Re Sutton and Comcare
[1996] AATA 168
•26 August 2016
Sullivan and TNT Australia Pty Ltd (Compensation) [2016] AATA 643 (26 August 2016)
Division
GENERAL DIVISION
File Number
2015/4000
Re
Edward Sullivan
APPLICANT
And
TNT Australia Pty Ltd
RESPONDENT
DECISION
Tribunal Senior Member J F Toohey
Date 26 August 2016 Place Sydney The Tribunal varies the decision under review so that, for the purposes of calculating the compensation payable for his injury on 12 March 2015, Mr Sullivan’s NWE is $1339.30.
........................[sgd]................................................
Senior Member J F Toohey
CATCHWORDS
COMPENSATION – Normal Weekly Earnings – whether calculation of Normal Weekly Earnings correct – Industrial Agreement – Transport Industry Award – special expenses –
decision under review varied
LEGISLATION
Safety, Rehabilitation and Compensation Act 1988 ss 8(1), 8(10)
CASES
Bortolazzo and Anor v Comcare (1997) 75 FCR 385
Comcare v Simmons [2014] FCAFC 4
Re Glen Edward Sutton and Comcare [1996] AATA 168
SECONDARY MATERIALS
Industrial Agreement between the Transport Workers’ Union of Australia New South Wales Branch on Behalf of Priority Contract Carriers Sydney and TNT Australia Pty Limited
TNT Australia – TWU New South Wales (Contract Carriers) Agreement 2014-2017
Transport Industry (State) Award - serial C7740Transport Industry (State) Award - serial C8299
REASONS FOR DECISION
Senior Member J F Toohey
26 August 2016
Background
Mr Edward Sullivan works as a contract carrier for the respondent. On 12 March 2015, he injured his right knee at work. The respondent accepted liability under the Safety, Rehabilitation and Compensation Act 1988 (SRC Act) to compensate Mr Sullivan for his injury.
This decision concerns the calculation of compensation payable to Mr Sullivan for his injury.
Relevant legislation
The payment of compensation for an employee who is incapacitated for work as a result of an injury is determined according to the formula in s 19 of the SRC Act. Essentially, an employee is entitled to the difference between his or her Normal Weekly Earnings (NWE) and what he or she is able to earn.
Subsection 8(1) of the SRC Act provides that an employee’s NWE are calculated in accordance with 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.
Mr Sullivan’s terms of employment
Mr Sullivan’s contractual arrangement with the respondent is governed by an Industrial Agreement made in November 2000 between the Transport Workers’ Union of Australia New South Wales Branch on behalf of Priority Contract Carriers (Sydney) and TNT Australia Pty Ltd (the Agreement).
The Agreement is read together with TNT Australia TWU New South Wales (Contract Carriers) Agreement 2014 – 2017 which sets out, among other things, percentage increases to the remuneration set out in the original Agreement.
Clause 8.1 of the Agreement provides that a contract carrier will receive fees for service for the supply of the vehicle and associated labour. It is common ground that Mr Sullivan’s compensation is to be determined by reference to the labour component only of his pay.
Clause 8.3 of the Agreement provides that fees for the labour component are determined as follows:
The fees for services made to the Contract Carrier for the supply of the labour portion of the services hereunder shall be equivalent to the Driver’s classification under the Transport Industry (State) Interim Award, including such conditions of that Award dealing with sick leave, bereavement leave, annual leave, picnic day and public holidays.
Schedule 3 to the Agreement provides that contract carriers are to be remunerated in accordance with the table in the schedule. I will return to the schedule below.
As to the hours to be worked by an employee, clause 11.6 of the Agreement relevantly provides:
The Contract Carrier shall negotiate with the Principal Contractor the times during which the vehicle is to be supplied. Both parties agree that the normal time unit of supply shall be a day of not less than eleven (11) hours.
It is common ground that the intent and effect of clause 11.6 is that a contract carrier is paid to be available for an 11-hour day, whether or not he or she actually provides services for that number of hours, and that the Agreement may operate beneficially in favour of the employee in this respect.
The Award
The reference in clause 8.3 of the Agreement to the “Interim Award” is not clear. Mr Woulfe, counsel for the respondent, advises he has been unable to identify an “Interim Award” but, in the end, nothing turns on this. The relevant Award is the Transport Industry (State) Award - serial C7740 (the Award), as varied by the Transport Industry (State) Award - serial C8299 with effect from 16 December 2014.
Clause 3.1 of the Award provides that the ordinary hours of work for all employees shall not exceed 38 hours per week or their equivalent per fortnight, per three weeks, or per four weeks, and shall be worked between Monday and Friday inclusive.
Clause 1.1 of the Award provides that employees are to be paid the rates of pay set out in Table 1 of Part B of the Award. Mr Sullivan is classified as a Grade 2 transport worker. At the date of his injury, the Award as varied provided that his weekly rate for wages was $759.60 which, divided by 38, gives an hourly rate of $19.99.
Clause 5.1 of the Award provides that overtime is payable at the rate of time and a half for the first two hours, and double time thereafter.
The effect of the Agreement and the Award is that Mr Sullivan is to be paid for 11-hour days, totalling 55 hours each week, of which the first 7.6 hours each day are paid at the ordinary rate, and the remainder according to clause 5.1.
The issue
The issue in these proceedings arises because, apparently for historical reasons, Mr Sullivan and other contract carriers have been paid at above the Award rate for the labour component of their service. The actual rates for the labour component and the vehicle component are set out in schedule 3 to the Agreement. Mr Sullivan says, and he may be correct, that they show that it was always the intention that he and others be paid above the Award rate, and he contends that his compensation should be calculated accord to the rate at which he is actually paid. He contends that clause 8.3 of the Agreement was never intended to apply to workers’ compensation payments.
The respondent submits that, whatever the historical reasons for Mr Sullivan’s pay, subsection 8(1) of the SRC Act requires that his NWE be calculated by reference to the terms and conditions of his employment as set out in the Agreement, which require that he be paid according to the Award, and there is no discretion to apply a different rate.
The reviewable decision
The complexities of calculating Mr Sullivan’s NWE can be seen in the somewhat confusing history of the reviewable decision.
On 25 March 2015, the respondent issued a determination assessing Mr Sullivan’s NWE as $1552.49 on the basis of his normal working hours of 55 hours per week. It appears this calculation was based on Mr Sullivan’s actual rate of pay. Mr Sullivan had no argument with the determination and maintains it was correct.
Approximately three weeks later, an officer of the respondent telephoned Mr Sullivan to say that information in the letter of 25 March 2015 was incorrect and he would receive a further letter shortly.
In a second letter, also dated 25 March 2015, the respondent advised Mr Sullivan that his NWE was determined to be $1070.18. It appears this calculation may have been based on a superseded version of the Award.
Mr Sullivan asked the respondent to reconsider its determination. He maintained that his hourly labour rate, which his employer’s payroll records would confirm, was $28.2270909. He added that he was also paid an hourly vehicle allowance of $15.7859091, giving a combined hourly rate of $44.0130. Payroll records confirm that these rates of pay. Mr Sullivan did not suggest he should be paid the vehicle allowance while fully incapacitated but said it should be paid during periods of partial incapacity. .
In a reviewable decision dated 9 June 2015, the respondent’s insurer acknowledged an error in its first determination, although not for the reasons advanced by Mr Sullivan. It varied the NWE in the first determination in line with the NWE in the subsequent determination, but otherwise left the determination unchanged.
In a statement of facts, issues and contentions filed in these proceedings, the respondent acknowledged a further error in its calculation of Mr Sullivan’s NWE in the reviewable decision, to do with periods of his leave. The respondent submitted that Mr Sullivan’s correct NWE was $1308.09. It appears this calculation may have been based on the rate in the unvaried Award.
In these proceedings, the respondent has acknowledged a further error in the calculation of Mr Sullivan’s NWE. It submits that the correct NWE was $1339.29 and asks the Tribunal to vary the reviewable decision in that amount.
Consideration
It is not in dispute that the hourly rate of pay under the Award at the date of Mr Sullivan’s injury for an employee of his classification is $19.99 and that, if the Award is to be used to determine his NWE, his 11-hour days are payable in accordance with the overtime rates in clause 5.1. Mr Sullivan accepts that, if the Award rate is the correct rate for present purposes, then his NWE is $1339.29. (By the Tribunal’s calculation, it is $1339.30).
Mr Sullivan submits that clause 8.3 of the Agreement was not intended to deal with claims for workers’ compensation. Nothing on the face of the document supports that assertion. Mr Sullivan relies on a document apparently prepared by, or for, the respondent’s payroll staff that indicates that the “Labour Rate” for a driver of his classification is $28.2271, and the “Vehicle Rate” $14.8554, giving a total rate of $43.0824. It refers also the “Award Rate” of $19.4579 applicable at the time. The document is ambiguous in parts and its status is unclear but I accept Mr Sullivan’s evidence that, for historical reasons, contract carriers engaged by the respondent have been paid at hourly rates higher than the Award.
The effect of subsection 8(1) of the SRC Act is clear. For the purposes of determining Mr Sullivan’s NWE, his average hourly ordinary time rate of pay is as per clause 8.3 of the Agreement which provides that it is payable at the rate in the Award. Subsection 8(10) reinforces this by acting as a “cap” on the calculation of NWE (see paragraph 37 below). Whatever the historical reasons for Mr Sullivan’s higher rate of pay, the Tribunal has no discretion to apply any rate other than that specified in the Agreement, which is that in the Award.
For these reasons, I find that Mr Sullivan’s correct hourly rate for the purposes of calculating his NWE is the rate in the Award, which is the rate provided for in s 8 and which the Tribunal must apply. On this basis, his NWE is $1339.30 calculated as follows:
$19.99 x 7.6 hours 151.92
$19.99 x 2 hours x 1.5 59.97
$19.99 x 1.4 hours x 2 55.97
267.86 x 5 = NWE $1339.30
The vehicle expenses component
It is common ground, and I am satisfied, that Mr Sullivan’s NWE is to be calculated by reference to the labour component only of his pay. For completeness, the reasons for this are as follow.
Payroll records indicate that Mr Sullivan’s pay comprises labour and vehicle expenses components which are not disaggregated in pay records (but which appear to be in a document prepared by, or for, payroll staff for the purposes of their calculations).
The vehicle expenses component of Mr Sullivan’s pay is by way of reimbursement for costs incurred in earning his hourly rate of pay. It is a form of special expenses incurred or likely to be incurred by him in respect of his employment and so excluded from “any allowance payable” for the purposes of the formula in subsection 8(1).
The expression “special expenses” is not defined in the Act. In Re Glen Edward Sutton and Comcare [1996] AATA 168, Deputy President Breen stated at [12]:
Allowances to be included [in earnings in subsection 8(1)] would generally be those payable for such things as conditions encountered during service, special qualifications, special duties and so on. Any allowance for monies expended (or likely to be spent) by the employee will not be earnings as such i.e. these are not monies ‘obtained as a reward for work or merit’ (OED definition of earnings)…
By way of examples, Deputy President Breen said the types of allowances which could be included in calculating NWE include Higher Duties Allowance, First Aid Allowance, Leading Hand Allowance, and Proficiency and Shift Allowances. Examples of allowances that would be excluded were Annual Leave Bonus, Travel Allowance, Meal Allowance, and Tropical Clothing Allowance.
The difference between these two types of allowance is apparent. The excluded allowances are for monies expended or likely to be expended by the employee (or in the case of the Annual Leave Bonus, a bonus that is not actually by way of reward for effort or merit).
This approach to the meaning of special expenses, with which I respectfully agree, is consistent with subsection 8(10) of the SRC Act which provides, in effect, that an employee should be no better off, and no worse off, during a period of incapacity: Bortolazzo and Anor v Comcare (1997) 75 FCR 385. See also Comcare v Simmons [2014] FCAFC 4 in which the Court described subsection 8(1) as serving as a “cap” and an “audit” on the manner of calculation of NWE.
Conclusion
Mr Sullivan’s frustration at the way in which his compensation has been calculated is understandable but the Tribunal has no discretion to arrive at any other decision.
For these reasons, the decision under review is varied so that, for the purposes of calculating the compensation payable for his injury on 12 March 2015, Mr Sullivan’s NWE is $1339.30.
I certify that the preceding 39 (thirty- nine) paragraphs are a true copy of the reasons for the decision herein of Senior Member J F Toohey ..............................[sgd]..........................................
Associate
Dated 26 August 2016
Date of hearing 11 July 2016 Advocate for the Applicant Transport Workers' Union of Australia Counsel for the Respondent Mr P Woulfe Solicitors for the Respondent HBA Legal
4
2
0