2012
PLACE: Sydney
The Tribunal directs the Registrar, pursuant to subsection 43AA(1) of the Administrative Appeals Tribunal Act 1975, to alter the text of the decision in this application as follows:
- The date in paragraph 5 should read 5 August 2010, not 5 August 2009.
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Ms N Bell, Senior Member
[2012] AATA 471
Division GENERAL ADMINISTRATIVE DIVISION File Number
2011/5321
Re
Miko Chun
APPLICANT
And
Comcare
RESPONDENT
Decision
Tribunal Ms N Bell, Senior Member
Date 25 July 2012 Place Sydney The decision under review is remitted to the Respondent for reconsideration with the direction that Mr Chun exceeded 45 times his normal weekly hours under section 19(2A) of the Safety, Rehabilitation and Compensation Act 1988 on 5 August 2010.
The Respondent is to pay the Applicant’s costs of the application as agreed or taxed up to 15 May 2012.
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Ms N Bell, Senior Member
Catchwords
WORKERS' COMPENSATION – calculation of compensation payments – calculation of incapacity benefit – whether superannuation contribution should be calculated – normal weekly earnings – meaning of allowances – whether calculation includes pay increase in an enterprise bargaining agreement – award increments
Legislation
Safety, Rehabilitation and Compensation Act 1988 (Cth), ss 8, 8(1), 8(6), 8(9A), 8(9B), 14, 19, 19(2A)
Cases
Hammerton v Comcare [1995] AATA 63
McDonald v Department of Defence [1999] FCA 882
McKernan v Comcare (2004) 85 ALD 508
Military Rehabilitation and Compensation Commission v Perry [2007] FCA 1586Secondary Materials
Defence Enterprise Collective Agreement 2006-2009
Defence Enterprise Collective Agreement 2009
REASONS FOR DECISION
Ms N Bell, Senior Member
25 July 2012
1.Miko Chun was employed by the Department of Defence until his employment was terminated on 15 October 2009.
2.Following incidents at work, claims made by Mr Chun and determinations by the Tribunal, there is no dispute that Comcare is liable under sections 14 and 19 of the Safety, Rehabilitation and Compensation Act 1988.
3.However, the calculation of Mr Chun’s incapacity payments under section 19 of the Act is disputed. Mr Chun disputes the calculation on the following grounds:
(i)The calculation does not include an amount for employer superannuation contributions; and
(ii)The calculation does not include an amount for percentage increases in pay pursuant to the Defence Enterprise Collective Agreement 2009.
These grounds are the issues in this application.
A third issue, concerning the date on which Mr Chun exceeded 45 times his normal weekly hours under section 19(2A) of the Act has now been resolved between the parties, with Comcare conceding that the relevant date is 5 August 2010. That concession will be the subject of a remittal to Comcare for reconsideration.
should the weekly compensation payment include an amount for employer superannuation contributions?
Section 19(2) of the Act provides for the following formula for calculating a person’s weekly amount of compensation:
(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.
Normal weekly earnings (NWE) are defined in section 8(1) of the Act as follows:
(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.
The only controversial element of the formula in section 8(1) for the purposes of this application is ‘A’ – allowances payable to Mr Chun in each week.
Mr Chun submitted that the amount of employer superannuation provided for by the Defence Enterprise Collective Agreement 2006-2009 (15.4% of contribution salary) is an allowance of the kind provided for in section 8(1). He sought support for this argument in paragraph G10.1 of the Agreement which provides that “(a)n employee may access salary sacrifice arrangements provided under the Defence Flexible Remuneration Package (FRP) Scheme”. He submitted that the employer contribution was a form of salary sacrifice because he had “elected” this scheme instead of others which have lower employer contributions.
In addition, Mr Chun suggested that the Act is unclear on the question of employer superannuation contributions. He pointed to workers’ compensation legislation in South Australia which specifically provides for employer superannuation contributions to be disregarded in the calculation of weekly payments and urged the view that the absence of such a provision in the Commonwealth Act indicates an intention not to disregard employer superannuation contributions.
Comcare referred me to the decision of this Tribunal in Hammerton v Comcare [1995] AATA 63 as follows:
An essential feature of s 8(1) is that NWE is based on hourly ordinary time rate of pay, average number of hours worked and any allowances paid (other than those payable for special expenses incurred in respect of the employment). I have already decided that “pay” must equate with wages and salary paid to an employee. …It is also clear from the words of s 8(1) that any allowance taken into account must be payable to the employee and not on behalf of the employee. There is no room in the concept of NWE in s 8(1) for money payable on behalf of an employee.
I was also referred to the Tribunal’s decision in McKernan v Comcare (2004) 85 ALD 508 which followed Hammerton and cited a line of previous decisions that had also done so.
I do not agree with Mr Chun’s submission that employer superannuation contributions, at any percentage rate, are an allowance within the meaning of section 8(1) of the Act. Nor do I accept that they amount to salary sacrifice by an employee. I am not persuaded to depart from the line of reasoning or the consistent application of Hammerton. I do not consider that payment of employer superannuation contributions to a superannuation fund are an “allowance payable to the employee”.
should the weekly compensation payment include an amount for percentage increases in pay pursuant to the 2009 Agreement?
Section 8(6) of the Act provides:
(6) Subject to this section, if the minimum amount per week payable to an employee in respect of his or her employment by the Commonwealth or a licensed corporation at the date of the injury is increased, or would have been increased if the employee had continued in that employment, because of:
(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.
The Defence Enterprise Collective Agreement 2009 provides for the following increases in salary for employees covered by the Agreement:
G2.1 In recognition of the contribution made by employees to improving productivity and efficiency throughout Defence, salary will be increased by:
a. 3.8% from no later than the second pay day after the Agreement becomes operational (expected to be 12 or 26 November 2009, with payment made on the following pay day); and
b. 2.4% from 8 July 2010, which is expected to be paid on 22 July 2010.
These provisions of the Agreement were implemented on 3 November 2011. Mr Chun’s employment was terminated prior to the implementation of the Agreement.
Mr Chun submitted that, by virtue of section 8(6)(c), his weekly compensation should be increased by a percentage in line with the increases provided for in the Agreement.
Comcare submitted that the increases provided for by the Agreement do not fall within the scope of section 8(6). Rather, it submitted, section 8(6) should be constructed in line with the judgment in Military Rehabilitation and Compensation Commission v Perry [2007] FCA 1586 and in Mr Chun’s case should operate together with section 8(9B) which provides:
(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.
In Perry, the Federal Court concluded that sections 8(6) and 8(9B) do different work. The Court said:
·section 8(6) is directed to increments in remuneration payable to an employee by reason of the attainment of a level of seniority or the passage of time;
·section 8(9) and 8(9A) are directed to increases in remuneration, in addition to the calculation made under section 8(6), payable to a class of continuing employees where those increases come about because of the operation of the law or an industrial determination or agreement and the employee continues to be employed; and
·section 8(9B) is directed to injured employees who have ceased to be employed and provides for normal weekly earnings to be calculated under section 8(6) and according to the Wage Cost Index – but not increases under sections 8(9) and 8(9A).
In Perry, Bennett J considered that alternative constructions of the provisions would yield the illogical result that injured employees who ceased to be employed would receive more than continuing employees. Her Honour was satisfied that the preferred construction was neither unreasonable or unnatural.
I also note the judgment of the Federal Court in McDonald v Department of Defence [1999] FCA 882 in which Sundberg J said of the increase provided for in section 8(6):
“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.” (para 12)
There is no dispute that, for the purposes of section 8(6), at the date his employment was terminated Mr Chun had already reached the highest level in the range of salary for the position he held. It follows that his weekly compensation should be increased only by reference to the Wage Cost Index pursuant to section 8(9B).
Costs
Comcare applied for an order that each party pay its own costs. It submitted that the issue on which it conceded and in respect of which Comcare’s decision is to be varied in Mr Chun’s favour (the question of the date by which Mr Chun had exceeded 45 weeks of compensation payments) was not the subject of any agitation before the Tribunal after 15 May 2012. Comcare submitted that if Mr Chun is unsuccessful in relation to the remaining two issues he should not have the benefit of costs.
Mr Chun submitted that if he is unsuccessful in relation to the remaining two issues, then Comcare should pay his costs up to 15 May 2012. I consider this to be the preferable course.
decision
The decision under review is remitted to the Respondent for reconsideration with the direction that Mr Chun exceeded 45 times his normal weekly hours under section 19(2A) of the Safety, Rehabilitation and Compensation Act 1988 on 5 August 2010.
The Respondent is to pay the Applicant’s costs of the application as agreed or taxed up to 15 May 2012.
I certify that the preceding 26 (twenty -six) paragraphs are a true copy of the reasons for the decision herein of
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Associate
Dated 25 July 2012
Date of hearing 16 July 2012 Date final submissions received 19 July 2012 Solicitors for the Applicant Mr Ian Collins Counsel for the Respondent Ms Melissa Fisher Solicitors for the Respondent Australian Government Solicitor
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