Taylor-Craig v Smartgroup Benefits Pty Ltd

CERTIFICATE OF DETERMINATION OF MEMBER
Citation:	Taylor-Craig v Smartgroup Benefits Pty Ltd [2023] NSWPIC 137
APPLICANT:	James Taylor-Craig
RESPONDENT:	Smartgroup Benefits Pty Ltd
PRINCIPAL Member:	Glenn Capel
DATE OF DECISION:	30 March 2023
CATCHWORDS:	WORKERS COMPENSATION - Workers Compensation Act 1987; dispute regarding the applicant’s pre-injury average weekly earnings (PIAWE); whether bonus payments should be included in the calculation of the PIAWE having regard to the terms of the applicant’s contract and clause 6(2)(d) of Schedule 3; Held – the respondent had a discretion to pay the bonuses under the terms of the contract, so such payments were made without obligation; the bonus payments are excluded from the calculation of the PIAWE; award for the applicant; credit for payments already made.
determinations made:	The Commission determines: 1. The applicant sustained a psychological injury arising out of or in the course of his employment on 4 February 2022 (deemed). 2. The applicant’s employment was the main contributing factor to his injury. 3. The applicant had no current work capacity from 4 February 2022 to 10 May 2022. 4. The applicant was paid weekly compensation from 4 February 2022 to 4 May 2022. 5. The applicant’s pre-injury average weekly earnings were $1,407.04 as of 4 February 2022 and $1,432.93 as of 1 April 2022. 6. The respondent paid the applicant weekly compensation from 4 February 2022 to 4 May 2022. The Commission orders: 1. The respondent to pay the applicant weekly compensation as follows: (a) $1,336.69 per week from 4 February 2022 to 31 March 2022 pursuant to s 36(1) of the Workers Compensation Act 1987; (b) $1,361.28 per week from 1 April 2022 to 5 May 2022 pursuant to s 36(1) of the Workers Compensation Act 1987, and (c) $1,146.34 per week from 6 May 2022 to 10 May 2022 pursuant to s 37(1) of the Workers Compensation Act 1987. 2. The respondent to have credit for payments already made. 3. Liberty to the parties to apply in respect of these calculations within 14 days of this determination.

STATEMENT OF REASONS

BACKGROUND

James Taylor-Craig (the applicant) is 49 years old and commenced employment with Smartgroup Benefits Pty Ltd (the respondent) as a leasing consultant on 1 July 2018. His current employment status is unknown. He was previously employed by Smartsalary Pty Ltd.
There is no dispute that the applicant suffered a psychological injury arising out of or in the course of his employment on 4 February 2022 (deemed) and that his employment was the main contributing factor to his injury. Further, there is no dispute that the applicant had no current work capacity from 4 February 2022 to 10 May 2022. The applicant was certified fit to return to his pre-injury duties on 10 May 2022.
The applicant submitted a claim form to the respondent on 31 March 2022, alleging that he suffered his injury because of limited time to complete tasks, poor systems, excessive workload and lack of assistance. He first experienced symptoms on 1 February 2022 and ceased work on 4 February 2022.
On 7 April 2022, icare (the insurer) advised the applicant that it would pay compensation of up to $1,331.30 per week and medical expenses on a provisional basis, based on pre-injury average weekly earnings (PIAWE) of $1,407.37. The insurer advised that once it had received wages information, it would recalculate the PIAWE, and adjust the weekly payments if necessary.
On 12 May 2022, the insurer issued a Work Capacity Decision (WCD). It determined that the applicant’s PIAWE was $1,407.04 and that he would receive $1,336.69 per week during the first entitlement period of 13 weeks.
On 29 August 2022, the applicant’s solicitor asked the insurer to review its decision pursuant to s 287A of the Workplace Injury Management and Workers Compensation Act1998 (the 1998 Act) on the basis that he had calculated the applicant’s PIAWE in the sum of $2,224.13, and that 95% of the figure amounted to $2,112.92 per week. He advised that the applicant claimed $2,112.92 per week from 7 February 2022 to 10 May 2022, with credit for payments already made.
On 12 September 2022, the insurer reviewed its decision and advised that it proposed to maintain its position. The insurer explained that it had reviewed the applicant’s payslips for the period 1 February 2021 to 31 January (sic) 2022 (52 weeks) and noted that his earnings included the payment of bonuses. It indicated that cl 6(2)(d) of Sch 3 of the Workers Compensation Act 1987 (the 1987 Act) provided that income of a worker did not include any payment made without obligation by the employer (for example, bonuses and performance incentives).
By an Application to Resolve a Dispute (the Application) registered in the Personal Injury Commission (Commission) on 3 November 2022, the applicant claims weekly compensation from 7 February 2022 to 10 May 2022 due to a psychological injury sustained on
4 February 2022 (deemed).

PROCEDURE BEFORE THE COMMISSION

The matter was listed for a preliminary conference before me on 5 December 2022. I clarified the nature of the dispute and was informed that the matter could not be resolved because both sides stood by their respective positions regarding the applicant’s PIAWE. The issue concerned the terms of the contract signed by the applicant in 2016.
I issued a Direction regarding the filing of wage schedules and submissions. After I had reviewed the late documents and the submissions of both parties, it became apparent that the applicant had executed a contract with the respondent in 2018, meaning that the contract that was signed in 2016 with Smartsalary Pty Ltd was no longer in effect at the time of the applicant’s injury at the respondent. Further, in the applicant’s written submissions filed on
18 January 2023, the applicant objected to some or parts of the late documents filed by the respondent on 23 December 2022.
I convened a preliminary conference on 14 February 2023, and we discussed which contract was relevant for the purpose of this dispute. It was agreed that the contract dated
1 July 2018, which did not have the “Terms Sheet” attached, was in force at the time of the applicant’s injury, meaning that many of the written submissions made by the parties were irrelevant.
The respondent’s solicitor, Mr Anderson, agreed to file a complete copy of the contract with the “Terms Sheet”. Given the objections made by the applicant, I questioned him as to the relevance of the balance of the documents attached to the Application to Admit Late Documents received on 23 December 2022. Following these discussions, Mr Anderson advised that he did not press the admission of those documents apart from the signed contract dated 4 October 2018 (pages 15 and 16). Accordingly, only pages 15 and 16 of these late documents were admitted. The applicant did not oppose the withdrawal of the other documents.
As no objection has been made regarding the Application to Admit Late Documents received on 21 December 2022, the statement of the applicant dated 19 December 2022 was admitted into evidence.
On 17 February 2023, the respondent filed an Application to Admit Late Documents which attached an unsigned copy of the contract and the “Terms Sheet”. These documents were admitted into evidence.
The submissions that had been filed focussed on the 2016 contract, so on 22 February 2023, I arranged for an email to be sent to the parties as follows:
“Principal Member Capel has reviewed the late documents that were filed by the respondent on 17 February 2023. He considers that this fresh evidence is crucial to the dispute and he proposes to admit the contract and the terms sheet into evidence, subject to any submissions to the contrary by the applicant.
Whilst the copy of the 2018 contract is unsigned, there is a signed copy that was executed by the applicant on 4 October 2018 which is contained in the late documents filed by the respondent on 23 December 2022.
Principal Member Capel notes that the submissions of the parties have focussed on the unsigned letter of offer dated 20 September 2016 that is in the Reply. Given that there was a later contract that was executed by the applicant in 2018 and was in force at the time of his injury, the Principal Member believes that further submissions are required.
In the circumstances, Principal Member Capel makes the follow direction:
1.     Both parties are directed to file and serve written submissions regarding the contract and terms sheet executed on 4 October 2018.
2.     Both parties are directed to revisit all of their previous submissions and advise which paragraphs are no longer pressed, given that they relate to the 2016 contract.
3.     The applicant is to file and serve written submissions by 1 March 2023.
4.     The respondent is to file and serve written submissions by 8 March 2023.
5.     Any submissions in reply are to be filed and served by 14 March 2023.
6.     The preliminary conference at 8.30 am on 16 March 2023 is confirmed.
The parties are encouraged to attempt to resolve this small claim prior to the preliminary conference.”
Unfortunately, the submissions filed by the applicant’s solicitor on 27 February 2023 were unhelpful and did not properly comply with the Direction. Accordingly, on 1 March 2023, I issued the following Direction:
“The Commission notes:
1.     The only matter in dispute is the calculation of the applicant’s PIAWE and the quantification of the applicant’s entitlement to weekly compensation in the period 7/2/22 to 10/5/22.
2.     The written submissions filed to date focus on the 2016 contract and ‘Terms Sheet’ rather than the 2018 contract and ‘Terms Sheet’, and documents that the respondent does not seek to have admitted into evidence. In my view, most of the written submissions filed to date are unhelpful and will not be considered. Accordingly, the parties will need to file fresh written submissions.
The Commission directs:
3.     Having regard to the discussions at the preliminary conference on
14 February 2023, the following documents are admitted into evidence:
(a)Application and attached documents;
(b)Reply and attached documents;
(c)Applicant’s wage schedule received on 6 December 2022;
(d)Respondent’s wage schedule received on 8 December 2022;
(e)Application to Admit Late Documents received on 21 December 2022,
(f)Application to Admit Late Documents received on 23 December 2022 (excluding pages 1 to 14, and 17 to 89), and
(g)Application to Admit Late Documents received on 17 February 2023.
4.     The previous Directions in this matter are revoked.
5.     The preliminary conference scheduled on 16 March 2023 is cancelled.
6.     The applicant is to file and serve fresh written submissions by 10 March 2023.
7.     The respondent is to file and serve fresh written submissions by 17 March 2023.
8.     Any submissions in reply are to be filed and served by 22 March 2023.
9.     At the conclusion of the time allowed for submissions the dispute will be determined ‘on the papers’.”
Written submissions were filed by the applicant on 8 March 2023 and by the respondent on 17 March 2023. Submissions in reply were filed by the applicant on 20 March 2023.
I am satisfied that the parties to the dispute understand the nature of the application and the legal implications of any assertion made in the information supplied. I am satisfied that the parties have had sufficient opportunity to explore settlement and that they have been unable to reach an agreed resolution of the dispute.

PRELIMINARY ISSUE

In submissions filed by the applicant on 20 March 2023, Mr Parker seeks leave to have the documents that were withdrawn by Mr Anderson at the preliminary conference on
14 February 2023 admitted into evidence. He submits that the applicant does not recall being asked which documents would be admitted prior to the Direction dated 5 December 2022 being issued, although he accepts that submissions were previously made in which the applicant objected to their admission. He submits that the applicant withdraws the objection.
Mr Parker submits that had this been flagged at the preliminary conference, or prior to the Direction being issued, the applicant would have been clearer about this and made an application formally.
Mr Parker submits that there would be no prejudice to the respondent if the documents were admitted into evidence. They were already the subject of previous arguments and discussions, and it was the respondent that originally relied on them. He submits that their admission will make no difference to the respondent’s argument, as its argument is based solely on the contract.
Mr Parker submits that the applicant’s case is based on relevant evidence of which these documents form a part, and documents are usually admitted in the Commission, subject to weight, in the absence of prejudice or relevance. The applicant says that the documents are relevant, and it will be necessary for the documents to be admitted even if it is just to deal with the applicant’s argument as to relevance.
No submissions have been filed by the respondent in response to these submissions.

REASONS

The reference to the Direction dated 5 December 2022 is confusing because the documents that were withdrawn at the preliminary conference on 14 February 2023 were received on
23 December 2022.
Although Mr Parker submits that the applicant, presumably counsel and his solicitor, does not recall being asked which documents would be admitted, this is precisely what was discussed at the preliminary conference on 14 February 2023, because the applicant had raised objection to many or parts of these documents in the submissions filed on
18 January 2023.
When I raised the applicant’s objections with Mr Anderson on 14 February 2023 and questioned him regarding the probative value of these documents to the dispute, he advised that he did not press the admission of the documents apart from the contract at pages 15 to 16.
Mr Parker now wishes to rely on these withdrawn documents, but they are not before the Commission. They were withdrawn by Mr Anderson at the preliminary conference on
14 February 2023 without objection by the applicant, and at no stage since then have these documents been attached to an Application to Admit Late Documents filed by the applicant.
In my view, the applicant had the opportunity to file these documents after they were withdrawn at the preliminary conference on 14 February 2023 and after I issued the further Direction on 1 March 2023, which clearly identified the documents in evidence. A further preliminary conference could have been requested to address this but the applicant failed to do so.
In the circumstances, the applicant’s application to have pages pages 1 to 14, and 17 to 89 in the Application to Admit Late Documents received on 23 December 2022, is declined.

Documentary evidence

The following documents were in evidence before the Commission and taken into account in making this determination regarding the preliminary and substantive issues:
(a)    Application and attached documents;
(b)    Reply and attached documents;
(c)    Applicant’s wage schedule received on 6 December 2022;
(d)    Respondent’s wage schedule received on 8 December 2022;
(e)    Application to Admit Late Documents received on 21 December 2022;
(f)    Application to Admit Late Documents received on 23 December 2022 (excluding pages 1 to 14, and 17 to 89), and
(g)    Application to Admit Late Documents received on 17 February 2023.

ISSUES FOR DETERMINATION

The parties agree that the following issues remain in dispute:
i) calculation of the applicant’s PIAWE – cl 6(2)(d) of Sch 3 of the 1987 Act, and
ii) quantification of the applicant’s entitlement to weekly compensation – s 36 of the 1987 Act.

Oral evidence

Neither party sought leave to adduce oral evidence or cross examine any witnesses.

REVIEW OF EVIDENCE

Given the discrete nature of the dispute, I will focus my summary on the evidence relevant to this issue.

Applicant’s statements

The applicant provided a statement on 24 May 2022. This statement largely deals with his work injury, but he made some comments regarding the payment, or rather non-payment, of commissions.
The applicant stated that commissions were paid based on deals settled in any one month, but as the Settlement Team was understaffed, there were delays, meaning that consultants did not meet their targets and no commissions were paid.
The applicant stated that commissions were called "discretionary benefits" under the contract of employment. These seemed to be withheld as punishment whenever it suited the respondent. When an email that he sent to a client mentioned a staff member, the matter was escalated. He was issued with a final warning letter, and he was informed that he would not be paid his incentive for June 2021. He did not understand why he was not paid, but he acknowledged that in his contract, the payment was at the absolute discretion of the respondent.
The applicant confirmed that he was told that his pay was made up of a base salary and monthly commission based on individual monthly revenue as well as quarterly and annual bonuses based on the team and company performance.
In his statement dated 24 June 2022, the applicant indicated that he commenced employment with Smartsalary Pty Ltd as a leasing consultant on or about 4 October 2016. At some stage, the company’s name changed to Smartgroup Benefits Pty Ltd, which was known as Smart Leasing.
The applicant stated that he was employed on a base salary and in addition, he was paid commission based on meeting certain monthly targets. The quarterly bonus was based on individual or team targets being met, and the annual bonus would be paid to team members if the team met a minimum amount. He explained that his commission was paid on a monthly basis based on a percentage of the brokerage in the finance amount, plus a fixed dollar amount for various products and insurances on deals that settled within that particular month.
The applicant stated that the commission structure changed during the course of his employment, being based on 5% of retained revenue of any deal that settled in each month. He was initially paid fortnightly and the commission was paid on a monthly basis. This system later changed such that the salary and commission were paid on the same day each month.
The applicant stated that the commission was listed on his payslips as a “bonus”, but it was essentially a commission payment that was payable if “hurdle” targets were achieved. The “hurdle” target was a minimum of 34 “hurdles” each month, and once reached, there was an obligation on the respondent to pay the commission.
The applicant conceded that there were months when he did not meet the "hurdles" and was not paid any commission. There was only one occasion that he was not paid his commission when he had met the “hurdle”. In that case, he had an issue with a customer, and the respondent refused to pay him his commission because it believed that he had adversely affected the contract renewal with the customer. He had been unable to return to work at the respondent since 10 May 2022.
In his statement dated 19 December 2022, the applicant stated that in approximately
March 2020 during the COVID-19 lockdown period, the respondent informed him that the commissions were to be paused to ensure the business had funds available to operate or it would be necessary to make redundancies. The commission structure was paused between approximately March 2020 to May 2020. Redundancies occurred in May 2020 and payments of commissions were reinstated in July 2020.
The applicant stated that when he commenced employment, he was told there would be a base salary and commission structure with quarterly and annual bonuses, calculated on a percentage of revenue brought in by him. He advised that his commissions for the period prior to COVID-19 and in the preceding year were not taken off him, in contrast to what happened to Mr Cordiner. He noted that the icare fact sheet indicated that commissions were included in the calculation of the PIAWE.

The applicant relies on a number of emails from 2017 and one from 2019 that deal with the commission structure and payments. These are highly technical and are of minimal assistance.
The icare Fact Sheet is attached to the applicant’s last statement. Relevantly, in respect to the calculation of the PIAWE, it states:
“What is included?
PIAWE is based on the sum of the amounts paid or payable for:
i.earnings for the hours the worker worked and/or was on paid leave
ii.allowances and loadings (including for shift and overtime)
iii.piece rates and commissions
iv.the value of non-monetary benefits (only where a worker is no longer entitled to the use of that benefit following injury).
Income does not include:
v.the individual superannuation guarantee shortfall ('superannuation guarantee amount'),
·a non-monetary benefit if the workers continues to be entitled to the use of the benefit after the injury,
·compensation for loss of earnings under an insurance or compensation scheme (this includes workers compensation payments made during the re levant earning period), or
vi.any discretionary payment made without obligation by the employer (this can include incentive bonus payments) …”

Applicant’s payslips, list of payments and wage schedules

The applicant’s payslips from 1 February 2021 to 31 January 2022 with the respondent are in evidence. These show that the applicant was paid a “bonus” each month except for the months of July 2021 and September 2021. His gross salary, excluding the bonus payments, was $6,072.58 per month, or $72,871 for 52 weeks.
The applicant’s gross earnings for the period 1 February 2021 to 30 June 2021 were $50,080.53 and for the period 1 July 2021 to 31 January 2022 were $65,574.17, for a gross total of $115,654.17, or $2,224.13 per week.
The list of payments shows that the applicant was paid $1,336.69 per week (95% of $1,407.04) from 4 February 2022 to 23 March 2022, and then $1,331.30 per week (95% of $1,401.37) from 24 March 2022 to 4 May 2022. It would seem that the insurer’s PIAWE of $1,407.04 per week was not adjusted upwards on 1 April 2022.
According to the applicant’s wage schedule, his PIAWE was $2,224.13, whereas according to the respondent’s wage schedule the PIAWE was $1,407.04, which is the equivalent of $73,166.08 gross during the relevant period.

Contract of Employment with Smartgroup Benefits Pty Ltd

The letter of offer dated 19 July 2018 was executed by the applicant on 4 October 2018. The signed letter contained in the late documents filed by the respondent on 23 December 2022 does not have the Terms Sheet attached. However, the unsigned copy attached to the late documents filed on 17 February 2023 has a copy.
The offer dated 19 July 2018 was as follows:
“OFFER OF EMPLOYMENT
We are delighted to confirm your ongoing employment with Smartgroup Benefits Pty Ltd (ABN 88 119 344 740) (‘Company’) in the position of Leasing Consultant commencing on 1/07/2018 and note all service-related entitlements in relation to your employment will be calculated from 4/10/2016.
The terms and conditions of your employment with the Company are set out in:
1.this letter of offer and enclosed Term Sheet, which applies throughout your employment with the Company regardless of your position and replaces any earlier employment agreement(s);
2.the National Employment Standards contained in the Fair Work Act 2009 (Cth).
However, neither the provisions of the Fair Work Act 2009 (Cth) nor the Award, which may apply to your employment from time to time, form part of your contract of employment.
Position, Location and Hours of Work
Your employment will be on a full-time basis.
You are required to work a minimum average of 38 hours per week between 8:30am – 5:30pm, Monday to Friday, or as otherwise determined by the Company.
You may be required to perform your duties at various locations as reasonably directed by the Company or Group.
You may be required to work additional hours, including on weekends as are required to discharge your duties consistent with the Group’s business needs. You agree that given your position and the nature of the business the requirement to work these additional hours is reasonable. No additional remuneration will be payable for additional hours worked.
Remuneration
You will receive a gross annual base salary of $69,700.00 excluding superannuation.
You will be paid for the month, on the 15th of each month, into your nominated bank account.
The Company will also make superannuation contributions on your behalf. Further details regarding your remuneration are set out in the attached Terms Sheet.
Acceptance
In order to accept this offer of employment, please sign and return a copy of the enclosed acceptance to the Company as soon as possible.”
The relevant paragraphs in the “Terms Sheet” are as follows:
“4 Remuneration
Your total remuneration package is $76,321.50 gross per annum (‘TRP’). Your TRP presently consists of the following components:
(a) Base Salary $69,700.00 gross, per annum (This is the full time equivalent fixed annual salary, where you work part time hours, the amount will be pro rata accordingly).
(b) superannuation $6,621.50 gross, per annum. (This is the full time equivalent amount, where you work part time hours, the amount will be pro rata accordingly). Superannuation contributions will be paid into an approved fund nominated by you, or in the absence of such nomination into an approved fund nominated by the Company.
You will be paid your remuneration for the month on the 15th of each month by electronic funds transfer into your nominated bank account after deduction of all taxes, superannuation contributions and, if relevant, salary sacrifice amounts.
Your TRP compensates you for any benefits or entitlements under any applicable award, other industrial instrument or any law and you will not be entitled to receive any additional payment in respect of such benefits or entitlements. This includes, without limitation, any overtime payments, penalty rates, allowances and loadings to which you may be entitled under an award other industrial instrument or law.
Your TRP is confidential and you must ensure and you must ensure that it is treated as Confidential Information in accordance with your obligations under this Agreement.
Your Base Salary will be reviewed annually but will not necessarily be increased as a result of such review.
5 Discretionary Benefits
In addition to your TRP, the Company may in its absolute discretion provide you with other benefits (‘Discretionary Benefits’). The Company may cease to provide Discretionary Benefits or change the basis on which it provides them at any time, and nothing in this clause constitutes a promise or guarantee that you will receive any Discretionary Benefit.
Discretionary Benefits including any bonus or incentive payment do not form part of your contract of employment or remuneration. You agree and acknowledge that the payment of a Discretionary Benefit does not create any expectation that further Discretionary Benefits will be paid.
For the avoidance of doubt, you will not be entitled to receive any Discretionary Benefits if you:
(a) are not employed as at the date the Discretionary Benefit is payable; or
(b) have given or received notice of termination of your employment as at the date the Discretionary Benefit is payable.
24 Entire agreement
These terms and conditions, including any schedules to this Terms Sheet, constitutes the entire agreement of the parties with respect of the matters dealt with in this contract of employment. It supersedes all prior agreements, understandings, arrangements and negotiations in respect of your employment. No other term can be implied or inferred.”

Statement of William Cordiner

William Cordiner, a vehicles consultant, provided a statement on 7 June 2022. He confirmed that he worked in the same team and role as the applicant. His statement largely dealt with the system of work, understaffing, and the excessive workload.
Mr Cordiner confirmed that sales consultants were not paid their commission until the deal was settled by the Settlement Team. He stated that when COVID-19 started, management advised that they would stop paying commissions. He was also deprived of commissions earnt in the three month period before COVID-19 as well as his annual commission for the previous year.
Mr Cordiner stated that the delays caused by the Settlement Team meant that the applicant did not achieve the minimum number of settled deals required for him to be paid commission. He was similarly affected on many occasions.

APPLICANT’S SUBMISSIONS

The applicant’s counsel, Mr Parker, submits that the respondent bears the onus on the contractual interpretation.[1] He submits that the respondent’s contention that commissions/bonuses do not relate to earnings, is contrary to the definition of wages in
[1] L & A Fazzini Pty Ltd v Amaca Pty Ltd [2021] NSWCA 313 (Fazzini).
s 174(9) of the 1987 Act and the meaning given to assessable earnings under Australian taxation law.
Mr Parker submits that the contract of employment relied upon by the respondent does not support the interpretation sought on an objective standard.[2] He submits that letter dated
[2] Toll Pty Ltd v Alphapharm [2004] HCA 52.
9 July 2018 indicated that there would be no “additional remuneration” (which is defined under the contract) for additional hours worked. However, the case does not concern “additional hours worked”, rather an incentive program.
Mr Parker submits that “remuneration” provided includes “…any overtime payments, penalty rates, allowances and loadings …”, but the case does not concern overtime, penalty rates, allowances or loadings.
Mr Parker submits that the incentive plans are dealt with under the heading “Discretionary Benefits”. However, this limits only the expectation that there would be a discretionary benefit from time to time in the future (as compared to some point paid in the past) as shown in the words “….You agree and acknowledge that the payment of a Discretionary Benefit does not create any expectation that further Discretionary Benefits will be paid”. The applicant received discretionary payments in the past.
Mr Parker submits that the contract says nothing about limiting payments if a plan had already been implemented for any particular period, except to exclude it when an employee is not employed when the payment is payable or has given or received a notice of termination. These situations do not apply to the applicant.
Mr Parker submits that the contract and terms say nothing about payments being purely gratuitous or a gift. He submits that the contract and terms specifically include that there will be a payment if the applicant does something extra, like complying with the incentive plan.
Mr Parker submits that there is nothing in the contract that states that payments made as a result of additional work or criteria will not be remunerated. The only exclusions for extra renumeration arising from his normal job relate to “additional hours, overtime, penalty rates, allowances, and loadings”. This is why there is a section dealing with “Discretionary Benefits”, which applies to bonuses and incentives. This is consistent with both contractual principles and quantum meruit theory. To suggest otherwise would mean that the applicant performed additional work, and the employer voluntarily paid money that it did not have to pay out of goodwill. This is artificial and unrealistic.[3]
[3] Dickinson v Chapman [2022] NSWCA 2.
Mr Parker submits that the principles of statutory interpretation support the applicant’s argument when consideration is given to the context of the PIAWE provisions. Further, statutory interpretation embraces elements of the mischief rule, literal rule and golden rule and if more than one construction is available, the court should prefer the one that avoids absurd, capricious, curious, extraordinary, inconvenient, irrational, obscure, unjust, unlikely, or unreasonable constructions.[4]
[4] CIC Insurance Limited v Bankstown Football Club Limited (1997) 187 CLR 384, [408].
Mr Parker submits that cl 6 of Sch 3 of the 1987 Act refers to income for work performed, and that is what the payments were for. The payments were not ex gratia or discretionary. Once the conditions were satisfied, the employer was obligated to pay the bonuses/commissions or at least the “fair value” of the services rendered.[5]
[5] Pavey & Matthews Pty Ltd v Paul [1987] HCA 5 (Paul).
Mr Parker submits that cl 6(2)(d) of Sch 3 of the 1987 Act excludes payments that were made “without obligation”, being voluntary, not made pursuant to a contract, not made pursuant to quantum meruit principles, not made by reference to work undertaken, and made purely on a goodwill or gratuitous basis. The payments made to the applicant related to income for work performed.
Mr Parker submits that the contract does not define “Discretionary Benefits” of that kind. It refers to a “bonus” or an “incentive”, suggesting that there was an expectation that something extra would be done, and when that was done, the payments were payable, unless the exclusions applied. Accordingly, the payments fall within cl 6(1) of the definition of earnings and should be included in the PIAWE.
Mr Parker submits that Mr Cordiner’s statement does not assist the respondent because the facts and circumstances of Mr Cordiner’s employment are distinct. It is likely that certain facts and circumstances have not been included. Choosing not to pay someone does not mean that there was no obligation to do so. Further, the applicant received payments in the relevant period.
Mr Parker has made submissions in paragraphs 37 to 44 regarding the factual investigation that has been excluded from the evidence. Accordingly, no regard will be had to these submissions.
Mr Parker submits that the applicant does not cavil with the four corners or parole evidence rule, namely if two parties enter into a written agreement, they cannot use oral or implied agreements to contradict the terms of the written contract. He submits that the principles of this rule do not apply to this matter.
Mr Parker submits that there are numerous exceptions to the parole evidence rule, such as when the contract is ambiguous.[6] In those circumstances, other evidence could be considered. The other evidence allows the interpretation of the contract consistent with that of the applicant.
[6] Codelfa Constructions Pty Ltd v State Rail Authority of NSW (1982) CLR 337.
Mr Parker submits that the respondent has failed to engage with the applicant’s submission, namely whilst the incentive program may have been discretionary in the sense that the employer was under no obligation to create such a program, payment was required if workers met the conditions. The determination of this issue must turn on a consideration of the statute itself. The contract is merely a piece of evidence, in addition to the other evidence, that must be considered when applying the statute.

RESPONDENT’S SUBMISSIONS

The respondent’s solicitor, Mr Anderson, submits that the issue to be determined starts and finishes with a construction of the written contract between the applicant and the respondent. It is impermissible to have regard to conduct or circumstances outside the written contract. He submits that the plain words of the contract unambiguously provided that the payments in issue were “without obligation” within the meaning of cl 6(2)(d) of Sch 3 of the 1987 Act.
Mr Anderson submits that it is impermissible to rely on post-contractual conduct, and secondly, the task is to construe the written agreement as of 4 October 2018.
Mr Anderson submits that the structure of the contract was simple. The respondent undertook a contractual obligation to pay amounts solely by reference to cl 4, titled “Remuneration”, in exchange for the applicant’s services. The total remuneration package (TRP) comprised of a fixed base salary plus superannuation and compensated the applicant for any benefits or entitlements payable by law. This meant that the parties agreed that only the payments referred to in cl 4 were to be made by the respondent under an obligation. When read with cl 5, it must follow that any additional payments made to the applicant could only have been so made “without obligation by the employer”.
Mr Anderson submits that the language in cl 5 regarding “Discretionary Benefits” is in plain language. It is diametrically opposed to the proposition that the incentive/commission payments were made under any obligation. The use of the term “Discretionary Benefits” reinforces the proposition that the employer's obligation was confined to payments of remuneration under cl 4.
Mr Anderson submits that it made clear by the High Court in WorkPac Pty Ltd v Rossato[7] that post-contractual conduct was irrelevant and one had to construe the written contract at the time that it was made, and it was an error to have regard to the nature of the work performed pursuant to the contract.[8] Further, neither an “expectation falling short of a binding promise”,[9] nor notions of perceived unfairness are legally relevant. These principles were confirmed by the High Court in Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd.[10]
[7] [2021] HCA 23 (Rossato).
[8] Rossato, [95]-[96].
[9] Rossato, [61]-63], [99].
[10] [2022] HCA 1 (Personnel Contracting).
Mr Anderson submits that the applicant bears the onus, so Fazzini does not assist him. He is seeking an award for a sum greater than that which has been paid, so he needs to show that the circumstances fit the statutory formulation of earnings. These are not to include "any payment made without obligation by the employer".
Mr Anderson submits that s 174(9) of the 1987 Act concerns the keeping of records and is irrelevant. He submits that the actual payment of incentives/commissions from
4 February 2021 to 4 February 2022 is irrelevant when construing the contract. One needs to construe the contract as at the time it was made in October 2018. The applicant’s submissions in paragraphs 14 to 16 are without merit. By looking for whether some payment is or is not excluded does not address whether such payment was "made without obligation by the employer". The task is to construe what the contract says, not what it does not say. According to the contract, any incentive/commission payments "may", not will, be made in the respondent's "absolute discretion".
Mr Anderson submits that there is no merit in the submission that, if the respondent’s case was accepted, the payments were made from time to time purely out of goodwill. It is perfectly sensible that an employer puts in place a program to motivate employees to perform to a higher level, so as to increase the profitability of the business. There is nothing prohibiting the parties to agree that the arrangements attract no obligation on the employer. The submission is also irrelevant to the construction of the contract in question. Further, subjective notions about the desirable outcome have no role to play
Mr Anderson submits that the payment of commissions/incentives to the applicant in the
12 months immediately prior to 4 February 2022 were paid in the "absolute discretion" of the respondent under the terms of the contract and were thus made "without obligation". One cannot substitute the statutory language as suggested in paragraph 31 of the applicant’s submissions. He submits that the plain wording of the contract is that the achievement of the "something extra" does no more than qualify an employee to be considered for a reward, which "the Company may in its absolute discretion" provide. He submits that if post-contractual conduct is relevant, the evidence is compellingly in favour of the respondent, when one has regard to the applicant’s evidence as to when the commissions were not paid.

REASONS

Quantification of the applicant’s entitlement to weekly compensation

The parties have been unable to reach agreement as to the applicant’s PIAWE for the purposes of calculating the applicant’s entitlement during the first entitlement period.
The applicant was paid weekly compensation from 4 February 2022 to 4 May 2022 based on a PIAWE of $1,407.04. This PIAWE was calculated without reference to the commission or “bonus” payments made in the 52 period from 1 February 2021 to 31 January 2022. The PIAWE claimed by the applicant is $2,224.13, which includes those payments.
Schedule 3 of the 1987 Act contains provisions regarding the PIAWE. Relevantly, it provides:
“…
2   Meaning of ‘pre-injury average weekly earnings’
(1)     Pre-injury average weekly earnings, in relation to an injured worker, means the weekly average of the gross pre-injury earnings received by the worker for work in any employment in which the worker was engaged at the time of the injury.
Note—
See also clauses 3–5 relating to modifications of pre-injury average weekly earnings by agreement and in relation to apprentices, trainees and persons aged under 21 years.
(2)    Except as provided by this clause (or by regulations made under this clause), in calculating the pre-injury earnings received by a worker in employment for the purposes of subclause (1), no regard is to be had to earnings in the employment paid or payable to the worker for work performed before or after the period of 52 weeks ending immediately before the date of the injury (the relevant earning period) …
6   Meaning of ‘earnings’
(1)    The earnings received by a worker in respect of a week means the amount that is the income of the worker received by the worker for work performed in any employment during the week.
(2) The income of a worker does not include—
(a) any minimum amount paid to a superannuation fund or scheme in respect of the week to avoid an individual superannuation guarantee shortfall, within the meaning of the of the Commonwealth, for the worker, or
(b)  the monetary value of any non-monetary benefit provided to the worker for the performance of work by the worker, or
(c)  any payment in respect of loss of earnings under a scheme to which the workers compensation legislation relates or under any other insurance or compensation scheme, or
(d)  any payment made without obligation by the employer …”
According to cl 6(1) of Sch 3 of the 1987 Act, “earnings” means the amount that is income for work performed by a worker. In other words, it is the reward for undertaking work for the employer. The clause refers to certain exclusions.
The current dispute centres on whether the “bonus” payments made by the respondent to the applicant each month were made “without obligation by the employer” in terms of cl 6(2)(d) of Schedule 3 of the 1987 Act.
The issue that I need to determine involves the interpretation of the legislation. The principles of statutory interpretation are well established and have been confirmed by the High Court in Project Blue Sky v Australian Broadcasting Authority[11] and Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (NT),[12] and in the Commission in Hesami v Hong Australia Corporation Pty Ltd.[13]
[11] [1998] HCA 28; 194 CLR 355.
[12] [2009] HCA 41; 239 CLR 27 (Alcan).
[13] [2011] NSWWCCPD 14.
One must interpret the ordinary and grammatical meaning of the text, the language and structure of the legislation, the legal and historical context, and the purpose of the statute in order to come to a reasonable conclusion as to its meaning and application.
In my view, the language used in cl 6(2)(d) of Schedule 3 of the 1987 Act is clear and unambiguous. Any payment that an employer is not obliged to make is excluded from the calculation of the employee’s PIAWE. So, the next step is to examine the terms of the contract executed by the applicant in October 2018.
According to the applicant’s contract of employment dated 1 July 2018, his remuneration package comprised a base salary of $69,700 gross per annum plus superannuation of $6,621.50 gross per annum. This contract superseded the previous contract that was executed in 2016, so it concerned payments made after 1 July 2018 and not before, although service-related entitlements, presumably accrued long service and sick leave entitlements, would be calculated from 4 October 2016, when the applicant commenced employment with his former employer. The parties agree that the applicant would be paid a base salary. In other words, the respondent was obliged to pay the applicant for the work that he performed as a fulltime leasing consultant under the terms of the letter of offer and the “Terms Sheet”.
The contract also provided for other benefits, described as “Discretionary Benefits” which the respondent might or might not pay the applicant in its absolute discretion. The terms specified that the respondent could “cease to provide Discretionary Benefits or change the basis on which it provides them at any time” and there was no promise or guarantee that the applicant would receive the discretionary benefit.
What payments constitute “Discretionary Payments” are not defined in the contract. Whilst the contract indicates that “Discretionary Benefits including any bonus or incentive payment do not form part of your contract of employment or remuneration”, it is not clear whether bonuses and incentive payments fall within the “Discretionary Payments”. The term only specifies that they do not form part of the applicant’s remuneration.
It is true that the contract does not indicate when the applicant might qualify for a bonus, incentive payment or discretionary payment, or how it is calculated, but it confirmed that he would not receive a discretionary payment if he was no longer employed or if he had given or he had received notice of termination of his employment when the discretionary payment was payable.
Given the lack of precision in the terms of the contract, one needs to examine the other evidence regarding this issue.
According to the applicant, the quarterly bonus was based on individual or team targets being met, and the annual bonus was paid to team members if the team met a minimum amount commissions. He also provided an explanation as to how the bonus was calculated and how the payment was identified as a “bonus” in his payslips. If the consultants did not meet their targets, the commissions were not paid. The applicant stated that the commissions were called "Discretionary Benefits" under the contract of employment, and in his statement, he agreed that according to his contract, the payment was at the absolute discretion of the respondent, suggesting that he accepted that the respondent was not obliged to make the payment.
The applicant stated that he would not receive commission when the “hurdles” were not achieved. His bonus had also not been paid when an issue arose regarding a client, and he was issued with a final warning letter. Commission payments were also paused during the COVID-19 lockdown to ensure that the respondent could continue to operate. These facts would tend to support the respondent’s argument that the respondent had a discretion and was under no obligation to make the payments.
Whilst it is true that the icare Fact Sheet states the PIAWE calculation includes “piece rates and commissions”, it also indicated that the PIAWE does not include “any discretionary payment made without obligation by the employer (this can include incentive bonus payments”. This seems to suggest that the bonus payment that was received by the applicant for achieving the “hurdles” is to be excluded from the PIAWE calculation.
The statement of Mr Cordiner is of little probative value. He merely confirms when the bonus payments were made. Similarly, no assistance is provided by the SIRA Workers Compensation Guidelines.
Mr Parker referred me to s 174(1) of the 1987 Act, however, I do not consider that this is of relevance to the current dispute.
Division 2 of part 7 of the 1987 Act that deals with insurance premiums and the information that is required to be maintained by an employer for premium calculation purposes. Section 174(1) of the 1987 Act states that an employer must keep correct records of all wages paid to workers.
“Wages” is defined in s 174(9) as including
“salary, overtime, shift and other allowances, over-award payments, bonuses, commissions, payments to working directors (including payments as directors’ fees), payments for public and annual holidays (including loadings), payments for sick leave, value of board and lodging provided by the employer for the worker and any other consideration in money or money’s worth given to the worker under a contract of service or a training contract”.
The section does not refer to the term “income”. Therefore, the fact that bonuses and commissions are part of “wages” and records need to be maintained for premium calculation, is not relevant to the current issue in dispute. Similarly, the fact that bonuses and commissions are taxable is irrelevant.
It is true that there is nothing in the contract that says that the bonuses would not be paid if the “hurdles” were achieved. However, the same could be said about the opposite situation, namely the contract does not state that the bonuses would be paid if the “hurdles” were achieved. The discretionary payments were not confined to ex-gratia payments, voluntary payments or on the basis of goodwill, but were based on certain goals being achieved. However, even if those goals were achieved, the contract does not specify whether those payments would be made. Mr Parker submits that there is ambiguity in the contract, but in my view, its terms are clear. The contract dealt with “Discretionary Benefits”, and specifically referred to bonus or incentive payments.
Mr Parker submits that there is ambiguity in the contract, but in my view, its terms are clear. The contract dealt with “Discretionary Benefits”, and specifically referred to bonus or incentive payments. Under the contract, the applicant was paid wages for work performed. According to the applicant’s evidence, if “hurdles” were achieved, a bonus or discretionary payment would be paid, but he also gave examples as to when payments were not made. Whether this related to past or future payments is in my view of no relevance. The applicant was paid for the services rendered, and it seems from the contract that the respondent had a discretion regarding any bonuses to be paid, which distinguishes this matter from Paul.
The “Discretionary Benefits” clause in the “Terms Sheet” state that the respondent had an “absolute discretion” to pay other benefits, namely bonuses and commission, and could cease to provide them or change the basis on which it provides them at any time. It stated that the Discretionary Benefits including any bonus or incentive payment did not form part of the contract or remuneration, and a past payment did not mean that further Discretionary Benefits would be made.
Further, the respondent indicated that nothing in the clause constituted a promise or guarantee that he would receive any discretionary benefit. In other words, any payment was made at the respondent’s discretion, and it was under no obligation to pay the bonus.
Therefore, I am satisfied that the respondent was under no obligation to pay the bonus or discretionary payment to the applicant, and consistent with cl 6(2)(d) of Schedule 3 of the 1987 Act, the bonuses should be excluded from the calculation of the applicant’s PIAWE.

Award

The applicant was paid weekly compensation from 4 February 2022 to 4 May 2022
(12 weeks 6 days) based on a PIAWE of $1,407.04. He was not paid compensation for the period 5 May 2022 to 10 May 2022.
It seems that the PIAWE was not indexed on 1 April 2022, meaning that there has been an underpayment after 1 April 2022.
According to my calculations the PIAWE as of 1 April 2022, based on the movements in the Consumer Price Index (1.0184), was $1,432.93, and 95% of this figure was $1,361.28, and 80% is $1,146.34.
Accordingly, I propose to make the following order:
(1)    The respondent to pay the applicant weekly compensation as follows:
(a)$1,336.69 per week from 4 February 2022 to 31 March 2022 pursuant to
s 36(1) of the 1987 Act;
(b)$1,361.28 per week from 1 April 2022 to 5 May 2022 pursuant to s 36(1) of the 1987 Act, and
(c)$1,146.34 per week from 6 May 2022 to 10 May 2022 pursuant to s 37(1) of the 1987 Act.
(2)    The respondent to have credit for payments already made.
(3)    Liberty to the parties to apply in respect of these calculations within 14 days of this determination.

[2023] NSWPIC 137

30 March 2023