Telstra Corporation Ltd v Keen - [2005] FCAFC 195

FEDERAL COURT OF AUSTRALIA
Telstra Corporation Ltd v Keen [2005] FCAFC 195
WORKER’S COMPENSATION – Safety, Rehabilitation and Compensation Act 1988 (Cth) – applicant entitled to payment of compensation for incapacity – redundancy – whether compensation payable to be reduced under s 33(1) of the Act – the nature of redundancy payments – whether “salary, wages or pay”
Safety, Rehabilitation and Compensation Act 1988 (Cth) ss 21, 33
Boncristiano v Lohmann [1998] 4 VR 82 cited
Termination, Change and Redundancy Case (1984) 8 IR 34 cited
Fryer v System Services Pty Ltd (1996) 137 ALR 321 referred to
TELSTRA CORPORATION LTD v LA-RAINE LESLEY KEEN
No NSD 527 of 2005
TAMBERLIN, FINN AND CONTI JJ
SYDNEY
9 SEPTEMBER 2005

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

NSD 527 OF 2005

BETWEEN:

TELSTRA CORPORATION LTD
APPELLANT

AND:

LA-RAINE LESLEY KEEN
RESPONDENT

JUDGE:

TAMBERLIN, FINN AND CONTI JJ

DATE OF ORDER:

9 SEPTEMBER 2005

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:
1.        The appeal be dismissed.
2.        The appellant pay the respondent’s costs of the appeal.
Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

NSD 527 OF 2005

BETWEEN:

TELSTRA CORPORATION LTD
APPELLANT

AND:

LA-RAINE LESLEY KEEN
RESPONDENT

JUDGE:

TAMBERLIN, FINN AND CONTI JJ

DATE:

9 SEPTEMBER 2005

PLACE:

SYDNEY

REASONS FOR JUDGMENT

The issue in this appeal is whether redundancy payments made to an employee of Telstra Corporation Ltd (“Telstra”) are properly to be characterised as amounts payable to that employee by way of salary, wages or pay for the purposes of s 33(1) of the Safety, Rehabilitation and Compensation Act 1988 (Cth) (“SR&C Act”), so reducing the amount of compensation for incapacity payable to the respondent, Ms Keen, under that Act.
BACKGROUND SETTING
On 29 December 1997 Ms Keen was made redundant and received a redundancy payment. The quantification of that payment was in accordance with an “agreed benefit framework” prescribed in an industrial agreement (the AOTC Redundancy Agreement) and the benefit payable was calculated as a sum equivalent to 80 weeks of her ordinary pay. The appellant received as well some other sums under the Agreement on termination.
Insofar as presently relevant, the AOTC Redundancy Agreement provided:
“1.2 In negotiating this Agreement, the parties have sought to achieve:
…
(ii)the provision of fair compensation for employees who leave AOTC through redundancy; [emphasis added]
…
7. ENTITLEMENTS [The ‘agreed benefit framework’]
…
7.2The agreed benefit framework is:
(i)four weeks pay for each completed year of continuous service up to five years,
(ii)three weeks pay for each completed year of continuous service thereafter, plus a pro-rata payment for each completed month of continuous service since the last completed year of continuous service,
(iii)for employees over fifty years of age, four weeks pay for each year of service beyond fifty years of age, including pro-rata adjustment for each completed month of continuous service…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2005] FCAFC 195
Decision Date: 9 SEPTEMBER 2005

CaseChat Overview and Summary

Telstra Corporation Ltd appealed against a decision of the Administrative Appeals Tribunal (AAT) that found it liable to pay Ms Keen compensation for incapacity under the Safety, Rehabilitation and Compensation Act 1988 (Cth). The central issue was whether the redundancy payment made to Ms Keen should be characterised as salary, wages, or pay for the purposes of s 33(1) of the SR&C Act. If so, it would reduce the amount of compensation payable to Ms Keen. Ms Keen was made redundant in 1997 and received a redundancy payment of 80 weeks of her ordinary pay. The payment was made in accordance with an industrial agreement. Ms Keen suffered a work-related injury in 1991 and sought compensation under the SR&C Act in 2000. The AAT determined that Ms Keen was entitled to compensation for incapacity under the Act, and the redundancy payment was to be deducted from the compensation payable.

The court was required to decide whether the redundancy payment should be considered as salary, wages, or pay for the purposes of s 33(1) of the SR&C Act. If it was, it would reduce the amount of compensation payable to Ms Keen. Telstra argued that the redundancy payment should be considered as salary, wages, or pay because it was calculated by reference to weeks of employment. The court examined the language of the relevant sections of the SR&C Act and the nature of the redundancy payment. The court held that the redundancy payment was not properly to be described as pay for particular weeks of employment. Instead, it was compensation for the loss of a job.

The court dismissed the appeal and held that the redundancy payment was not to be characterised as salary, wages, or pay for the purposes of s 33(1) of the SR&C Act. The appeal was dismissed, and Telstra was ordered to pay the respondent’s costs of the appeal. The court concluded that the redundancy payment was compensation for the loss of a job, and it did not reduce the amount of compensation payable to Ms Keen under the SR&C Act.

Orders

Orders of the court

1. The appeal be dismissed.

2. The appellant pay the respondent’s costs of the appeal.

Background

Background to the litigation

The issue in this appeal is whether redundancy payments made to an employee of Telstra Corporation Ltd (“Telstra”) are properly to be characterised as amounts payable to that employee by way of salary, wages or pay for the purposes of s 33(1) of the Safety, Rehabilitation and Compensation Act 1988 (Cth) (“SR&C Act”), so reducing the amount of compensation for incapacity payable to the respondent, Ms Keen, under that Act.BACKGROUND SETTING On 29 December 1997 Ms Keen was made redundant and received a redundancy payment. The quantification of that payment was in accordance with an “agreed benefit framework” prescribed in an industrial agreement (the AOTC Redundancy Agreement) and the benefit payable was calculated as a sum equivalent to 80 weeks of her ordinary pay. The appellant received as well some other sums under the Agreement on termination. Insofar as presently relevant, the AOTC Redundancy Agreement provided:“1.2 In negotiating this Agreement, the parties have sought to achieve:…(ii)the provision of fair compensation for employees who leave AOTC through redundancy; [emphasis added]…7. ENTITLEMENTS [The ‘agreed benefit framework’]…7.2The agreed benefit framework is:(i)four weeks pay for each completed year of continuous service up to five years, (ii)three weeks pay for each completed year of continuous service thereafter, plus a pro-rata payment for each completed month of continuous service since the last completed year of continuous service,(iii)for employees over fifty years of age, four weeks pay for each year of service beyond fifty years of age, including pro-rata adjustment for each completed month of continuous service since the last completed year of continuous service,(iv)the minimum sum payable under these arrangements, including any payment in lieu of notice (four weeks), to be eight weeks salary and the maximum to be eighty-four weeks salary.(v)the sum payable to an employee under these arrangements not to exceed the sum of salary that would be payable were the employee to continue in employment until the maximum retiring age.” Ms Keen suffered a work related injury in 1991. In late 2000, she sought compensation under the SR&C Act on the basis of that injury. The Administrative Appeals Tribunal (“the Tribunal”) determined on 23 June 2003 that Ms Keen was entitled to payment of compensation for incapacity under that Act. There has been a sequence of Telstra decisions and reviews and appeals to the Tribunal concerning the proper basis upon which her compensation claim should be calculated. It is agreed for the purposes of this appeal that the calculation should be made under s 21 of the SR&C Act. That section relevantly provides that:“21Compensation for injuries resulting in incapacity where employee is in receipt of a lump sum benefit (1)This section applies to an employee who, being incapacitated for work as a result of an injury retires voluntarily, or is compulsorily retired, from his or her employment at any time after the commencement of this section and, as a result of the retirement, receives a lump sum benefit under a superannuation scheme. (2)Comcare is liable to pay compensation to the employee, in respect of the injury, in accordance with this section for each week after the date of the retirement during which the employee is incapacitated.”The section then prescribes how the compensation is to be calculated.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

TAMBERLIN, FINN AND CONTI JJ

The present question arises because Telstra has contended, unsuccessfully before the primary Judge and now on this appeal, that s 33 of the SR&C Act applies to reduce the amount of compensation payable to Ms Keen. Section 33(1) provides:“(1)Where, in relation to a day in respect of which compensation is payable to an employee under section 19, 20, 21, 21A, 22 or 31, an amount or amounts are paid or payable to the employee by the Commonwealth or a licensed corporation by way of salary, wages or pay, the amount of compensation payable under that section in respect of that day shall be reduced by the amount, or the sum of the amounts, so paid or payable to the employee.(2)In this section, a reference to an amount paid or payable to an employee by the Commonwealth or a licensed corporation does not include a reference to:(a)an amount by way of pay in respect of a period of leave of absence granted, or in lieu of the grant of a period of leave of absence, under section 16 or 17 of the Long Service Leave (Commonwealth Employees) Act 1976, section 73 or 74 of the Public Service Act 1922 as in force before 20 December 1976 or section 7 or 8 of the Commonwealth Employees’ Furlough Act 1943 as in force before that day; (b)an amount by way of pay in respect of a period of leave of absence granted, or in lieu of the grant of a period of leave of absence, under regulations in force under the Naval Defence Act 1910, the Defence Act 1903 or the Air Force Act 1923; (ba)an amount by way of pay in respect of a period of leave of absence, or in lieu of the grant of a period of leave of absence, in the nature of long service leave under a law of a State or Territory or an industrial award, determination, order or agreement; (c)any amount that the employee is able to earn in suitable employment or any amount of earnings payable to an employee, being an amount that has been taken into account for the purposes of calculating the amount of compensation payable to the employee under section 19; or (d)an amount of deferred pay within the meaning of Part III of the Defence Forces Retirement Benefits Act 1959 or of any provision of that Part.” The section goes on to exempt specific payments, e.g. a payment in respect of a period of leave of absence or deferred pay, from the operation of s 33(1). THE DECISIONS OF THE AAT AND THE PRIMARY JUDGE The decision of the Tribunal which gave rise to the present proceeding was that Ms Keen’s redundancy payment was an amount paid by Telstra to her, for labour or personal services and was made pursuant to an agreement between Telstra and Ms Keen (i.e. the AOTC Redundancy Agreement). Hence it was “salary, wages or pay” within s 33 of the SR&C Act and the redundancy payment was paid for the 80 weeks period from Ms Keen’s redundancy. The amount of compensation payable to her under s 21 of the SR&C Act was, in consequence, to be reduced in the manner prescribed in s 33(1). In setting aside the Tribunal’s decision, the primary Judge concluded that s 33(1) was inapplicable to Ms Keen’s circumstance for the reason that, even if the manner in which a redundancy payment was calculated was by reference to a number of weeks pay for a number of years service, the payment itself was not properly to be described as pay for particular weeks of employment. Rather, it was “compensation for the loss of a job”.

Ratio Decidendi

Legal Principle Established

Established by: TAMBERLIN, FINN AND CONTI JJ

Full text does not contain this section.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD 527 OF 2005

BETWEEN:	TELSTRA CORPORATION LTD APPELLANT
AND:	LA-RAINE LESLEY KEEN RESPONDENT
JUDGE:	TAMBERLIN, FINN AND CONTI JJ
DATE OF ORDER:	9 SEPTEMBER 2005
WHERE MADE:	SYDNEY

JUDGE:	TAMBERLIN, FINN AND CONTI JJ
DATE:	9 SEPTEMBER 2005
PLACE:	SYDNEY