West and Telstra Corporation Ltd - [2002] AATA 852

DECISION AND REASONS FOR DECISION [2002] AATA 852

ADMINISTRATIVE APPEALS TRIBUNAL )

) No N2002/256

GENERAL ADMINISTRATIVE DIVISION          )
           Re      MARTIN WEST
  Applicant
           And    TELSTRA CORPORATION LTD
  Respondent

DECISION

Tribunal Ms N Bell, Member

Date27 September 2002
PlaceSydney

Decision The Tribunal sets aside the decision under review and in substitution therefor remits the matter to the Respondent to calculate the Applicant's normal weekly earnings in relation to, pursuant to section 8(5) of the Safety, Rehabilitation and Compensation Act 1988, a relevant period of the latest 12 months before the date of the Applicant's injury.

[SGD] Ms N Bell
Member
CATCHWORDS
COMPENSATION – method of calculation of normal weekly earnings – penalty allowances – fair representation of weekly rate of pay – correct "relevant period" prior to date of injury – 12 months
Safety, Rehabilitation and Compensation Act 1988 – ss. 8, 9
Re Zarb and Comcare (1997) 48 ALD 718
Re Zegura and Comcare (AAT 12740, 25 March 1998)
Re Zegura and Comcare (AAT 11555, 13 January 1997)

REASONS FOR DECISION

27 September 2002 Ms N Bell

This is an application by Mr Martin West ("the Applicant") for review of a decision by GIO for Telstra Corporation Ltd ("the Respondent") dated 14 January 2002, to determine the Applicant's compensation by calculating the Applicant's normal weekly earnings having regard to the Applicant's earnings for the period of 12 weeks prior to the Applicant's injury.
The decision under review arose out of a decision of the Tribunal dated 13 October 2000 which was in accordance with minutes of consent signed by the solicitors for both parties to the effect that the Respondent would pay the Applicant compensation for a closed period from 13 September 1999 to 10 October 2000.
The issue for the Tribunal to consider is the correct "relevant period" to which regard should be had by the Respondent in calculating the Applicant's normal weekly earnings. This involves consideration of the provisions of sections 8 and 9 of the Safety, Rehabilitation and Compensation Act 1988 ("the Act").
The Applicant was represented by Mr Leo Grey of Counsel and the Respondent was represented by Mr Brendan Kelly of Counsel. The following documentary evidence was before the Tribunal:
Exhibit          Document    Date
TD1     T-Documents T1-T72
TD2     T-Documents (N2000/343)
A1      Applicant's Group Certificate        1998-99
A2      Applicant's pay slips          January 1999-September 1999

The Applicant says, in respect of the decision under review, that calculation by the Respondent of the Applicant's normal weekly earnings by reference to the Applicant's earnings for the period of 12 weeks prior to the date of injury is not a fair basis on which to make that calculation and that a fair basis on which to make the calculation would be by reference to the Applicant's earnings over a period of 12 months before the date of the Applicant's injury.
It is not in dispute that the Applicant suffered a condition of aggravation of major depression and anxiety, with the date of injury being 13 September 1999. It is also not in dispute that the Applicant commenced work with the Respondent in 1994. He worked as a Service Consultant, dealing with telephone calls from customers via the 1100 service, mainly concerning service faults. It is also not in dispute that the Applicant worked on a seven-day rotating shift. Logic dictates that his start and finish times varied, as did his rates of pay according to which shifts he worked and whether those shifts attracted penalty rates or shift allowances.
Applicant's evidence
The Applicant told the Tribunal that the penalty rates or shift allowances payable in respect of different shifts at his employment were broadly as follows:
Commencing at 7.00 am or before  15%
Finishing at 6.30 pm or later  15%
Saturdays  50%
Sundays  100%
Public holidays  250%
The Applicant said that the period leading up to and including Christmas and January is a very busy period with many more overseas calls being placed. He also said that this period can be even busier when there are bushfires and/or heavy rains giving rise to damage to cables and consequent faults. He said that in summer the shifts at his employment are set up differently to accommodate this increase in customer service calls and he has always worked many more penalty rate shifts in the summer period and has been asked to work extra penalty shifts on top of his roster.
The Applicant said that working penalty shifts was voluntary but that the employer appreciated employees doing so. He said he had declined to work such shifts on only a couple of occasions.
The Applicant agreed, in cross examination, that over the summer period extra staff were generally employed, but said that this did not serve to lessen his workload. He said that when, in summer, there was a bushfire, this led to a massive increase in the number of service calls received. He said there had been no particular increase in the period leading up to his injury in September 1999.
The Applicant said that it had been the practice in his workplace to assign an individual consultant to a customer, some of whose problems lasted over months, but that this practice had changed. He agreed that when on sick leave he would not attract any penalty rates. He also agreed that from 20 March 1999 he had five days annual leave and from 5 June 1999 he had five days annual leave but said that he would have received a leave loading for these periods. He did not know how much that loading was. The Applicant also said that it was very rare for him to work overtime.
Other evidence
Exhibit A1 is the Applicant's group certificate for the financial year 1998/ 1999. The certificate shows a gross income of $48,019.88. That annual gross income, when divided by 52, yields a gross average weekly income of $923.46. By contrast, the normal weekly earnings calculated by the Respondent were, from 13 September 1999, $856.68 and, from 23 December 1999, $873.82.
Exhibit A2 is the Applicant's pay slips for the period ended 6 January 1999 to the period ended 15 September 1999. The two payslips for January 1999 show fortnightly shift allowance payments of $346.69 and $507.08 respectively. Thereafter, the following fortnightly shift allowance payments are shown in the following months:
February  $944.66 ending 3/2/99
  $00.00 ending 17/2/99
March  $301.55 ending 3/3/99
  $329.80 ending 17/3/99
  $360.56 ending 31/3/99
April  $227.04 ending 14/4/99
May  $596.10 ending 12/5/99
  $374.06 ending 26/5/99
June  $204.53 ending 9/6/99
  $182.78 ending 23/6/99
July  $527.83 ending 7/7/99
  $176.28 ending 21/7/99
August  $308.05 ending 4/8/99
  $132.02 ending 18/8/99
September  $351.55 ending 1/9/99
  $220.54 ending 15/9/99
The above figures show that the Applicant, in the first three-quarters of 1999, received the most shift allowance in the first quarter of 1999, being $2790.34. In the second quarter of 1999 he received $1584.51 (although the payslip for the fortnight ending 28/4/99 was not included in the bundle of payslips handed to the Tribunal) and in the third quarter, being the period used by the Respondent to calculate the Applicant's normal weekly earnings, he received $1716.27 in shift allowance. No figures were available to the Tribunal in respect of the last quarter of 1998.
Submissions
Mr Grey for the Applicant submitted that the Applicant will have suffered a substantial drop in income if his normal weekly earnings are calculated so as to ignore the seasonal changes in shift allowance earnings evidenced by the Applicant's payslips.
Mr Grey referred the Tribunal to the definition of "relevant period" in section 9(1) of the Act and submitted that in many cases that definition will create no difficulties. He submitted that the Respondent is not in error in using a period of 12 weeks rather than the two weeks provided for in section 9(1) of the Act but if the Respondent chooses to take itself outside the statutory two week period, then it should choose a period that fairly represents the Applicant's earnings.
Mr Grey referred the Tribunal to section 8(5) of the Act which provides for another period to be taken as the "relevant period" where the period provided for in section 8(1) would not fairly represent the weekly rate at which the employee was being paid in respect of his or her employment before the injury. He submitted that were the Tribunal to be concerned with a period of incapacity that was the winter period only, the need to rely on section 8(5) would not arise. However, in his submission, the period of the Applicant's incapacity is 13 months and covers all seasons including the busier summer season and there is no evidence of the Respondent having taken the seasonal changes in the Applicant's employment into account.
Mr Kelly, for the Respondent submitted that the Respondent had adopted a general policy of using a 12 week or six pay period as the relevant period in order to ensure that the application of the statutory formula for an employee's normal weekly earnings is as fair as possible. He referred the Tribunal to the Tribunal's decision in Re Zarb and Comcare (1997) 48 ALD 718 in which it was held that an employee is "required' to work overtime when he or she is obliged to do so by the employer. Mr Kelly noted the Applicant's evidence that he worked shifts on a voluntary basis and submitted that this does not amount to a requirement. He also noted that the Respondent had included overtime in its calculation of the Applicant's normal weekly earnings and this shows the fairness of the Respondent's approach.
Mr Kelly also referred the Tribunal to its decision in Re Zegura and Comcare (AAT 12740, 25 March 1998) in which the Tribunal held that, though the mechanism to calculate the normal weekly earnings must be construed as being fair to the employee, this does not mean that the figure that most favours the employee is the one to be regarded as "fairly" representing the employee's normal weekly earnings. Mr Kelly submitted that this means that the question of what is fair to the Respondent is also relevant in any consideration of the operation of section 8(5) of the Act. In this respect he noted the possibility of Respondents having to calculate on the basis of a 12 month relevant period and the added expense and time this would take.
In reply Mr Grey noted that in the Applicant's case a long period of 13 months incapacity must be calculated and that that period involves significant seasonal variations. He also noted that this application involves no question of overtime.
Consideration
Section 8 of the Act provides relevantly:
Normal weekly earnings
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.
(2) Where an employee is required to work overtime on a regular basis, the normal weekly earnings of the employee before an injury shall be the amount calculated in accordance with subsection (1) plus an additional amount calculated in relation to the relevant period under the formula:
NH x OR
where:
NH is the average number of hours of overtime worked in each week by the employee in his or her employment during the relevant period; and
OR is the employee's average hourly overtime rate of pay during that period.
(3) Where an employee was, at the date of the injury, employed by the Commonwealth or a licensed corporation in part-time employment or unpaid employment, any earnings of the employee from any other employment shall, for the purposes of this section, be treated as earnings of the employee from his or her employment by the Commonwealth or the licensed corporation.
(4) Where, because of the shortness of the relevant period, it is impracticable to calculate the normal weekly earnings of an employee before an injury under subsection (1) or (2), the normal weekly earnings of the employee before the date of injury shall be taken to be the normal weekly earnings before that date of another employee performing comparable work, being normal weekly earnings from employment by the Commonwealth or a licensed corporation and calculated under subsection (1) or (2), as the case requires.
(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 of the Act provides:
Relevant period
9. (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.
(2) Subject to subsection (3), if, during the period referred to in subsection (1), the minimum amount per week payable to an employee in respect of his or her employment by the Commonwealth or a licensed corporation was varied 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 the doing of any other act or thing, under such a law;
any part of that period that occurred before the variation, or last variation, took place shall be disregarded for the purposes of calculating the relevant period.
(3) Where in any case the application of subsection (2) would require that a period be disregarded for the purposes of calculating the relevant period in relation to an employee, and as a result of disregarding that period:
(a) it would be impracticable to calculate under section 8 the normal weekly earnings of the employee before an injury; or
(b) the normal weekly earnings as so calculated would not fairly represent the weekly rate at which the employee was being paid in respect of his or her employment by the Commonwealth or a licensed corporation before the injury;
subsection (2) shall not apply in that case, but the normal weekly earnings of the employee during that period shall be taken to be the amount that would have been his or her normal weekly earnings during that period if the variation had taken effect at the beginning of that period.
(4) If, during any part of the period calculated under the preceding subsections, the employee's earnings were reduced, or the employee did not receive any earnings, because of absence from his or her employment for any reason, that part of that period shall be disregarded for the purposes of calculating the relevant period.
In Re Zegura and Comcare (AAT 11555, 13 January 1997) Senior Member Allen said:
"Now as I see the scheme of the Act subsection (5) of Section 8 is to qualify the case of a casual or part-time employee who may be disadvantaged or may be unduly advantaged by a calculation under subsection (1) of section 9. The Act requires that either Comcare or the instrumentality must first consider subsection (1) of section 9, that is to say there must be a calculation on the latest period of two weeks before the date of the injury during which the employee was continuously employed. Then subsection (5) of section 8 must be considered and a figure obtained and a comparison made as to whether the two-week period under subsection (1) of section 9 fairly represents the weekly rate which the employee was being made. The period over which that calculation under subsection (5) of section 8 is to be made as I see it varies according to the facts and circumstances of each particular case. In this matter it was suggested by the respondent that a period of one year was appropriate as that period of one year took into account what might be termed high periods and slow periods; in other words what is the ebb and flow of a casual employee, and as I see it I think that is correct that a period of 12 months is fair both to the applicant and to the respondent."
Senior Member Allen set aside the decision under review and directed the Respondent to make calculations pursuant to sections 9(1) and 8(5) of the Act to ascertain the amount of normal weekly earnings of the applicant, the calculations pursuant to section 8(5) to be based on the 12 months immediately prior to her injury.
In the decision of Senior Member Burton in Re Zegura and Comcare (AAT 12740, 25 March 1998) Senior Member Allen's decision was not the subject of examination by the Tribunal but rather the Tribunal examined the correctness of the calculations made consequent to Senior Member Allen's direction and the issue of which of the normal weekly earnings, that is, the amount calculated under section 9(1) or that correctly calculated under section 8(5), should form the basis of the applicant's weekly payments. The issue of the appropriate length of the period adopted for the section 8(5) calculation did not arise.
Returning to the decision of Senior Member Allen, I note that his comments, extracted above, refer particularly to the circumstances of casual or part time employees. However, the kinds of fluctuations in availability of work that are a feature of casual employment are, albeit to a lesser extent and in a modified form, often present in other employment where demand for the services or product of the employer fluctuates. In the Applicant's circumstances, according to the evidence of the Applicant, which the Tribunal accepts, that fluctuation in demand for services gave rise to fluctuations in the availability of, and need to work, penalty shifts. I also accept the evidence of the Applicant, which is supported by Exhibit A2, that an increase in the number of penalty shifts worked by employees of the Respondent, and by the Applicant in particular, occurred in the summer months.
It has not been argued, and there is nothing in the legislation to suggest, that recourse to section 8(5) is available only in the case of casual or part time employees. The words of the statute are that the employee's normal weekly earnings may be calculated in relation to a period other than the two weeks provided for in section 9(1) 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" (emphasis added).
As Senior Member Allen said in Zegura (AAT 11555, 13 January 1997), the period over which the calculation under section 8(5) is to be made will vary according to the facts and circumstances of each particular case. In this case, the Tribunal accepts the Applicant's uncontroverted evidence that during the summer months, he worked more penalty shifts than at other times in the year. Given the date of the Applicant's injury (13 September 1999) and the length of the period of the Applicant's incapacity from that date (13 months), the adoption by the Respondent of the period of the 12 weeks prior to the date of the injury as the basis of its calculation of the Applicant's normal weekly earnings means that, over the period of the Applicant's incapacity he is denied the benefit of the higher rate of earnings he would have had over the summer months. I consider that, in order to "fairly represent the weekly rate at which the employee was being paid" (section 8(5)) the period of 12 months is the appropriate period to be adopted in the circumstances of this case.

I note that, by calculating normal weekly earnings by reference to a period of 12 weeks rather than to the period of two weeks provided for in section 9(1) of the Act, the Respondent has already determined to calculate the Applicant's normal weekly earnings pursuant to section 8(5). It is therefore unnecessary for the Respondent to embark on the exercise of comparison between a calculation under section 9(1) and calculation under section 8(5) that was directed by Senior Member Allen in Zegura (AAT 11555, 13 January 1997).
Decision
The Tribunal sets aside the decision under review and in substitution therefor remits the matter to the Respondent to calculate the Applicant's normal weekly earnings in relation to, pursuant to section 8(5) of the Safety, Rehabilitation andCompensation Act 1988, a relevant period of the latest 12 months before the date of the Applicant's injury.

I certify that the 30 preceding paragraphs are a true copy of the reasons for the decision herein of Ms N Bell
Signed:         .....................................................................................
  Associate
Date of Hearing  26 August 2002
Date of Decision  27 September 2002
Counsel for the Applicant        Mr L. Grey
Counsel for the Respondent    Mr B. Kelly