Rose and Australian Capital Territory (Compensation)

[2023] AATA 3

Rose and Australian Capital Territory (Compensation) [2023] AATA 3 (4 January 2023)

Division:GENERAL DIVISION

File Number(s):2022/0044      

Re:Craig Rose

APPLICANT

And  Australian Capital Territory

RESPONDENT

Decision

Tribunal:Senior Member O'Donovan

Date:4 January 2023

Place:Canberra

The decision under review is set aside and the matter is remitted to the respondent for re-determination of Mr Rose’s incapacity payments, in accordance with the Tribunal’s reasons for decision. 

...........................[sgd]...........................

Senior Member O’Donovan

Catchwords

Incapacity payments – normal weekly earnings (NWE) – application of subsection 8(10) of the Safety, Rehabilitation and Compensation Act 1988 - whether the applicant’s normal weekly earnings as calculated under subsection 8 exceeds the amount he would receive if he were not incapacitated – respondent failed to establish that it would – decision set aside

Legislation

Safety, Rehabilitation and Compensation Act 1988 (SRC Act), ss 8
Public Sector Management Act 1994 (ACT)

Cases

John Holland Group v Robertson (2010) 185 FCR 566

Malec v JC Hutton Pty Ltd(1990) 92 ALR 545

REASONS FOR DECISION

Senior Member O'Donovan

4 January 2023

1. The applicant is an employee of the ACT Government. He is employed under the Public Sector Management Act 1994 (ACT). Immediately prior to suffering a compensable injury on 7 July 2021, he was employed in the Community Services Directorate and was performing higher duties in a long-term acting role (Higher Duties Position). As a consequence of his compensable injury, the applicant left that role and has not returned to it. Following the applicant’s departure from the workplace a number of changes occurred. In the immediate aftermath of his departure, another person was moved in to fill the Higher Duties Position. Subsequently a merit selection process (which had been announced prior to the applicant’s departure) was undertaken. Ultimately, a 5 year contract in relation to the Higher Duties Position was given to another person. Because of his injury, the applicant did not participate in the merit selection process. Subsequently, some special arrangements which entitled the applicant to increased remuneration in his substantive position were not renewed.

2. The respondent asserts that the consequence of these changes is that the applicant’s incapacity payments should be reduced to reflect the fact that he is no longer entitled to the salary he was paid in the Higher Duties Position nor the additional benefits previously associated with his substantive position. The applicant’s position is that if he had not been injured there are good reasons to believe that he would have retained the Higher Duties Position and so there is no basis for reducing his compensation entitlements.

3. To resolve this issue, it is necessary to examine closely the statutory provisions in the Safety Rehabilitation and Compensation Act 1988 (SRC Act) which govern the calculation of incapacity payments. In broad terms, incapacity payments calculated under the SRC Act rely on two key components. First, the amount the applicant was able to earn prior to the injury (known as ‘normal weekly earnings of an employee before an injury’ which is referred to by the abbreviation NWE). Second, the amount that the applicant is able to earn each week after the injury (referred to by the abbreviation AE). In broad terms, in the first 45 weeks after an injury, an applicant will be paid NWE-AE, and after 45 weeks they will be paid 75% of that amount.  How an applicant’s NWE is worked out is described in section 8. The determination of the figure can be quite technical, but in normal circumstances the NWE figure will reflect what the applicant was earning in the two weeks prior to the injury.

4. However, subsection 8(10) requires a reduction in the NWE component of the compensation calculation in certain circumstances. Subsection 8(10) requires a reduction in the NWE amount if the NWE amount calculated using the statutory formula provided in the other subsections of section 8, exceeds the amount that the applicant would have been earning if they had not been incapacitated. The respondent submits that subsection 8(10) should be applied to reduce the compensation payable to the applicant. The applicant resists that contention.

5. Subsection 8(10) relevantly 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…

   the amount so calculated shall be reduced by the amount of the excess.

6. There is no dispute that the applicant continues to be employed by a licensed corporation (the ACT). There is also no question that if section 8 of the SRC Act is applied without bringing to bear subsection 8(10), then the applicant’s normal weekly earnings before his injury would be based on his earnings in the Higher Duties Role.  The only issue to be determined is whether, as a consequence of the changes in workplace roles (and other changes to the applicant’s entitlements) which followed his departure from the workplace, subsection 8(10) must be applied to reduce the normal weekly earnings amount on the basis that his NWE figure calculated using subsections 8(1) to (9G) exceed the amount per week that the applicant would receive if he were not incapacitated for work. Before examining more closely the proper application of subsection 8(10), it is first necessary to set out the factual basis on which the application of the provision must proceed.

   Facts

7. In 2014, after a career in the military, the applicant began work in the Community Services Directorate of the ACT Government. He was initially employed on a temporary basis as a Senior Officer Grade C. By 2019 the applicant held a substantive position as a Senior Officer Grade A.

8. Over the course of 2019 two things happened virtually simultaneously. First, the applicant entered into what is known as an Attraction and Retention Incentive (ARIn) agreement. An ARIn is an agreement under which the ACT pays an employee increased remuneration in recognition of the marketability of the skills they possess having regard to the particular position they hold. In the applicant’s case, he entered into an ARIn in relation to his substantive position - Deputy Director People Management Branch (Substantive Position). It provided for a significantly higher level of remuneration than was standard for a Senior Officer Grade A. It recognised the particular demands of the position and the skills and qualifications which the applicant possessed for performing it.

9. At around the same time, in June 2019, the applicant was offered a short-term executive contract in the position of Executive Branch Manager People Management (Higher Duties Position). This position carried with it a significant increase in the remuneration the applicant was entitled to. The Higher Duties position was vacant because its substantive occupant, Christine Murray, was also acting in a higher position - Executive Group Manager – Inclusion and Participation.

10. The Higher Duties contract initially offered to the applicant ran from 24 June 2019 to 22 July 2019. The contract was offered to the applicant after an expression of interest process was conducted pursuant to which applicants submitted a written application and referee reports. Following the expiry of the first contract, the applicant entered into a series of short-term contracts after that and occupied the Higher Duties Position more or less continuously until he left the workplace on 7 July 2021. Some of the contract renewals were for only a month, but most were for longer periods. The longest contracted period ran from 2 July 2020 to 31 March 2021.

11. The granting of the longest contract was the result of a merit process (albeit one conducted after the contract had already been renewed). The position was advertised on 16 July 2020. Five applications were received. Three applicants were short listed, and interviews were held on 31 August 2020. Two applicants for the position were found suitable. The position was awarded to the applicant who finished first on the order of merit. The process appears to have been finalised in September 2020.

12. In October 2020 the applicant’s ARIn was also renewed (although it made no material difference to his remuneration as he continued to act in the Higher Duties Position).

13. On 29 March 2021 the applicant’s contract was extended until 30 June 2021. On 5 July 2021 the applicant received a further extension until the end of August 2021.

14. In early July 2021 a decision was made to run a recruitment process in relation to the Higher Duties. This decision was made when ‘it became apparent that Ms Murray [the substantive occupant of the Higher Duties Position] would not be returning to the role for some time’.[1] The position was first advertised on 7 July 2021. The explanation for the decision to advertise it is set out in the Executive Action Request forwarded by Ms Leanne Green to Ms Robyn Calder on 5 July 2021 which sought approval to advertise the Higher Duties Position for 12 months, with the possibility of extension up to 2 years or a 5 year long-term contract if the position became vacant.[2] The Executive Action Request was expressed in the following terms:

    Ms Christine Murray has a long-term a contract in the position of Executive Branch manager, people management (E673) until 2 January 2022.

    Ms Murray has been backfilling the role of Executive Group manager, Inclusion and Participation (E1032) from 15 November 2019 to 30 June 2021 and a request has been submitted to extend Ms Murray to 31 August 2021.

    Mr Craig Rose has a permanent position in the position of Senior Director, People Management (P38435)

    Mr Rose has been backfilling the position of Executive Branch Manager, People Management (E673) from 15 November 2019 to 30 June 2021.

    In line with advice from Workforce Capability and Governance regarding contract extensions, it is requested that Mr Rose be extended in the position of Executive Branch Manager, People Management for two-months pending the outcome from the EOI.

    It is understood that the end date of the contract may be varied pending the EOI outcome and the starting of the successful applicant ASAP.

    This EAR seeks approval to extend Mr Rose’s current short-term contract in the position of Executive Branch manager, Corporate Services (E632) from 1 July 2021 to 31 August 2021 with the possibility of a variation to the end date.

    [1] Exhibit R1 at paragraph [6]

    [2] Respondent’s SOFIC [26]

15. On 7 July 2021 the applicant left the workplace and has not returned (although he has had a limited return to work in other parts of the ACT Government). His injury was a psychological condition and his supervisor in the Higher Duties Position had a role in its onset.

16. As a result of the applicant ceasing work, alternative acting arrangements were put in place. Ms Cathryn Chandler acted in the Higher Duties position from 8 July 2021 until 31 January 2022 on a series of short-term contracts.

17. Following a merit selection process, the Higher Duties role was ultimately filled by Maggie Drejer-White on a 4 month contract commencing in February 2022. This contract was subsequently extended to 26 August 2022. Ms Drejer-White now holds the position pursuant to a 5 year contract. A long term contract was offered to her when Ms Murray, the substantive holder of the Higher Duties Position, took up a different substantive role elsewhere in the Directorate.

18. When the merit selection process was run to fill the Higher Duties position, there were three applicants interviewed. The applicant did not apply because if he were successful, he would have been working for the person whose behaviour resulted in his injury. On that basis he did not apply.

19. The applicant’s ARIn was also subsequently not renewed.

20. As a result of these events, there is now some uncertainty about what position the applicant would have been in and what he would be earning if he had not been incapacitated for work. The respondent relies on that uncertainty to contend that subsection 8(10) should be applied to reduce the applicant’s incapacity payments to reflect the fact that the Tribunal could not be satisfied that the applicant would be in the Higher Duties Position and would not be receiving the benefit of his ARIn.

    Application of subsection 8(10)

21. For the most part, section 8 of the SRC Act provides a mechanistic method for determining the amount of an employee’s normal weekly earnings before injury (NWE). Once an NWE figure has been derived, it can then be plugged into the formulas which are provided in other sections of the SRC Act for the calculation of incapacity payments .

22. Subsection 8(10) comes into play when an applicant’s level of earnings prior to injury are anomalous in some way, or at the very least were unlikely to be sustained for an extended period even if the injury had not been suffered. For example, if the level of an applicant’s earnings were tied to a project which, following their injury, is completed, may mean that a revision of the applicant’s compensation may be required to reflect any loss of earnings referable to the completion of the project. In such circumstances, it may be obvious that the applicant’s pre-injury earnings were going to drop to a lower level, whether the injury occurred or not. Subsection 8(10) requires a decision maker in those circumstances to reduce the amount of normal weekly earnings that is calculated using the other subsections of section 8. Such a reduction however is only required if the amount of the NWE figure calculated under the balance of section 8 would exceed the weekly earnings that the employee ‘would receive if he or she were not incapacitated for work.’

23. The respondent submits that once it is established that Mr Rose’s continued occupation of the Higher Duties Position is subject to significant doubt, subsection 8(10) should be applied. It expresses its position in these terms:

    Even if the applicant had not been injured and had applied for the [Higher Duties Position], there was no certainty that he would have been appointed. He would have been one of four applicants interviewed.

    The applicant did not have a reasonable expectation that he would have continued to receive [Higher Duties] beyond 31 August 2021 and it is correct that from 1 September 2021, by operation of s 8(10)(a) of the SRC Act, his NWE was reduced to ‘the amount per week of the earnings that the employee would receive if he or she were not incapacitated for work’.

24. In the course of the hearing, it was put by the respondent that it is for Mr Rose to establish on the balance of probabilities that he would have continued to occupy the position. If he cannot do that, then a finding should be made that his normal weekly earnings before injury, calculated on the basis of his occupation of the Higher Duties Position, have to be discounted to reflect the earnings he would now receive in positions to which he has a more definite entitlement. If Mr Rose cannot meet the balance of probabilities threshold and establish that he would have been receiving the salary from the Higher Duties position, then reduction to the level of his definite legal entitlement is appropriate.

25. There are a number of difficulties with that submission.

26. First, as was pointed out by the Full Federal Court in John Holland Group v Robertson[3] at [20], the amount an employee would receive if he or she were not incapacitated for work is a hypothetical amount. It is not a fact capable of being ascertained on the balance of probabilities. The inappropriateness of applying the civil standard of proof to findings about events which cannot now happen has been noted by the High Court.[4]  What the applicant would be earning now if he was not in fact injured is not something susceptible of definite proof. He has been injured. What he would have earned, were that not the case, can be the subject of informed consideration, but should not be regarded as a provable fact.  

    [3] (2010) 185 FCR 566.

    [4] Malec v JC Hutton Pty Ltd (1990) 92 ALR at 548.

27. Further, the Federal Court has increasingly emphasised that in the Tribunal ‘reasonable satisfaction’ is a preferable formulation to the civil standard of proof when considering whether a matter has been made out by a party.[5]  

    [5] Sun v Minister for Immigration and Border Protection [2016] FCAFC 52 at [67]

28. Accordingly, it would not be correct to approach subsection 8(10)(a) on the basis that the applicant had a burden to prove, on the balance of probabilities, that he would be earning more than he is presently legally entitled to receive if he had not been injured. Even leaving aside the difficulties in framing the burden of proof in such a way, such an interpretation is also difficult to square with the text of s 8(10)(a).  

29. It is reasonably clear on the face of the statute that if the respondent is to succeed, it must satisfy the Tribunal that in any given week, the figure determined to be the applicant’s normal weekly earnings before injury, using subsections 8(1) to 8(9G), exceeds the amount per week of the earnings that the employee would have received if he were not incapacitated for work. The burden of satisfying the Tribunal of the applicability of the subsection rests on the respondent.

30. The nature of that burden can be summarised as follows. The first task in applying the subsection, is to work out the amount of the applicant’s normal weekly earnings before injury by applying subsections (1) to (9G). The figure arrived at then needs to be compared to the hypothetical case described in paragraph 8(10)(a) – the amount per week of the earnings that the employee would receive if he or she were not incapacitated for work.

31. Only if there is affirmative satisfaction that the first amount exceeds the amount determined under paragraph (a) is the subsection applied. If, due to significant uncertainty, it cannot be determined whether the amount determined by reference to the chapeau exceeds the amount determined by reference to paragraph (a), then the subsection cannot be applied to reduce the amount otherwise determined.

32. Answering the question posed by paragraph (a) involves some speculation as to what the figure would be. But to apply the provision requires a definite conclusion that the amount assessed under the balance of section 8 exceeds the amount that the applicant would be receiving if he were not incapacitated for work. In the face of uncertainty about that question, the provision cannot be applied

33. Applying these principles to the facts yields the following.

34. Applying subsections (1) to (9G) of section 8 yields the conclusion that the applicant’s normal weekly earnings before injury are based on his weekly earnings when he occupied the Higher Duties Position (subject to the adjustments provided for in the various subsections).

35. The question then is, does that amount exceed the amount per week the applicant would have received if he had not been incapacitated for work. To reach the conclusion that it does, one would need to be satisfied that in the absence of his injury the applicant would not have continued in the Higher Duties Position, and would have been reduced to his substantive position. I am not satisfied that that is the case.

36. There is obviously significant doubt about what the applicant would be earning if he had not been injured. On the one hand, he had occupied the Higher Duties Position for more than 2 years, he had won the right to act in the position on two occasions following merit processes and there is no evidence that there were any issues with his performance in that role. On the other hand, he was certainly going to be subject to a merit process which had the potential to identify a person with better claims on the position.

1. The Tribunal was provided with very little detail about the claims of the employee who was ultimately successful in winning the Higher Duties Position on a long term basis. What is known is that the applicant did not participate in that process for valid reasons related to his injury. There is no real evidence which could positively satisfy me that the applicant would not have won the Higher Duties Position if he had been in a position to compete for it. The fact that another person won it in his absence does not provide a sure footing for a definite conclusion that he would not.

2. The respondent’s argument in relation to this issue is essentially a submission based on the numbers. The position was advertised. A number of other people applied. While there is a chance the applicant would have got it, it is more likely that he would not.

3. I don’t accept that is the proper basis on which the question should be resolved.

4. The applicant was a long-term incumbent in a senior position. He was experienced and had been performing the duties for more than 2 years when a process had to be run to determine whether he should continue in the position. On past occasions when processes had been run, he was rated highly suitable and he had been extended on multiple occasions. His reasons for not applying to continue to act in the position are understandable. There is no evidence before me to suggest that his performance in the position was unsatisfactory prior to his departure on compensation leave. The decision to undertake a merit process was based entirely on the ACT Government’s requirements to conduct merit processes in relation to long-term acting positions.

5. The current occupant of the Higher Duties Position was no doubt selected on merit. I am not in a position to compare her claims against those of the applicant, other than to observe that incumbency and experience in the position would generally be regarded as giving the applicant advantages in a merit process.

6. In these circumstances I accept there is a chance, even a significant chance, that the applicant would not have been given an extension to his Higher Duties Contract as a consequence of the merit process. However, I am not affirmatively satisfied that the amount of normal weekly earnings before injury, calculated on the basis that the applicant was acting in the Higher Duties Position, exceeds the amount the applicant would be receiving if he were not incapacitated. Satisfaction of that proposition is what subsection 8(10) requires for the subsection to be applied.

7. If he had not been incapacitated by his injury, I consider it at least as likely that he would have continued to act in the Higher Duties Position and won the long term contract. I am not affirmatively satisfied of any alternative scenario and in particular that someone else would have been put in to replace him. In these circumstances subsection 8(10) should not be applied, and the applicant’s normal weekly earnings should be calculated by reference to the balance of section 8.

8. In light of this finding, it is unnecessary to consider the other issue in the case which is whether, if the applicant ceased to continue on higher duties he would now be paid the additional sums payable under his ARIn Agreement which terminated on 11 October 2021.

9. Before concluding though, it is important that I address one specific submission made by the respondent. The respondent contended that properly understood, paragraph 8(10)(a) should be applied by starting with a determination of what earnings the applicant was legally entitled to now, and if those entitlements were lower than the amount calculated under the balance of section 8, then the applicant had a burden to establish on the balance of probabilities that it would have been something different.

10. I do not accept that submission. It is not what subsection 8(10)(a) instructs the decision maker to do. The paragraph does not reference, as a starting point, the employee’s existing legal entitlements. The question posed in paragraph (a) is a wholly hypothetical question about what the employee would be earning if he had not been incapacitated.

11. The respondent submitted that its approach was supported by statements by Justice Dowsett in the Full Court decision in John Holland Group v Robertson at [174]. There his Honour states:

    Clearly, s 8(10) seeks to limit the compensation payable to an injured employee by reference to his or her notional earnings derived from employment with the same employer had he or she not been injured. Section 8(10)(a) demands a notional enquiry which commences with the employee’s actual current employment. The enquiry is as to his earnings in that employment had he or she not been injured. Such enquiry would involve consideration of how, in those circumstances, the employee would have been employed, including consideration of whether he or she would have continued to perform the same duties as were being performed at the time of the accident.

12. Contrary to what was put to me, I don’t accept that when his Honour states that the notional enquiry ‘commences with the employee’s actual current employment’, that he is suggesting that in the usual case, the appropriate factual premise for beginning the inquiry is that whatever the applicant is entitled to earn now is what he would have been paid if he had not been injured. Such a formulation ignores the fact that the wording of the statute directs the inquirer to interrogate the scenario of what the applicant would have received if he had not been injured. While it is not entirely clear what his Honour meant by the phrase ‘Section 8(10)(a) demands a notional enquiry which commences with the employee’s actual current employment,’ I consider it most likely that his Honour was emphasising that in relation to paragraph 8(10)(a), the premise of the whole enquiry is that the employment relationship between the employee and the employer at the time of injury subsists. This is in contrast to paragraph (b) where the employee has ceased to be employed. His Honour is however clear that from there, it is necessary to ask ‘what would the employee have been earning if he had not been injured’. I do not consider that there is anything said by his Honour which is inconsistent with the approach I am taking.

13. In those circumstances I am satisfied that the applicant’s normal weekly earnings prior to injury were his earnings in the Higher Duty Position. I am not satisfied that that amount exceeds the amount that he would have been earning if he had not been injured. Consequently, there is no obligation imposed by subsection 8(10) to reduce the applicant’s NWE figure for the purposes of calculating his incapacity payments. His NWE figure should be calculated only by reference to subsections 8(1) to (9G).

14. I set aside the decisions of the respondent which are the subject of review and remit the matter for re-determination in a manner consistent with these reasons.

51.     I certify that the preceding 50 (fifty) paragraphs are a true copy of the reasons for the decision herein of Senior Member O’Donovan.

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Associate

Dated: 4 January 2023

Hearing date:	25 November 2022
Date final submissions received:	24 November 2022
Applicant:	Self-Represented
Counsel for the Respondent:	Andrew Dillon
Solicitor for the Respondent:	Australian Government Solicitor