Tibbetts v Sighthouse Pty Ltd ATF the Trustee for Lord & Rhodes
[2021] NSWPIC 478
•23 November 2021
| CERTIFICATE OF DETERMINATION OF MEMBER | |
CITATION: | Tibbetts v Sighthouse Pty Ltd ATF the Trustee for Lord & Rhodes [2021] NSWPIC 478 |
| APPLICANT: | Merrin Tibbetts |
| RESPONDENT: | Sighthouse Pty Ltd ATF the Trustee for Lord & Rhodes |
| MEMBER: | Catherine McDonald |
| DATE OF DECISION: | 23 November 2021 |
| CATCHWORDS: | WORKERS COMPENSATION - Calculation of pre-injury average weekly earnings (PIAWE) under clause 8EA of Division 2 of the Workers Compensation Regulation 2016 being adjustment of the relevant earning period because of the COVID-19 pandemic; Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (NT) and Project Blue Sky Inc v Australian Broadcasting Authority considered; Held – no order. |
| DETERMINATIONS MADE: | 1. No order. 2. I grant liberty to apply in writing in the limited circumstances set out in my reasons. |
STATEMENT OF REASONS
BACKGROUND
Merrin Tibbetts was employed by Sighthouse Pty Ltd as a casual receptionist. She suffered a psychological injury which is deemed to have occurred on 12 January 2021. Ms Tibbetts has been paid weekly compensation since that date by reference to pre-injury average weekly earnings (PIAWE) of $487.79, indexed on 27 March 2021 to $502.
Ms Tibbetts contends that her PIAWE were higher because Sighthouse’s insurer has incorrectly applied cl 8EA(4)(a) of the Workers Compensation Regulation 2016. That clause makes adjustments to the period used for the calculation of PIAWE because of the COVID-19 pandemic.
PROCEDURE BEFORE THE COMMISSION
The matter was commenced as an application for an expedited assessment. Submissions in support of Ms Tibbetts’ case were included in the application.
The parties negotiated at a telephone conference on 7 October 2021. Ms Vella, solicitor, appeared for Ms Tibbetts and Mr Griffin, solicitor, appeared for Sighthouse. 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 used my best endeavours in attempting to bring the parties to the dispute to a settlement acceptable to all of them. I am satisfied that the parties had sufficient opportunity to explore settlement and that they were unable to reach an agreed resolution of the dispute.
The parties requested that they file written submissions, though they agreed to the determination of the matter without a conference or formal hearing. Mr Griffin told me that iCare considered the proceedings raised a significant legal matter because they involved the interpretation of legislation.
The parties’ submissions were filed in accordance with the timetable ordered.
LEGISLATION
It is appropriate to set out the relevant legislation before summarising the evidence and submissions which refer to it.
The sections of the Workers Compensation Act 1987 (the 1987 Act) under which workers are paid weekly compensation appear in Division 2 of Part 3 and provide that those payments are a percentage of PIAWE.
Schedule 3 of the 1987 Act is headed “Earnings for the purposes of weekly payments of compensation under Division 2 of Part 3”. Clause 2 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.
...
(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).
(3) The regulations may provide for the adjustment of the relevant earning period for a worker in employment (including, for example, by extending or reducing the period)—
(a)to take into account any period of unpaid leave or other change in earnings circumstances in the employment, or
(b)to align the relevant earning period with any regular interval at which the worker is entitled to receive payment of earnings for work performed in the employment.
(4) If the amount of a worker’s pre-injury average weekly earnings is less than any minimum amount prescribed by the regulations as applicable to the worker, the amount of the worker’s pre-injury average weekly earnings is taken to be that minimum amount. Different minimum amounts may be prescribed for different classes of workers, including part-time and full-time workers.”
Earnings is defined in cl 6:
“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.
…”
Clause 10 provides:
“10 Effect of Commonwealth jobkeeper scheme
(1) This clause applies to an injured worker who receives or has received jobkeeper scheme payments from an employer.
(2) For the purposes of determining the pre-injury average weekly earnings of a worker who received jobkeeper scheme payments during the relevant earning period for the worker, for each week to which a jobkeeper scheme payment applies, the worker’s earnings in the employment to which the payment relates are taken to be the amount of income the worker is entitled to receive for work performed in the employment in that week.
(3) A jobkeeper scheme payment received by an injured worker after the date of injury is, for each week to which the jobkeeper scheme payment applies, taken to be part of the worker’s actual gross earnings in relation to that week for the purposes of the definition of current weekly earnings in clause 8.
(4) In this clause—
jobkeeper payment has the same meaning as it has in Part 6–4C of the Fair Work Act 2009 of the Commonwealth.
jobkeeper scheme payment means a payment made to a worker by an employer in connection with jobkeeper payments that are paid or payable to the employer in relation to that worker.”
The definitions in the Fair Work Act 2009 (Cth) are:
“jobkeeper payment means a payment that:
(a) is payable by the Commonwealth in accordance with the jobkeeper payment rules; and
(b) is known as jobkeeper payment.
jobkeeper payment rules means rules made under the Coronavirus Economic Response Package (Payments and Benefits) Act 2020.”
Division 2 of the Workers Compensation Regulation 2016 (the 2016 Regulation) was introduced by the Workers Compensation Amendment (COVID-19 Weekly Payment Compensation) Regulation 2020. The objects of the amendment included:
“[to] provide for adjustments to be made to the relevant earning period for a worker who experiences a financially material reduction in total earnings because of a change to the worker’s employment arrangements as a result of the impact of the COVID-19 pandemic;”
The 2016 Regulation as amended provides for the adjustment of the relevant earning period in certain circumstances. Its purpose is explained in cl 8A:
“8A Operation of Division
(1) This Division provides for the adjustment of the relevant earning period under clause 2(2) of Schedule 3 to the 1987 Act for a worker in employment for the purposes of calculating the pre-injury average weekly earnings in relation to the worker.
(2) The relevant earning period in respect of the employment is to be adjusted in accordance with the provisions of this Division in the following order—
(a)Clause 8B (Adjustment for workers not continuously employed),
(b)Clause 8C (Adjustment for financially material change to earnings),
(c)Clause 8D (Alignment of relevant earning period with pay period),
(d)Clause 8E (Adjustment for unpaid leave),
(e)Clause 8EA (Adjustment for prescribed periods relating to COVID-19).
(3) Accordingly, a reference in a provision of this Division—
(a)to the relevant earning period is a reference to the relevant earning period as adjusted in accordance with any preceding provision applicable to the worker, or
(b)to the unadjusted earning period is a reference to the relevant earning period as so adjusted, but without regard to any adjustment under the provision in which the expression is used.”
Clause 8EA reads:
“8EA Adjustment for prescribed periods relating to COVID-19—Schedule 3, clause 2(3)(a) of 1987 Act
(1) The relevant earning period for a worker in employment is to be adjusted in accordance with this clause if, during the unadjusted earning period, there was a change to the worker’s employment arrangements as a direct result of the impact of the COVID-19 pandemic on the operations or general financial position of an employer of the worker.
(2) If the change to the worker’s employment arrangements resulted in a financially material reduction to the total earnings of the worker during the first prescribed period, the relevant earning period is to be adjusted by excluding the first prescribed period.
(3) The relevant earning period for a worker to whom subclause (2) applies is to be further adjusted in accordance with subclause (4) if the change to the worker’s employment arrangements resulted in no earnings in employment being paid or payable to the worker for a period of 2 or more days commencing on the first day of the second prescribed period.
(4) For subclause (3), the relevant earning period is to be further adjusted by excluding each day, whether or not the day was a usual work day for the worker, of the period commencing on the first day of the second prescribed period and ending on the earlier of—
(a)the day immediately before the day on which earnings in any employment once again became payable to the worker, and
(b)the last day of the second prescribed period.
(5) In this clause—
first prescribed period means the period on and from 23 March 2020 to 14 June 2020.
second prescribed period means the period on and from 15 June 2020 to 27 September 2020.”
EVIDENCE
The following documents were in evidence before the Commission and considered in making this determination:
(a) Application for Expedited Assessment and attached documents (the Application), and
(b) Reply.
There is no statement from Ms Tibbetts in the Application.
Sighthouse’s insurer issued a notice dated 12 April 2021, accepting liability and assessing PIAWE at $502, resulting in a weekly payment of $476.90 for the first 26 weeks. An information sheet accompanying the notice explained that an employer may claim Jobkeeper payments for a partially incapacitated worker who is still working.
Ms Tibbetts’ solicitors sought a copy of the information used to calculate PIAWE and the insurer responded to Ms Tibbetts saying:
“For us to calculate your Pre Injury Average Weekly Earnings, your employer provided a wage summary showing hours worked and earnings from 02/02/2020 - 10/01/2021. In the calculation we excluded 6 weeks 23/03/2020 - 03/05/2020 where the practice was closed and you were receiving job keeper.
We also have missing pay periods:
1 week: 27/01/2020 - 02/02/2020
1 week: 20/07/2020 - 26/07/2020
Your PIAWE was calculated as $487.79 a week based off the remaining 37 weeks . This has now been indexed and your PIAWE is $502.00.”
A schedule of earnings provided by Sighthouse was subsequently provided, together with a copy of Ms Tibbetts’ timesheets. The timesheets show that the most hours Ms Tibbetts worked in any week was 25 and that her hours and days varied.
Ms Tibbetts’ solicitors sought a review of the calculation on 5 August 2021, stating that Jobkeeper payments received by Ms Tibbetts in the 12 week period when Sighthouse’s office was closed should have been included in the calculation. They said that PIAWE should have been $510.26.
A review of the PIAWE assessed by the insurer was completed on 19 August 2021. The insurer said that the definition of earnings includes only income for work performed and therefore does not include Jobkeeper payments. The insurer said:
“On 31/01/2020 you commenced your employment with the insured as a receptionist on casual basis.
• On 12/01/2021 you sustained an injury at work.
• Your employer has provided timesheet details for the period of 31/01/2020 to the 10/01/2021 (49.43 weeks).
• The timesheet details indicate that there was a financial material reduction in earnings due to the impact of Covid-19. In accordance with Clause 8EA of the Workers Compensation Regulations 2016, we have excluded the 12 weeks in the period of 23/03/2020 to 14/06/2020 from the relevant earning period.
• As you were employed as a casual, any weeks not worked are still included in the relevant earning period.
• The relevant earning period is therefore 37.43 weeks.
• Your total earnings in this relevant period were $18,257.98.
• Your average earnings were $487.79 ($18,257.98/37.43 weeks).
Accordingly, your PIAWE has been maintained as $487.79, currently indexed to $502.00.”
The Reply attached a statement from James Rhodes, one of the principals of Sighthouse, dated 4 February 2021. He said that Sighthouse purchased the business on 31 January 2020 and that Ms Tibbetts commenced employment on that date. She was an existing employee of the previous owners of the business and worked as a casual receptionist. Mr Rhodes said that Ms Tibbetts generally worked three days or an average pf 17.3 hours per week – being a Tuesday or Wednesday and Thursday and Friday. The business was closed for six weeks because of the pandemic from March 2020 and when it reopened, staff were brought back gradually. Ms Tibbetts worked 9.5 hours a week which gradually increased. He described the circumstances of the injury.
SUBMISSIONS
Ms Vella prepared the submissions which were included in the Application and began by descrbing the correspondence. The submissions are by reference to the numbering of the Workers Compensation Amendment (COVID-19 Weekly Payment Compensation) Regulation 2020 (the Amendment Regulation) rather than the paragraphs of the Workers Compensation Regulation 2016. For ease of reference I have referred to the current reference from the 2016 Regulation.
Ms Vella said that Ms Tibbetts agreed that cl 10 Sch 3 of the 1987 Act provided that jobkeeper payments are not considered income for the purpose of calculation PIAWE. She said that, pursuant to cl 8EA of the Regulation, earnings in the period 23 March 2020 to 14 June 2020 are excluded from the relevant earning period for the purpose of determining PIAWE.
Ms Vella submitted that the relevant earning period should be further adjusted during the second prescribed period between 15 June 2020 and 27 September 2020 but that the insurer had not done so. Ms Vella said that Ms Tibbetts’ employment arrangements resulted in no earnings being received for a period of two or more days during the second prescribed period. A breakdown of Ms Tibbetts’ earnings is attached to the submissions and Ms Vella said that the relevant earning period is reduced to 29.58 weeks and that PIAWE should be calculated as follows:
“Relevant Earning Period = 29.58 weeks.
5 February 2020 to 22 March 2020 – earnings were $4,496.00 gross.
23 March 2020 to 14 June 2020 – exclude all payments received as per Schedule 1 of
the 2020 Regulation - nil15 June 2020 to 19 January 2021 – earnings during the second prescribed period
excluding jobkeeper - earnings were $12,848.72 gross.Total Gross Earnings = $17,344.72
divided by 29.58 weeks = $586.36 gross (PIAWE).”
A schedule shows the hours worked and amounts Ms Tibbetts earned between 23 June 2020 and 29 September 2020 and the amount paid as Jobkeeper benefits. A calculation of the period of time sought to be excluded from the assessment of PIAWE was made for each week on the basis of a 35 hours per week. The schedule excludes the difference between the number of hours worked and 35 hours. Those hours are converted to 37.1 days and 7.42 weeks. It is said that the relevant earning period is 29.58 weeks.
Ms Vella submitted that amount should be indexed.
Ms Goodman and Mr Necovski of counsel (Counsel) prepared submissions on behalf of Sighthouse. After setting out the legislation, Counsel said that if Ms Tibbetts did not work two or more days “at the commencement of the first day of the second prescribed period” then days are excluded from the calculation of the earning period until the day immediately before the day on which earnings in any employment became payable.
On the basis that Ms Tibbetts commenced employment on 31 January 2020 and ceased on 12 January 2021 when she finished early, she was employed for an earning period of 49.7 weeks (348 days divided by 7).
The period is reduced by 12 weeks under cl 8EA (1) and (2) for the first prescribed period, so that the earning period is reduced to 264 days or 37.71 weeks.
Counsel said that the timesheets attached to the Application show that Ms Tibbetts worked one hour on 18 June 2020, during the week ending 21 June 2020. Clause 8EA(4)(a)
“results in days ceasing to be excluded from the calculation of the earning period on 17 June 2020, being the day immediately before the day on which earnings in any employment once again became payable, as the Applicant worked 1 hour on 18 June 2020.”
Counsel said that equates to an exclusion of three days (15 to 17 June 2020) so that the remaining earning period was 261 days or 37.3 weeks. If the total earnings during the relevant period were $18,257.98, as set out in the s 78 notice dated 19 August 2021, dividing that amount by 37.3 equals PIAWE of $503.60 after indexation.
Mr Fogarty and Ms Vella prepared submissions in reply. They noted that the objectives of the amending regulation. They submitted that the insurer’s interpretation was restrictive and, if accepted, would defeat the purpose and objectives of the amendment because, even though Ms Tibbetts had experienced a material reduction in her earnings as a result of the pandemic, she would not receive the full benefit of the regulation.
Ms Tibbett’s solicitors submitted that cl 8EA. (3) and (4) require an adjustment to be made on each occasion in the second prescribed period when Ms Tibbetts’ employment arrangement resulted in no earnings for two or more days. They said that the period of adjustment during the second prescribed period is not limited to one period of adjustment and there can be many during the second prescribed period. They noted that a breakdown of earnings in the Application showed that Ms Tibbetts continued to receive Jobkeeper top up payments in addition to earnings when she was offered work. There were a number of occasions on which Ms Tibbetts received no earnings from her employer so that there should be an adjustment on each occasion when she received no earnings for a period of two days or more. Relying on the calculations in the Application, Mr Fogarty and Ms Vella said that the PIAWE calculation should be $586.36, subject to indexation.
FINDINGS AND REASONS
The position taken on behalf of Ms Tibbetts is no longer the same as that taken in the early correspondence and she now agrees that Jobkeeper payments are excluded from the calculation of earnings.
The only issue for determination is how the relevant earnings period is to be adjusted in respect of the second adjustment period between 15 June 2020 and 27 September 2020 and that turns on the interpretation of the legislation.
The task begins with the text itself - Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (NT)[1]. In the same case, French CJ said that the starting point is “the ordinary and grammatical sense of the statutory words to be interpreted having regard to their context and legislative purpose.”[2]
[1] (2009) 239 CLR 27, 46.
[2] At [31].
Section 33 of the Interpretation Act1987 provides:
“33 Regard to be had to purposes or objects of Acts and statutory rules
In the interpretation of a provision of an Act or statutory rule, a construction that would promote the purpose or object underlying the Act or statutory rule (whether or not that purpose or object is expressly stated in the Act or statutory rule or, in the case of a statutory rule, in the Act under which the rule was made) shall be preferred to a construction that would not promote that purpose or object.”
The objects of the Amendment Regulation are relevant. In this case it is to adjust the components of the PIAWE calculation for workers who experience a financially material reduction in total earnings as a result of the pandemic, so that the average is not diluted by weeks in which less work was performed.
In Project Blue Sky Inc v Australian Broadcasting Authority[3], Mc Hugh, Gummow, Kirby and Hayne JJ said:
“…the duty of a court is to give the words of a statutory provision the meaning that the legislature is taken to have intended them to have. Ordinarily, that meaning (the legal meaning) will correspond with the grammatical meaning of the provision. But not always. The context of the words, the consequences of a literal or grammatical construction, the purpose of the statute or the canons of construction may require the words of a legislative provision to be read in a way that does not correspond with the literal or grammatical meaning.”[4]
[3] (1998) 194 CLR 355.
[4] At 384.
The position contended for on behalf of Ms Tibbetts is that there may be a number of periods where the change in employment arrangements as a result of the pandemic resulted in no earnings being paid for a period of two or more days. The schedule provided with the submissions in the Application assumes that there are 15 such periods – one for each week between 23 June 2020 and 29 September 2020 when no earnings were paid for the equivalent of two or more days.
The parties conducted the case on the basis that there were no earnings for two or more days after 15 June 2020 as a result of the pandemic so that sub-cl (3) and (4) applied. The schedule provided for Ms Tibbetts’ starts on 15 June 2020 and is somewhat artificial in that she had worked for differing numbers of hours per week after 3 May 2020.
The purpose of the calculation under Sch 3 of the 1987 Act and Div 2 of the 2016 Regulation is to ascertain PIAWE for the purpose of paying weekly compensation. PIAWE is defined as a weekly average.
Generally, the calculation of PIAWE is performed under Sch 3 of the 1987 Act. It is made by reference to the relevant earning period (my emphasis). In most circumstances, the relevant earning period will be the period of 52 weeks before the injury, though Sch 3 provides that the period may be adjusted by regulation or that an estimate be used for short term workers.
Earnings is defined in Sch 3 and the earnings in respect of a week means the income received for work performed during the week. Earnings are defined by reference to a weekly amount.
Jobkeeper payments are excluded from the calculation. The schedule attached to the submissions shows that Ms Tibbetts received more money in weeks that she received the full Jobkeeper payment than her usual earnings. Those payments must be disregarded to prevent PIAWE being inflated.
Division 2 of the 2016 Regulation provides for adjustment of the relevant earning period in certain circumstances, one of which is where there was a change in employment as a result of the COVID-19 pandemic. The purpose of the clauses is to exclude the weeks in which no earnings were received from the period so as to prevent a reduction in the weekly average for periods when no work was undertaken by many people.
Subclause (1) of cl 8EA provides for the adjustment of the relevant earning period (as defined in Sch 3 cl 2 of the 1987 Act) if there was a change in employment as a direct result of the pandemic on the operations or financial position of the employer.
Subclause (2) provides for the exclusion of the first prescribed period from 23 March to 14 June 2020 when many businesses throughout Australia shut down. The parties agree that the whole of that period is excluded from the calculation of Ms Tibbetts’ PIAWE, even though the payslips show that she earned some wages.
Subclause (3) provides that the earning period is to be an adjustment in the period commencing on 15 June 2020 if a change in employment resulted in no earnings being paid or payable for a period of two or more days.
Subclause (4) provides for the method of that adjustment. Each day of the second adjustment period is to be excluded from the calculation, whether or not it was a usual work day for the worker, until a certain date. The last day to be excluded is either the day immediately before the day on which earnings in any employment became payable or the end of the period on 27 September 2020. Effectively it means that the adjustment ends on the day before the day on which a worker returned to work, if they did so before 27 September 2020.
As noted above, Ms Tibbetts did not provide a statement. I therefore draw the conclusion that she agrees that her employment was casual and that the payslips reflect the hours she worked. The lack of a statement also means that there is no explanation in Ms Tibbetts’ evidence of the days on which she usually worked or to explain why she only worked one hour in the period for which she was paid on 23 June 2020.
The relevant pay slip for the period 14 June 2020 to 20 June 2020 shows that the period of one hour was for salary and wages “including 25% casual rate for casuals”. For the remainder of that pay period, she was paid Jobkeeper. I am satisfied that the payment of salary was “earnings in any employment.”
The submissions made for Ms Tibbetts stress that earnings were not payable for various periods of two or more days but do not engage with the ordinary words of sub-cl (4). No reason was offered for comparing her hours to a 35 hour week. There is no evidence that she had worked a 35 hour week. The schedules and payslips show that in most weeks before March 2020 she worked 22 hours and that is consistent with Mr Rhodes’ evidence.
In Ms Tibbetts’ case, it was some time before she began working her usual hours.
Sub-clause (4) closes the period closes the period on the day before she returned to work, even though she only returned for an hour. After that her hours were less than her usual hours for about a month. She returned to working 22.5 hours a week from late July 2020.Giving effect to the grammatical meaning of the words and the objects of the provision has the result that the last day to be excluded from the period used to calculate PIAWE is 17 June 2021.
In those circumstances, the appropriate outcome would be that I make no order because Ms Tibbetts is being paid compensation by reference to the correct PIAWE. However, there is a slight difference between the PIAWE of $487.79 indexed to $502 in the review decision dated 19 August 2021 and the figure in Counsels’ submissions of $503.60. I assume the parties will be able to resolve that discrepancy but I grant liberty to apply in writing in the event they are not.
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