Thompson and Comcare - [2000] AATA 165

DECISION AND REASONS FOR DECISION [2000] AATA 165

ADMINISTRATIVE APPEALS TRIBUNAL )

) No A1999/215

GENERAL ADMINISTRATIVE DIVISION )

Re STEPHEN THOMPSON
Applicant

And COMCARE
Respondent

DECISION

Tribunal Pamela Burton, Senior Member

Date28 February 2000
PlaceCanberra

Decision The tribunal sets aside the reviewable decision and remits the matter for reconsideration with the direction that the calculation of increases in the applicant's normal weekly earnings since 16 June 1998 are to be made with reference to the increases in the base salary rate of the occupants of the position the applicant previously held at the National Library of Australia. The respondent is to pay the applicant's reasonable costs as agreed or taxed.

..................(Sgd.)......................
Pamela Burton Senior Member
CATCHWORDS
COMPENSATION – NWE – adjustment to NWE for the purpose of assessing weekly compensation payments – applicant a senior public servant – salary of the applicant's previous position later governed by Australian Workplace Agreement – whether salary of current occupant constitutes an "increase in salary" within s8(6)(c) of the SRC Act – applicant's reasonable expectation of incremental advances in salary.
Legislation
Industrial Relations Act 1988
Safety Rehabilitation and Compensation Act 1988 s8
Workplace Relations Act 1996
Authorities
Saraswati v The Queen (1991) 172 CLR 1
McDonald v Department of Defence (1999) FCA 882
Re West and Comcare (1999) 29 AAR 32
Re Spurr and Comcare (1999) 28 AAR 424
Richards and Commission for the Safety Rehabilitation and Compensation of Commonwealth Employees (AAT 8735, 26 May 1993)

REASONS FOR DECISION

28 February 2000 Pamela Burton, Senior Member

This is an application for review of the decision of the respondent dated 1 July 1999 varying the determinations of 18 November 1998 and 8 June 1999 as to the quantum of the applicant's Normal Weekly Earnings ("NWE") for the purpose of assessing the applicant's weekly compensation payments. The decision denied that the applicant's rate of weekly compensation is to be calculated with reference to the earnings of the current occupier of the applicant's pre-injury position of Assistant Director-General of the National Library of Australia ("the Library").
The applicant represented himself and Mr Peter Hanks of counsel represented the respondent. The tribunal had before it the documents lodged pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 (the "T-documents"), and various documents tendered by the parties. The applicant gave evidence and made submissions in relation to his claim. Mr Graham Still, employed by the Library, gave oral evidence on behalf of the respondent. The tribunal received written submissions from both parties.
The applicant's employment background
The facts are not in dispute. The applicant was employed by the Library as Assistant Director-General ("the position"). He was paid at the rate applicable to Level 2 in the Second Division of the Australian Public Service ("the APS"). He became incapacitated for work in 1985 and received total incapacity payments under the Compensation (Commonwealth Government Employees) Act 1971. The applicant retired from the APS on the ground of invalidity and received payments under the Superannuation Act 1976. On the coming into effect of the Safety Rehabilitation and Compensation Act 1988 ("the SRC Act"), the applicant received weekly payments pursuant to subsection 131(4) of that Act.
The calculation of the weekly amount of incapacity payments payable to the applicant requires the determination of the applicant's NWE for the time being in accordance with section 8 of the SRC Act. Subsection 8(1) prescribes a formula for calculating NWE before an employee's injury. Subsections 8(6) and 8(9) provide for an increase in the NWE in certain circumstances. The relevant subsections read as follows:
8.(1)    For the purposes of this Act, the normal weekly earnings of an employee (other than an employee referred to in subsection (2)) before an injury shall be calculated in relation to the relevant period under the formula:
  (NH x RP) + A
where:
NH is the average number of hours worked in each week by the employee in his or her employment during the relevant period;
RP is the employee's average hourly ordinary time rate of pay during that period; and
A is the average amount of any allowance payable to the employee in each week in respect of his or her employment during the relevant period, other than an allowance payable in respect of special expenses incurred, or likely to be incurred, by the employee in respect of that employment.
….
8.(6)    Subject to this section, if the minimum amount per week payable to an employee in respect of his or her employment by the Commonwealth or a licensed corporation at the date of the injury is increased, or would have been increased if the employee had continued in that employment, because of:
        (a) the attainment by the employee of a particular age;
        (b) the completion by the employee of a particular period of service; or
        (c)       the receipt by the employee of an increase in salary, wages or pay by      way of an increment in a range of salary, wages or pay applicable to the       employee or to his or her office, position or appointment;
the normal weekly earnings of the employee before the injury, as calculated under the preceding subsections, shall be increased by the same percentage as the percentage by which that minimum amount per week is increased, or would have been increased, as the case may be.
8.(7)    Subject to this section, if:
        (a)      an employee continues to be employed by the Commonwealth or a         licensed corporation after the date of an injury; and
        (b)       the minimum amount per week payable to the employee in respect of that           employment is increased because of the promotion of the employee;
the normal weekly earnings of the employee before the injury, as calculated under the preceding subsections, shall be increased by the same percentage as the percentage by which that minimum amount per week is increased.
….
8.(9)    If the minimum amount per week payable in respect of employees included in a class of employees of which the employee was a member at the date of the injury is increased or reduced on or after that date as a result of:
        (a)       the operation of a law of the Commonwealth or of a State or Territory; or
        (b)      the making, alteration or operation of an award, order, determination or     industrial agreement, or of the doing of any other act or thing, under such a law;
the normal weekly earnings of the employee before the injury, as calculated under the preceding subsections, shall be increased or reduced by the same percentage as the percentage by which that minimum amount was so increased or reduced, as the case may be.
Subsection 8(6)(c) requires consideration of what, if any, increase in salary by way of increment in a range of salary applicable to the applicant or to his office, position or appointment he would have received if he had continued in his employment at the Library. Restructuring of the APS in 1990 saw the introduction of the Senior Executive Service ("the SES"). Levels 1 and 2 were reclassified to become SES Band 1. All previous Level 2 officers moved into the top of the salary range for Band 1. As I understand the evidence, the applicant had been the only Level 2 officer in the Second Division at the Library, and the position remained the only one in that class.

The Library concedes that had the applicant remained at the Library, he was likely to have received the top salary rate of Band 1. The respondent acted on this assumption in calculating the applicant's NWE. Between 1990 and 1995 the salary range applicable to Band 1 of the SES was regularly adjusted consequential upon National Wage Case decisions and agreements under the Industrial Relations Act 1988 ("the IR Act"). In that period, the respondent adjusted the applicant's NWE and compensation entitlements accordingly.
Then, in 1996, the IR Act was amended and given the new title of the Workplace Relations Act 1996 ("the WR Act"). It introduced a wage fixing system of individually negotiated workplace agreements, called Australian Workplace Agreements ("AWAs"). Its effect was to allow the expansion of maximum salaries, and provide a safety net so that a person entering into an AWA would not get less than the maximum salary set under the previous system. Since the introduction of AWAs the salary paid to the subsequent occupants of the position have been negotiated. Negotiated increases in the salary, have therefore, replaced the former "cross the board" incremental increases.
The introduction of the AWA system of wage fixing complicates the determination of the applicant's NWE. Subsection 8(6)(c) of the SRC Act was not drafted with this system of wage fixing in mind. It has not been amended to accommodate the change.
The Issue
The issue for the tribunal is to decide how increases in the applicant's NWE are to be determined pursuant to subsection 8(6)(c) in circumstances where the easily identifiable increments that applied to a particular class of officers have been replaced by individually negotiated salaries or increases in pay. The question arises as to whether increases can be determined with reference to the annual salary fixed under an AWA between the subsequent occupiers of the position and the Library. If the words of subsection 8(6)(c) do not permit a construction that includes increases in pay which have been individually negotiated by the subsequent occupants of the position, then, is the applicant's compensation to be "frozen" as a consequence of the introduction of AWAs? Alternatively, does the construction of the subsection permit some other fair means of identifying the increases in salary the applicant could have expected to receive had he continued in his employment?
Contentions
The applicant claims that increases in his NWE should be calculated with reference to the salary of the current occupant of the position. He argues that he is entitled to the increases in the salary applicable to the position notwithstanding that they are fixed by negotiation between the occupant of the position from time to time and the Library, because the salary can only be increased by that means. It is not open to a retired officer in receipt of compensation to enter into such negotiations. Thus, if the respondent's approach to the application of subsection 8(6)(c) is correct, the applicant's NWE is effectively frozen by virtue of increase in the salary applicable to the position being negotiated privately under an AWA. The applicant contends that his compensation entitlements under the SRC Act cannot be negated by the new wage fixing method. That, he points out, is contrary to the spirit and objectives of the SRC Act.
The respondent contends that higher salaries negotiated by current employees with the Library, depending as they do on the particular skills, abilities and experience of the individual officers, cannot be treated as increases by way of increments in a range of salaries for the purpose of subsection 8(6)(c). The respondent nevertheless acknowledges that the SRC Act should not be applied to financially disadvantage injured former employees, who do not have access to the bargaining arrangements, which, in effect, are the sole means of achieving an increase in salary.
In calculating the applicant's weekly compensation payments the respondent initially based the applicant's NWE figure on the base rate available to SES officers Band 1, being $84,585. With allowances counting as salary of $13,464 per annum this gave a total of $98,049 per annum. On 5 November 1998 (T14, p.50), the tribunal made a decision to that effect reflecting an agreement between the parties. The applicant subsequently learned that a higher salary was being paid to the occupant of the position, the salary having been negotiated pursuant to an AWA, and the applicant asked the respondent to reconsider his compensation entitlements.
The respondent then decided to take the applicant's NWE to be the mean AWA salary rate for similarly classified officers, or the service wide base rate (if applicable), whichever is the greater, in addition to the cash out value of the applicable vehicle allowance. Mean AWA salary rates are identified by the Department of Employment, Workplace Relations and Small Business ("DEWRSB") in a confidential survey of SES officers' remuneration. The DEWRSB advised the respondent that the mean SES Band 1 base AWA salary as at 31 December 1998 was $86,132, and that the average AWA vehicle allowance was $15,861. This gave a total of $101,993 (T24, p68).
The applicant contends that the respondent's decision to take his NWE to be the mean AWA salary rate for similarly classified officers, reduces his legally based entitlement from a maximum to a mean salary payable to a Band 1 officer. He asserts that this approach is contrary to the concession previously made by the respondent, and is wrong in law and unfair.
Mr Hanks, counsel for the respondent, submitted that the respondent's decision to substitute the average of the negotiated salaries of SES Band 1 officers, for a salary in the range fixed under the agreement certified by the Industrial Relations Commission under the IR Act, is unsupported by section 8 of the SRC Act. However, Mr Hanks indicated that the respondent does not seek that the decision be set aside on that account. He explained that the decision was made in "recognition of the beneficial character of the SRC Act, in an attempt to accommodate the SRC Act to the changing industrial relations environment within the Australian Public Service and in an attempt to provide the applicant with access to benefits calculated by reference to the current structure of salaries with the Public Service" (para. 34 of Statement of Facts and Contentions, 24 November 1999).
Mr Hanks drew the tribunal's attention to paragraph 36 of the respondent's Facts and Contentions dated 24 November 1999 which indicated the respondent's preparedness to vary the decision under review to increase the applicant's NWE by 3% with effect from 1 July 1999, in accordance with a certified agreement entered into between the Library and its employees referred to in para. 13 of that document.
However, since the hearing further evidence has been produced by the respondent to establish that this concession was made in error, and that the 3% adjustment in rates of pay for SES officers does not apply across the board (per affidavit of Graham Still affirmed 10 December 1999). Thus, the respondent contends that its original decision reflected in the decision under review should be affirmed.
In submissions in response, the applicant points out that the fresh evidence produced confirms that the 3% has in fact been received directly by every officer working in the Library, or was incorporated in an AWA. The evidence is that there is one exception to this, in that one employee negotiated a higher salary than initially agreed in that employee's AWA, and, as part of those negotiations, provision for the 1999 3% increase was removed.
The legislative scheme
I repeat the comments I made in the matter of Re West and Comcare (1999) 29 AAR 32. Subsections 8(6) and 8(7) allows the NWE to be increased in line with increments and promotions, so that employees do not have their compensation payments frozen while salaries increase. In the case of increments subsection 8(6) covers both an employee who continues to be employed and receives increments, and an employee whose salary would have increased had he or she continued in that employment. Subsection 8(7) caters only for the employee who continues in the employ of the Commonwealth and whose salary increases because of promotion or promotions in that employment. Therefore, it does not cater for a person in the applicant's situation who has ceased to be so employed, for it would be purely speculative as to what promotion if any, he may have obtained had he continued in his employment with the Library. That is, the subsection allows for NWE to be adjusted to accord with the identifiable fact. Subsection 8(9) provides for NWE to be adjusted to accord with the fact of award changes, be it to operate to the advantage or disadvantage of an employee.
I also have regard to Comcare's own circular, "Guidelines for calculation of NWE" (Exhibit E). It reads: "NWE are to be a fair representation of what an employee could have expected to earn but for an injury", and "Should the situation change after the date of injury i.e. a National Wage Case, Increase or decrease in an overtime situation etc, then the Act provides for variation to the NWE at date of injury figure to reflect the change in the expected earnings. This ensures that at all times an employee will be compensated in relation to a fair representation of lost earnings at any particular point in time after the injury."
The evidence
The applicant produced the Library's 38th Annual Report 1997-8, p.97, setting out the remuneration levels of SES staff, which indicated that his former position attracted a remuneration package in the range of $130,000 to $139,000 (Exhibit B). He said that from other information available to the public it is not difficult to deduce that this remuneration package has a base salary element of between $100,000 and $105,000 as well as performance pay and other benefits. He concedes that other benefits such as spouse travel and telephone expenses are not relevant to the NWE figure. The respondent concedes that the motor vehicle allowance is to be included. In addition an increase of at least 3% was obtained in July 1999 (it could not be less, although it might be more according to the affidavit affirmed by Mr Still on 10 December 1999, and filed on behalf of the respondent).
The applicant tendered an advertisement for the Deputy Director-General, published in September 1999 (Exhibit C), indicating that the position currently attracts a remuneration package of up to $155,000 and access to performance pay.
The applicant had 13 to 14 years of experience as a Division Head and 11 years at Band 1 level as a policy adviser in education. Assuming no other promotion he had approximately 25 years experience, which he says, is more than any other of his counterparts. He maintains that his AWA would be no less than the maximum salary paid to the highest paid Band 1 officer, or the same as that received by the occupant of the position he formerly held. The applicant provided work references (Exhibit D) in support of his argument that he had reasonable expectations of being in receipt of the same salary as the present occupant of the position, leaving aside his prospects of promotion and performance pay.
The applicant subpoenaed material from the Library relating to the salaries of the occupants of senior positions at the Library and in particular to the salary negotiations of the current occupant of the position. He hoped to establish from that material that his qualifications and skills were likely to have matched any current SES officer of the Library, and that he had a reasonable expectation that, had he remained at the Library, he would be receiving the same remuneration as the occupant of the position. The Library's legal representatives objected to production of the documents. The tribunal ordered the production of the documents but deferred an order granting access to the parties to the material, inviting the parties to reapply for access to the material if and when required, as the issues unfolded. At the hearing the argument focussed on the application of subsection 8(6)(c) to increases in salary negotiated under AWAs, and no further call on the material was made.

The respondent asserts that the salaries of the subsequent holders of the position are not relevant to the determination of the applicant's NWE. Mr Hanks, for the respondent, stressed that the salary outcome of the negotiating process was unpredictable. He offered theoretical reasons why the applicant may not have succeeded in negotiating the same remuneration as the person currently occupying the applicant's former position under an AWA.
The applicant, in submissions, expressed concern at his inability to prove that he was likely to have been able to negotiate a similar package to the current holder of the position. He expressed the view that he might have been able to do so had he had access to the documents produced by the Library.
I am of the view that in a case such as this it is not appropriate for the respondent, or the tribunal in its shoes, to delve into the details of salary packages, or the way in which they are negotiated. If the applicant's NWE is to be increased with reference to the current salary of the holder of the position, or components of the salary, the respondent has the power to request the relevant salary information from the Library pursuant to sections 70 and 71 of the SRC Act. If the NWE is to be determined with reference to some averaging of salaries of SES officers at the Library, the same applies.
Discussion
The tribunal is to decide whether increases in the salary paid in respect of the position are akin to that of increments that the applicant could legitimately have expected to receive, for the purposes of subsection 8(6)(c).
The respondent relied on evidence adduced by Mr Still that the salaries of the Library's SES officers are independently negotiated depending on market forces and in the light of the particular employee's skills, experience and responsibilities. He said that the outcome of the negotiations is unpredictable and it can not be assumed the applicant could have successfully negotiated the same salary increases. For this reason the respondent submits that the language of subsections 8(6)(c) and 8(9) of the SRC Act do not permit the adjustment of the applicant's NWE with reference to the salary that is or was payable to another employee who has negotiated a salary with the Library.
On the evidence produced by the applicant, and in the absence of the respondent having produced any evidence to the contrary, I am able to conclude that the applicant was likely to remain in the position and that he would have been required to perform the same duties as those the current occupant of the position is expected to perform.
I accept the applicant's submission that had he not been injured he would have had a legitimate expectation that his remuneration package would be based on an AWA. All SES officers at the Library were expected to negotiate an AWA. It was in their interest to do so, as no salary negotiated by way of an AWA could be less than the APS award. There is no suggestion that the applicant was unlikely to perform the duties required of the position satisfactorily. The evidence is to the contrary.
The respondent asserted that a person appointed to the position from outside the APS was likely to have obtained a higher salary than that which the applicant was likely to have received. The respondent maintained that outside industry experience, which the applicant did not have, was one of the relevant factors in the negotiating process. No evidence was produced to support this claim. I don't think the tribunal can assume that officers attracted from outside the APS are more likely to have greater bargaining power or better attributes than the applicant.
I do not think it is up to the applicant to establish that his qualifications, experience and skills were equal to or better than those of the current occupant of the position. The respondent adduced no evidence to establish that the applicant was likely to have commanded a lesser salary than the current occupant of the position.
There is insufficient evidence before me to find, and it is not reasonable to suggest, that the applicant was unlikely to have obtained an AWA less favourable than that negotiated by any of his successors. On the evidence, the applicant had a reasonable expectation of obtaining the same base salary as that of the subsequent occupants of the position. I have no difficulty in finding that the best evidence available as to the increases in the salary the applicant was likely to have received had he remained at the Library is the salary currently being paid to the occupant of the position. In the absence of the availability of any other wage fixing method, I can only assume that the applicant, having carried out the duties of the position to his employer's satisfaction, was likely to have obtained the same base salary that has been paid to the successors to the position.
Having made this finding, I must now consider whether the increases in salary for the position since 16 June 1998, fall within the meaning of "increment in a range of salary, wages or pay" for the purpose of subsection 8(6)(c).
The Macquarie Dictionary provides the following meanings of "increment": 1. Something added or gained; an addition or increase. 2. Profit. 3. The act or process of progression within a graduated scale of salaries, designed to reward an employee for increases in skill or experience. The last meaning clearly incorporates the term of art that the word "increment" has assumed in the APS. The definition of "increment" is broad enough to bear the meaning of any increase in salary, wage or pay. That the drafters of the SRC Act envisaged a particular meaning to be attributed to it is not reason enough for the word to be given only that restricted meaning when it can bear a wider meaning more beneficial to the applicant.
The SRC Act is a remedial statute beneficial in nature. His Honour Justice McHugh observed in Saraswati v The Queen (1991) 172 CLR 1 at 21 that if the literal or grammatical meaning of a provision does not give effect to the purpose of the legislation, that meaning cannot be regarded as "the ordinary meaning" and cannot prevail. In circumstances whereby "cross the board" graduated increments in salaries are, so far as the position is concerned, a thing of the past, such a restricted meaning would be contrary to the spirit of the Act. The SRC Act must be construed such that the purpose and object of the Act will be served (see DP Blow in Re Spurr and Comcare (1999) 28 AAR 424 at 428).
Sundberg J in McDonald v Department of Defence (1999) FCA 882 said at para.12:
Section 8(6)(c) requires the respondent to take into account pay increases resulting from 'the receipt by the employee of an increase in salary, wages or pay by way of an increment in a range of salary, wages or pay applicable to the employee or to his or her office, position or appointment'. The increase must be an increment in a range applicable to the employee specifically or to the position held. The section contemplates the existence of a pay range which the employee may 'work up through' over time. The increase must be achieved within that position.
Mr Still, in giving evidence, said that on the implementation in 1996 of AWAs in the Library, consideration was given to the minimum level of salary, but there was no maximum. The respondent therefore argues that there is no "range" of salary in which the employee can work up to. I do not accept that submission. The AWA is negotiated within a range, in the applicant's case Band 1, with a maximum established by the negotiating process, and in fact this is reflected in the advertisement for the position (Exhibit C). In the applicant's case the respondent has accepted that at the time of the applicant's injury, the minimum salary for the position was the maximum salary payable to Band 1. The class to which he belonged at the time of his injury must be regarded as Level 2 (with a minimum salary of the maximum paid to Band 1). There was at the time only one of "this class" in the Library, and he was the only officer paid at the top of Band 1. It is in this context of there being a fixed minimum salary that the AWA negotiations would have begun. Sundberg J, in McDonald (above) contrasted a pay increase within a position with a pay increase resulting from a change in position by way of promotion which would not be "by way of an increment in a range". The applicant claims no increase in his NWE from expected promotions.
Deputy President McMahon said in Richards and Commission for the Safety Rehabilitation and Compensation of Commonwealth Employees (AAT 8735, 26 May 1993) at para. 19: "Within the structure of the Act, s 8 is a calculating section rather than a determining section. It is a section that tries to find normalcy in those rewards." In the applicant's case normalcy can best be determined with reference to the current salary of the office or position which the applicant would, but for the injury, have occupied.
I accept the respondent's submission that the predicted outcome, rather than a possible outcome of the continuation in employment, is to be considered. It is predictable that the applicant's salary would have been established by the current means of negotiating an AWA. It is predictable that the outcome would have been more favourable to the applicant than the previous certified Library agreement or APS award. I accept that the applicant, if he were still employed, would be performing the duties of the position satisfactorily. It is speculative to infer that other officers who subsequently occupied the position are likely to have negotiated a more lucrative salary than that the applicant was likely to negotiate. In addition to the base salary the current occupant of the position apparently has access to performance pay. What the applicant might have received by way of performance pay is speculative, and no increase can be made to his NWE with reference to that component of the salary package received by the current occupant of the position. I note the evidence that the current occupant of the position is likely to have received a 3% increase in pay in July 1999, and that increase must also be regarded as an increment for the purposes of section 8(6)(c).
I find that it is open to the tribunal in applying the provisions of the SRC Act to determine the applicant's NWE with reference to the AWA negotiated salary paid in respect of the position. This approach is consistent with the spirit of that Act. It requires the identification of increase in that base salary and applicable allowances such as the motor vehicle allowance, for the calculation of the applicant's NWE in accordance with subsection 8(6)(c).
I am not convinced that subsection 8(9)(a) does not apply to the applicant. The WR Act does not provide for an increase in salary, only the means by which it is to occur. Yet it is an enactment which effectively provides for any increase in the salary applicable to the position. As it effectively removes increases envisaged by the drafters of subsection 8(6)(c) to which the applicant would otherwise have been entitled, it seems that the increase the WR Act provides for by way of a negotiated increase under an AWA falls within the increase referred to in subsection 8(9) "as a result of the operation of a law of the Commonwealth". However, I do not need to determine the effect of subsection 8(9) in view of my decision in relation to the application of subsection 8(6)(c) to the applicant's situation.
Decision
The tribunal sets aside the reviewable decision and remits the matter for reconsideration with the direction that the calculation of increases in the applicant's NWE since 16 June 1998 are to be made with reference to the increases in the base salary rate of the occupants of the position the applicant previously held at the Library. The respondent is to pay the applicant's reasonable costs as agreed or taxed.
I certify that the 44 preceding paragraphs are a true copy of the reasons for the decision herein of Pamela Burton, Senior Member.
Signed:         Eva Dimopoulos           .....................................................................................
  Associate
Date of Hearing  25 November 1999
Date of Decision  28 February 2000
Counsel for the Applicant        Self-represented
Counsel for the Respondent    Mr Peter Hanks
Solicitor for the Respondent    Mr Jim Nealy, Australian Government Solicitor