Uijland and Comcare (Compensation)
[2019] AATA 19
•14 January 2019
Uijland and Comcare (Compensation) [2019] AATA 19 (14 January 2019)
Division:GENERAL DIVISION
File Number(s): 2018/4006
Re:Stefanus Petrus Uijland
APPLICANT
AndComcare
RESPONDENT
DECISION
Tribunal:Deputy President Gary Humphries
Date:14 January 2019
Place:Canberra
The Tribunal remits the decision under review to Comcare, in order that Mr Uijland’s NWE be calculated under s 8(5) on the basis that:
NH = 36
A = 0
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Deputy President Gary Humphries
Catchwords
COMPENSATION – normal weekly earnings (NWE) – whether public holiday penalty rate should be included in the calculation of NWE – whether public holiday penalty rate is included in the definition of “A” in s 8(1) of the Safety, Rehabilitation and Compensation Act 1988 – public holiday penalty rate falls outside the meaning of “A” – decision remitted.
Legislation
Safety, Rehabilitation and Compensation Act 1988 ss 7, 8, 14
Cases
Comcare v Nicholas (2014) 225 FCR 369
Re Maley and Comcare (1998) 27 AAR 100
Re Ragg and MRCC [2009] AATA 371
Re Whitton and Department of Defence [1998] AATA 628
Sutton and Comcare (AAT, No 10935, 16 May 1996, unreported)
Zarb and Comcare [1997] AATA 254
REASONS FOR DECISION
Deputy President Gary Humphries
14 January 2019
INTRODUCTION
This decision concerns the question of whether a public holiday penalty rate should be included in the calculation of the normal weekly earnings of an injured worker under the Safety, Rehabilitation and Compensation Act 1988 (the Act).
Stefanus Petrus Uijland has an accepted claim under s 14 of the Act for an aggravation of lumbar spondylosis.[1]
[1] In this decision, italicised text is generally used to indicate direct quotations.
Comcare issued a Determination dated 6 June 2018 in which it decided, pursuant to s 8 of the Act, that Mr Uijland’s normal weekly earnings (NWE) were $3,654.08. Mr Uijland sought reconsideration of this determination on 13 June 2018. Comcare subsequently issued a reviewable decision dated 11 July 2018 in which it varied the determination, deciding instead that Mr Uijland’s NWE were $3,582.42.
Mr Uijland appealed to the Tribunal for merits review of this decision on 18 July 2018.
THE LEGISLATION
Section 8(1) of the Act sets out the formula for the calculation of an injured worker’s NWE. The subsection provides:
(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.
Section 8(5) however provides:
(5)Where, because of the shortness of the relevant period, the normal weekly earnings as calculated in relation to the relevant period under subsection (1) or (2) would not fairly represent the weekly rate at which the employee was being paid in respect of his or her employment before the injury, the normal weekly earnings before the date of the injury shall be calculated in relation to such other period as Comcare considers reasonable for the purpose of arriving at an amount that does fairly represent the weekly rate at which the employee was being so paid.
Section 9(1) deals with the definition of relevant period in subsection (1). It provides:
(1)For the purposes of calculating the normal weekly earnings of an employee before an injury, a reference in section 8 to the relevant period is, subject to this section, a reference to the latest period of 2 weeks before the date of the injury during which the employee was continuously employed by the Commonwealth or a licensed corporation.
RELEVANT FACTS
From August 2001 Mr Uijland was employed as an air traffic controller by Airservices Australia, the government organisation charged with responsibility for Australia’s airspace management. Based in Albury NSW, his duties included the safe and expeditious control, sequencing and monitoring of air traffic arriving and/or departing from airports.
Mr Uijland experienced a lengthy absence from work from April 2017 for a non-compensable condition (a frozen shoulder, the Tribunal was told). In the second half of 2017 he was engaging in a process of rehabilitation for a return to work. As a consequence, in the two-week period before 6 October 2017 his licence to work as an air traffic controller was not current, and he was required to do what he called famil, or familiarity training. During this training he worked under the provisions of another air traffic controller’s licence.
Mr Uijland’s deemed date of injury for his accepted condition (for the purposes of s 7(4) of the Act) is 6 October 2017, though he maintained that the injury actually occurred on 18 September 2017. As will become apparent, nothing turns on which of these dates is selected as the date of injury. The latest period of two weeks, before the accepted date of injury (6 October), during which Mr Uijland was continuously employed by the Commonwealth was the period from 21 September 2017 to 5 October 2017. During that two-week period, he took sick leave for his non-compensable condition, was rostered off but nonetheless also attended work for the purposes of familiarity training. He told the Tribunal that he was stood down from work on the public holiday on 2 October 2017 because of his employer’s requirement that, to work on a public holiday, he would have had to have a current licence.
The number of hours actually worked by Mr Uijland during this two-week period was 13 hours. Applying the formula in s 8, Mr Uijland’s NWE would, on that basis, be $646.82. Comcare accepted, however, that this figure does not fairly represent the weekly rate at which Mr Uijland was being paid before his injury.
Subsection 8(5) confers a discretion on Comcare to apply a different calculation of NWE where, because of the shortness of the relevant period, the general provisions of the section would not fairly represent the weekly rate at which the employee was being paid before the injury. Comcare employed this discretion to arrive at its reviewable decision of 11 July 2018, whereby Mr Uijland‘s NWE was calculated to be $3,582.42. This calculation was based on a 72 hour fortnight, not the 13 hour fortnight which Mr Uijland actually worked in that period.
Putting aside momentarily the issue referred to in the following paragraphs, it was common ground between the parties that pursuant to the s 8(5) discretion the correct calculation of NWE for Mr Uijland is $3,582.36. (This figure is slightly less than the amount in the reviewable decision due to a calculating error.)
THE ISSUE BEFORE THE TRIBUNAL
During the two-week period preceding the date of Mr Uijland’s injury, there was a public holiday (2 October 2017). Mr Uijland was stood down and did not receive a public holiday penalty for that day. Mr Uijland was instead attributed 8 hours ordinary pay for STANDOWN PH.
The parties are in dispute on the question of whether a public holiday penalty rate should be included in the calculation of Mr Uijland’s NWE under s 8, to account for the public holiday. Mr Uijland contended that he would ordinarily receive the holiday penalty rate for working on a public holiday pursuant to his enterprise agreement. But for his injury, he would have worked on that public holiday, he said. Accordingly, his NWE should include this penalty rate as an allowance, represented by A in the formula in subsection (1).
The question before the Tribunal is, therefore, should a public holiday penalty rate be included in the calculation of Mr Uijland’s NWE under s 8?
CONTENTIONS
Mr Uijland
Mr Uijland maintained that in the years preceding April 2017, when he last worked normally under his own licence, he would regularly be paid by his employer the holiday penalty rate for public holidays. For example, he was paid the holiday penalty rate for all four public holidays in the fortnight before he ceased full-time work on 22 April 2017.
He contended:
… If I didn’t sustain the back injury on 18/8/2017 I would now be paid penalty rates for all the public holidays as per normal, and therefore it should be included as an allowance in my NWE.
Comcare
Comcare contended that a public holiday penalty rate is not an allowance of the kind which is included in the factor A in the formula in subsection (1) of s 8. Alternatively, it argued that, if A does include a public holiday penalty rate, Mr Uijland is not entitled to that penalty rate because he was stood down on the 2 October public holiday and did not actually work on that day. Mr Uijland was not entitled to any public holiday penalty rates in accordance with clause 19.26 of the Airservices Australia (Air Traffic Control and Supporting Air Traffic Enterprise Agreement 2017-2020 in those circumstances.
CONSIDERATION
In determining the question of whether a public holiday penalty rate should be included in the calculation of Mr Uijland’s NWE, the Tribunal must first address the question of whether a holiday penalty rate is captured by the factor A in the formula used in under s 8(1). I quote again the subsection’s definition of A:
"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.
The definition divides allowances payable to an employee into two classes: allowances payable … in respect of his or her employment and allowances payable in respect of special expenses incurred, or likely to be incurred… in respect of that employment. The former class falls within NWE, the latter does not. Put another way, an employee is entitled to have included in the calculation of his or her NWE allowances paid in respect of employment unless those allowances are payable in respect of special expenses, actually incurred or likely to be incurred, by the employee.
Special expenses is not defined in the Act. The term has, however, received some attention in decisions of the Tribunal. In Zarb and Comcare [1997] AATA 254 the Tribunal considered whether penalty rates constituted an allowance which should be included within NWE under s 8. Deputy President Burns observed at [51]-[54]:
51. Counsel for the respondent advised the Tribunal that, although it was a matter of practice that the respondent pay its claimants penalty rates under the category of "A" (being allowances) in s.8(1), it was not a "cut and dried" issue. There is no definition of what constitutes an allowance although s.8(1) does exclude an "allowance payable in respect of special expenses incurred, or likely to be incurred, by the employee in respect of the employment". In Sutton and Comcare (AAT No 10935, 16 May 1996) the Tribunal considered whether an accommodation allowance was an eligible allowance or a "special allowance". In reaching the conclusion that an accommodation allowance was a special allowance, the Tribunal was assisted by a copy of the "Legislation Information Papers Volume 3" (an internal document of Comcare) which contained the following explanation of "earnings" under s.8(1):
Allowances to be included would generally be those payable for such things as conditions encountered during service, special qualifications, special duties and so on. Any allowance for monies expended (or likely to be spent) by the employee will not be earnings as such i.e. these are not monies "obtained as a reward for work or merit" (OED definition of earnings).
The following are examples of the types of allowances which can be included in calculating NWE. The lists are not exhaustive but as a guideline, allowances that are taxable or continue to be paid during leave would be included:
INCLUDED
EXCLUDED
Higher Duties Allowance
Annual Leave Bonus
First Aid Allowance
Travelling Allowance
Leading Hand Allowance
Meal Allowance
Proficiency Allowances
Tropical Clothing Allowances
Shift Allowances'
Senior Officer Allowance (Work Related Expenses Component)
Senior Officer Allowance
(Overtime component)52. In considering whether penalty rates (shift allowances) fall to be included as an allowance under "A" in s.8(1), it must be kept in mind that the allowances in question are those which are "payable to the employee ... in respect of his or her employment" and that "A" forms an integral part of calculating normal weekly earnings (emphasis added).
53. The Tribunal agrees with the above explanation of earnings. Penalty rates quite clearly fall to be categorised as an allowance for the purposes of s.8(1). They arise directly from and are recompense for the particular labour and/or service provided by the employee.
54. The relevant penalty rates before this Tribunal were not paid in respect of special expenses incurred or likely to be incurred by the applicant in respect of his employment. They clearly were allowances payable in respect of his employment in the sense that they were recompense for his labour and are to be included when calculating the applicant's normal weekly earnings pursuant to the provisions of s.8(1) and the Tribunal so finds.
Mr Zarb was a nurse at the Royal Canberra Hospital. Although the Tribunal’s decision is not clear on this point, it appears that penalty rates (shift allowances) were paid regularly and across the board to nurses working at the hospital, to recompense them for the particular conditions of their employment; adjustments to salary representing actual hours of work at non-standard times were paid as overtime.
In Sutton, the Tribunal held that an accommodation allowance paid to Corrective Services officers in the Northern Territory fell within the category of an allowance payable in respect of special expenses incurred by the officers. It held that Mr Sutton could no longer consider the allowance part of his NWE when he moved to Queensland, where the allowance was not payable. Comcare had argued that the intent of the legislation was to
compensate employees for loss of substantive salary as a direct
result of injury, whereas the cessation Mr Sutton’s accommodation
allowance was attributable to the change in his choice of residence and not as a
result of the injury itself. Similarly in Re Ragg and MRCC [2009] AATA 371 a Remote Locality Leave Travel Allowance was considered a form of travelling allowance and was thus payable in respect of special expenses. The Tribunal found that the allowance’s purpose was to permit soldiers to take a break from the harsh climate and isolation of some posts, but was not an automatic entitlement.In Re Maley and Comcare (1998) 27 AAR 100 the Tribunal found that a field allowance fell within A in s 8(1). Senior Member Beddoe characterised it (at 104) as:
…an allowance for disabilities incurred while in the field and working under adverse conditions and is not an allowance or indemnity in respect to special expenses incurred, or likely to be incurred, because of the member’s service in the field.
In Re Whitton and Department of Defence [1998] AATA 628 the Tribunal found that Mr Whitton’s diver’s allowance could have been included in his NWE because it was paid to all Navy divers irrespective of the amount of diving work they did, whereas it was not included after 1989 when the allowance was restructured and paid to reflect actual time spent on diving duties, i.e. it was intermittent and …not paid continuously. Senior Member Webster observed at [8]:
The effect of sections 8(9) and sections 8(10) of the Safety, Rehabilitation and Compensation Act 1988 is that where the normal weekly earning of a person who remains to be employed in the class of employees in which Mr. Whitton was employed decreases, then Mr. Whitton's compensation should be reduced accordingly. The evidence is that prior to 2 February 1989, Mr. Whitton had ceased to be engaged in active diving duties. As diver's allowance would not have been payable to Mr. Whitton if he had continued in the Navy after 2 February 1989, as he could not have undertaken diving duties and therefore would not have qualified for the modified diving allowance, he would not have been entitled to diver's allowance after that date.
Although the Tribunal’s attention was not drawn to any decision specifically pertaining to holiday leave loadings, certain principles can be discerned from the authorities cited above that may be helpful in characterising such payments. The authorities suggest that an allowance which is paid as a feature or condition of service, generally to employees within a particular class or classification of employment, and for which some particular action or activity (beyond the ordinary conditions of service) is not required as a precondition for its payment, is more likely to be an allowance falling within the included entitlement in A in the s 8(1) formula. Conversely, an allowance which, while available to all or most employees in the particular class or classification, is not payable unless an employee incurs a particular expense or undertakes a particular hardship is likely to fall outside A in the formula. This bifurcation is most starkly illustrated in Whitton, where an allowance payable to Navy divers at large was considered part of NWE, while an allowance payable based on the actual performance of diving duties was not.
Applying these principles to the present facts, I regard the payment of a public holiday penalty rate as falling outside the factor A in the formula in s 8(1). Mr Uijland’s evidence was that an air traffic controller working on a public holiday would be paid the holiday penalty rate, however a controller not working on a public holiday and not on a rostered day off would not be so paid. The penalty rate thus bears the characteristic of compensation for a particular exertion undertaken by an employee, rather than a general entitlement accruing without the need for that exertion. Just as the legislative scheme evidently contemplates that a meal allowance is not included in earnings unless a meal is actually purchased, and travelling allowance is not included unless the employee actually incurs expenses in travelling, so too it seems clear that a holiday penalty is not payable unless the employee actually works, or is available for work, on that holiday.
It is the conditional, not automatic, nature of the payment which means that it cannot be included in the formula for NWE. Because Mr Uijland was stood down on the 2 October public holiday, and did not work, he was not entitled to the penalty rate and it cannot be included in the calculation of his NWE. The reason for being stood down – that he was not fully licensed as he was recovering from an injury – is immaterial to this conclusion. Just as Mr Whitton’s NWE could not include a diving allowance because he was unqualified to receive it, so too Mr Uijland’s NWE could not include a holiday penalty rate because he was unqualified to receive it at the relevant time.
If, notwithstanding this conclusion, I am mistaken with respect to the proper characterisation of a public holiday penalty rate in Mr Uijland’s case, there is a further reason his claim cannot succeed. The basis for that conclusion is set out below.
Section 8(1) provides that the NWE of an employee who is not required to work overtime on a regular basis shall be calculated in relation to the relevant period. Section 9(1) relevantly provides that a reference in section 8 to the relevant period is, subject to this section, a reference to the latest period of two weeks before the date of injury during which the employee was continuously employed by the Commonwealth.
As already indicated, the prima facie application of the formula in s 8(1), relying on an accepted date of injury of 6 October 2017, produces the outcome that Mr Uijland’s NWE would be calculated as $646.82. This is because Mr Uijland actually only worked 13 hours in the two week period before the date of injury. It is common ground between the parties that this figure unfairly understates the rate at which Mr Uijland was being paid in the period before his injury.
The parties further agree, as does the Tribunal, that s 8(5) should therefore be employed to calculate a figure for NWE which more fairly represents his preinjury rate of pay. Section 8(5) provides that, where, because of the shortness of the relevant period, the normal weekly earnings as calculated under s 8(1) would not fairly represent Mr Uijland’s normal weekly pay before his injury, the normal weekly earnings can be calculated in relation to such other period as Comcare considers reasonable for the purposes of arriving at an amount that does fairly represent the weekly rate at which Mr Uijland was being paid.
The subsection is curiously worded. Its operation (in common with subsection (4)’s) is triggered by the shortness of the relevant period. Section 9 defines the relevant period to mean a period of two weeks. Of course, one period of two weeks cannot be any longer or shorter than another period of two weeks. One supposes that subsection (5) might be more accurately (if less elegantly) understood if it referred to the unrepresentativeness of the relevant period, rather than its shortness. The subsection operates where a period does not yield a fair, or representative, outcome resulting from the calculation in subsection (1). This is the sense in which the Federal Court interpreted shortness in Comcare v Nicholas (2014) 225 FCR 369, per Edmonds, Buchanan and Flick JJ at [20].
Taking this as the subsection’s meaning, a decision-maker is required to substitute a different period for the two week period prior to the date of injury for the purposes of the s 8(1) calculation (which period may, of course, be a period longer than two weeks: Nicholas at [18]). Mr Uijland agrees, naturally enough, that a period other than the two weeks prior to 6 October 2017 should be used for this recalculation; however, he also argues that the recalculation should include an allowance for the public holiday that fell within that two-week period. With respect, however, he cannot use the two weeks in question for the purpose of attracting a public holiday penalty rate but not for the purpose of calculating what he earned during the same period. That might be described as having his cake and eating it too.
Comcare, on the other hand, accepts that, pursuant to s 8(5), a different period should be used other than the two weeks prior to 6 October 2017, but proposed a notional two-week period in which Mr Uijland has notionally worked 72 hours. It did not nominate a specific period actually worked by Mr Uijland. However, not to do so puts Comcare in the same position as that for which the Tribunal was criticised by the Federal Court in Nicholas, at [37]-[38]. The court suggested there that the section required a decision-maker to identify exactly what period was to be substituted for the two-week period referred to in s 9(1).
No doubt Mr Uijland would prefer that Comcare choose, as the substitute period, another period in which a public holiday fell. However, there is nothing in s 8 which requires such an approach. Given that a typical working week would not include a public holiday, choosing a period in which a public holiday fell, and for which a penalty rate was payable, would not in fact produce an outcome which fairly represent[s] the weekly rate at which the employee was being… paid.
I am of the opinion that Mr Uijland’s NWE should be calculated by reference to a period in which he worked a 36-hour week. There is no evidence before the Tribunal which will allow it to nominate a particular period in which this outcome, fairly representing his weekly rate of pay, would be achieved. Accordingly, the matter is remitted to Comcare for that calculation to be made pursuant to s 8(5).
CONCLUSION
Mr Uijland’s case to the Tribunal was a straightforward one: he argued that the intent of the legislation is that an injured worker should receive, during his incapacity, the wages and entitlements he would have received had he not been injured. Mr Uijland maintained that common sense should therefore provide that he receive the holiday penalty rate that he would, most probably, have received had he not been injured and thus deprived of his right to work under his own air traffic controller’s licence.
The interpretation Mr Uijland suggests might well win the approval and support of the man on the Clapham omnibus (to quote a famous legal fiction inherited from the English common law). His formulation does broadly describe the overall goal of the Act with respect to the wages of injured workers, it must be conceded, but it does not capture the specific mechanics whereby the Act approaches that goal. As Comcare submitted to the Tribunal, the Act codifies the provisions entitling an injured worker to compensation for loss of wages, and the Tribunal must look to those provisions to discover what the entitlements are. Those provisions are detailed and formulaic, ensuring consistency of outcomes by all who rely upon them and reducing to black-and-white those areas of grey which a broadly stated policy will always suffer from.
It is the mechanics – the specific terms of the provisions granting and delineating entitlements – to which the Tribunal must turn at first instance, not the broad policy objective. In this case, the specific terms are passably clear; a worker must actually work, or be available to work, on a public holiday to receive the public holiday penalty rate in his wages. The fact of compensable injury preventing him from doing so does not obviate the clear terms of the specific provisions in the Act imposing this precondition of entitlement.
The Tribunal remits the decision under review to Comcare, in order that Mr Uijland’s NWE be calculated under s 8(5) on the basis that:
NH = 36
A = 0
I certify that the preceding 42 (forty-two) paragraphs are a true copy of the reasons for the decision herein of Deputy President Gary Humphries
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Associate
Dated: 14 January 2019
Date(s) of hearing: 20 December 2018 Date final submissions received: 20 December 2018 Applicant: By telephone Counsel for the Respondent: Mr Peter Woulfe Solicitors for the Respondent: Ms Jady Kwong, McInnes Wilson Lawyers
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