Thirroul Investments Pty Ltd v Foley

[2003] TASSC 89

[2003] TASSC 89

CITATION:              Thirroul Investments Pty Ltd v Foley [2003] TASSC 89

PARTIES:  THIRROUL INVESTMENTS PTY LTD

(trading as TONIC@217)

v
  FOLEY, Alison Claire

TITLE OF COURT:  SUPREME COURT OF TASMANIA
JURISDICTION:  APPELLATE
FILE NO/S:  LCA 29/2003
DELIVERED ON:  24 September 2003
DELIVERED AT:  Hobart
HEARING DATES:  3 September 2003
JUDGMENT OF:  Slicer J

CATCHWORDS:

Workers Compensation – Assessment and amount of compensation – Weekly earnings – Tasmania - Workers Rehabilitation and Compensation Act 1988, s69(1) – Ordinary time rate of pay.

Workers Rehabilitation and Compensation Act1988, (Tas), s69.
Scott v Sun Alliance Australia Ltd (1993) 178 CLR 1, applied.
Aust Dig Workers Compensation [211]

REPRESENTATION:

Counsel:
             Appellant:  P L Jackson
             Respondent:  S Taglieri
Solicitors:
             Appellant:  Jackson & Tremayne
             Respondent:  Phillips Taglieri

Judgment Number:  [2003] TASSC 89
Number of Paragraphs:  15

Serial No 89/2003
File No LCA 29/2003

THIRROUL INVESTMENTS PTY LTD (trading as TONIC@217)
v ALISON CLAIRE FOLEY

REASONS FOR JUDGMENT  SLICER J

24 September 2003

1. The appellant seeks review of an order made by the Workers Rehabilitation and Compensation Tribunal ("the Tribunal") varying the quantum of the respondent worker's weekly payments payable as compensation.

1. On 17 October 2001, the respondent was injured during the course of her employment.  She was a casual worker who had commenced employment with the appellant some short time previously.  The Tribunal found that the applicable industrial award was the Restaurant Keepers Award, made in accordance with the Industrial Relations Act 1984. Her claim was referred to the Tribunal on two bases, namely:

"1)Pursuant to s88 of the Act, based on an assertion that the weekly payments were commenced and continued to be paid at an incorrect quantum there having been an incorrect assessment pursuant to s69(1)(a)(ii) of the Act.

2)In the alternative, a review pursuant to s69(8), (9) and (10) of the Act seeking a reduction by such an amount as appears to the Tribunal to be reasonable and appropriate having regard to the current weekly earnings of workers of the same grade or classification as the worker and employed by the employer in similar work to the worker, and having regard to the principle that the worker should not receive weekly rate payments greater than the payments the worker would have received if she continued to work in her usual employment during the relevant period."

1. The issues were whether, given that the worker was employed on a casual basis, she was entitled to claim compensation on the basis of "ordinary time rate of pay", multiplied by hours actually worked in the preceding period, and/or whether she was entitled to claim an amount based on "current weekly earnings of workers of a similar classification".

1. As a casual worker, the respondent's terms of employment were provided for by the Award, cl 8, which relevantly states:

"(a)A casual employee shall be engaged for a minimum period of two hours; each engagement shall stand alone and shall be paid at the rate of one thirty-eighth of the appropriate weekly wage rate prescribed in Clause 8 – Wage Rates, plus:

(i)     25 percent for all work performed Monday to Friday inclusive;

(ii)     50 percent for all work performed on Saturday;

(iii)    75 percent for all work performed on Sundays;

(iv)    150 percent for all work performed on public holidays.

(b)The provisions of Clause 21 – Hours of Work, subclauses (a), (b) and (c), and Clause 25 – Overtime and Other Penalty Rates, subclauses (a), (b), (c), (d) and (e), shall not apply to casual employees."

1. The clause excludes the operation of cl 21(a) to (c) which governs working hours, their spread and minimum breaks between shifts whilst providing particular rights or benefits such as "pay day arrangements", fortnightly payments, and the like.  It also excludes cl 25 which governs overtime and other penalty rates applicable to permanent employees.  The clause permits assessment of the hourly rate by reference to an "appropriate weekly wage rate" which, in this case, is fixed by cl 8 as $455.20 per week, which, as assessed by the Tribunal, was equivalent to $11.99 per hour.  The status of a casual employee, quite understandably, requires an adjustment which is accommodated by a percentage loading according to the day on which the employee is engaged.  The Tribunal accepted the amount of $11.99 as the respondent's "ordinary time rate of pay" which it related to the hours worked during an identified week preceding the accident.  The appellant contends that this methodology is not permitted by the statute and is a wrong application of the principles stated by the High Court in Scott v Sun Alliance Australia Ltd (1993) 178 CLR 1.

1. The Workers Rehabilitation and Compensation Act 1988, s69, relatively provides:

"69 ¾ (1)  Subject to this section, where total or partial incapacity for work results from an injury suffered by a worker … the compensation payable to him … is, in addition to any lump sum that may be payable under section 71 or 72 in respect of that injury ¾

(a)in the case of the total incapacity of the worker for work, weekly rate payments equal to ¾

(i)    the normal weekly earnings of the worker; or

(ii)   the ordinary time rate of pay of the worker for the work in which, and for the hours during which, the worker was engaged immediately before the period of incapacity¾

whichever is the greater; or

(b)in the case of the partial incapacity of the worker for work, weekly rate payments for the period of that incapacity equal to the difference between the worker’s normal weekly earnings and the amount that the worker is earning or would be able to earn in suitable employment or business during that period of incapacity.

(2)       In this section, 'normal weekly earnings' in relation to a worker who is incapacitated for work, means the average weekly earnings of the worker over the period of 12 months ending at the commencement of the period of incapacity.

(3)       If, during the period of incapacity of a worker, the ordinary time rate of pay for the work in which, and for the hours during which, the worker was engaged immediately before the commencement of that period increases or decreases, the weekly rate payment to which the worker is entitled is to be increased or decreased by the like amount."

1. In this case, any assessment of entitlement was dependent upon "normal weekly earnings" (s29(1)(a)(i)) or "ordinary time rate of pay", multiplied by hours worked immediately before the period of incapacity (s29(1)(a)(iii)).  The respondent contends that given the addition of the words "whichever is the greater" renders the distinction academic.

1. In the case of a casual employee subject to the Award, there are no "normal weekly earnings" capable of calculation.  The nature of the work and the status of the employee precludes normality.  The calculation varies according to whether the employee worked on a weekday, weekend, or public holiday, and on the number of hours worked during a particular period.  Any calculation would be meaningless, especially if, as here, a casual worker had only been employed for a short period of time.  However, subs(2) permits a calculation of "normal" by reference to the average weekly earnings of the particular worker over the preceding 12 months.  The calculation made by the Tribunal on this criteria was an entitlement of $305.15, based on the income earned and the hours worked during the three weeks during which she was employed.

1. The Tribunal made its assessment on the basis of "ordinary time rate of pay" for the hours worked, concluding that the entitlement was $590.51, an amount which incidentally exceeded the award rate applicable to a permanent full time employee.  In doing so, he, with respect, fell into error.  The calculation was based on the adoption of an objective criteria and its multiplication by a subjective factor.  The evidence of hours worked was:

Week 1   1 day

Week 2   49.25 hours

Week 3   15.25 hours

The Tribunal selected Week 2 because it appeared:

"… the most appropriate illustration of the weekly hours that the worker was working in the work in which she was engaged immediately prior to her incapacity … this in general was a week in which her hours conformed to the shifts that had been agreed … at the commencement of her employment."

1. No challenge is made in this appeal to any findings of fact, but the choice by the Tribunal of Week 2 shows the problem in combining a fixed or objective criteria with another, but variable.

1. The Tribunal, in accepting the test of "ordinary rate of pay", relied on, as authority, the decision of Scott v Sun Alliance (supra). The Act, s69(1)(a)(ii), was amended (16 of 1995) following the decision in Scott to accommodate some of its effect, but much of its statement of principle remains applicable.  The Tribunal cited in support of its conclusion the following passage from Scott, at par7:

"However, it is not always the case that a worker will have an ordinary time rate of pay. There may be no industrial award or agreement regulating his or her employment, and his or her contract of employment may not distinguish between ordinary and other time rates of pay or may provide for remuneration by a formula which has no temporal element - for example, piece work or commission."

1. The Tribunal stated its approach at pars23 – 25 in the following terms:

"By reference to the Award the ordinary hours of work are 38 hours per week for a person employed as a permanent full‑time employee (Clause 21). However, although Sub Clause (a), (b) and (c) of Clause 21 do not apply to a casual employee, it is still used as the basis of determining her ordinary time rate of pay, as it does relate to the 'class of work done when performed in ordinary hours' (Robertson v Accident Compensation Commission (supra)), and is the 'standard or ordinary hours per week as fixed by the Award' (Catlow v Accident Compensation Commission (1989) 167 CLR 543). Clearly these are the hours prescribed by the Award as attracting a base rate payment as compared to overtime and other penalty rates ‑ Clause 25. When combined with the phrase 'rate of pay', it becomes the rate of pay for the standard ordinary hours of work as contrasted with overtime or penalty rates for hours worked outside those standard or ordinary hours.

The fact that a particular worker may work less or more than those ordinary or normal hours as set by the Award does not mean that an ordinary time rate of pay cannot be determined for them. The ordinary time rate of pay need not relate directly to their employment. It is a determinable standard to be established from an Award or agreement and need not bear any relationship to the actual earnings of a particular worker. In Scott v Sun Alliance (supra) the worker in that case worked 16 hours per week as a casual employee. The Court, without question, determined the ordinary time rate of pay by reference to the applicable Award, determining that it related to the base salary for what the applicable Award described, that is 'the ordinary hours of work shall be an average of 38 hours per week' to be worked on one of four alternate methods. Although the Court was dealing with an artificial concept of determining an amount by reference to a week which was an 'impersonal concept', I do not believe that the subsequent amendment to s69(1)(a)(ii) which now applies to the actual hours worked by a worker alters the meaning to be given to the ordinary time rate of pay. It still relates to the determination of a rate for the work in which the worker was employed, as the first step and then this is applied to the actual hours as opposed to a week as required by the previously drafted s69(1)(a)(ii).

In my view the ordinary time rate of pay for this worker for the work in which she was employed is the amount payable should she have worked the ordinary 38 hours at the base salary rate and no penalty or overtime payment. This is because 38 hours have been determined as the ordinary hours by the Award and the Award provides for extra payment for work on a Saturday or Sunday."

1. However, in Scott, the employee did have an "ordinary time rate of pay" determined by his actual contract of employment. In their joint judgment at 6 – 7, Mason CJ, Brennan, Dawson, Toohey and McHugh JJ stated:

However, the critical question for present purposes is whether the legislature, in using the expression 'ordinary time rate of pay (as expressed by reference to a week)', intended that it should apply to rates of pay fixed by individual contracts as well as industrial awards or agreements.  In our opinion, the better conclusion is that the term was intended to apply only to rates of pay fixed by industrial awards or agreements.  Two considerations support this conclusion.

First, the terms of s69(3) of the Act suggest that the second limb of s69(1)(a) is dealing with a rate fixed by an industrial award or agreement and not the actual pay or hours worked by the worker in accordance with an agreement with the employer. Section 69(3) provides:

'If, during a period of incapacity of a worker, the ordinary time rate of pay (as expressed by reference to a week) for any work on which he was engaged immediately before the commencement of that period increases or decreases, the compensation payable to him shall correspondingly be increased or decreased by the like amount.' 

Sub-section (3) plainly assumes that 'the ordinary time rate of pay (as expressed by reference to a week)' is an impersonal concept which is not dependent on the particular contract between the injured worker and his or her employer.  It does not refer to 'the ordinary time rate of pay of the worker' but 'the ordinary time rate of pay ... for any work in which he was engaged'. It assumes that the 'ordinary time rate of pay' is a measure that can be ascertained without recourse to any agreement between the injured worker and the employer.  If 'the ordinary time rate of pay' refers to a rate fixed by an industrial award or agreement, sub-s(3) is easy to apply and will ensure that the compensation payable will be adjusted in accordance with the broad movement of wages in the industry in which the worker was engaged.  If the expression 'the ordinary time rate of pay (as expressed by reference to a week)' also refers to a rate fixed by contract between the employer and the injured worker, sub-s(3) would be difficult, although perhaps not always impossible, to apply. Nevertheless, it seems unlikely that the legislature should have intended that the amount of compensation of the injured worker should be increased or decreased by reason of a private agreement between the employer and another worker who was employed to do work of the class which the injured worker was doing.  Moreover, the provision would be unworkable if the employer had different contracts with different rates of pay (perhaps dependent on seniority) for that work."

1. The term "ordinary rate of pay" is objective, referable to an award or agreed term.  Here the respondent had no "ordinary rate" which fixed the calculation.  As a casual worker, she was entitled to be engaged "for a minimum period of two hours" with each engagement to "stand alone".  The ordinary rate of pay in the case of the respondent varied between $14.99, $17.99, $19.99 and $29.99, depending on the days worked.  There is no "ordinary time rate".  Cases such as Paterson v Stanmorr Pty Ltd (2000) 2 VR 460, Robertson v Accident Compensation Commission [1991] 2 VR 333 and Catlow v Accident Compensation Commission (1989) 167 CLR 543 do not support the respondent's contention. It is settled law that the term "ordinary time rate" does not include payments for overtime or special payments. But an equation based on a variable X (dependent on the day of work) does not constitute an ordinary rate.

1. In my opinion, the ground of appeal is made out and the determination made by the Tribunal quashed.  In substitution for that determination, the appropriate order ought be:

That pursuant to the Workers Rehabilitation and Compensation Act 1988, s88, the weekly payments of compensation be reduced to $305.15, with effect from 16 May 2002.