FEDERAL COURT OF AUSTRALIA Gray v Comcare [2004] FCA 1037 WORKERS COMPENSATION – casual Commonwealth employees – appeal from decision of Administrative Appeals Tribunal (AAT) – statutory compensation entitlement calculated by reference to 'normal weekly earnings' – 'normal weekly earnings' calculated by reference to hours actually worked during weeks of relevant employment period – whether weeks during which casual employee worked no hours owing to illness included in relevant employment period – whether payment of loading to casual employee a relevant consideration for purpose of determining normal weekly earnings under statutory formula. Safety, Rehabilitation and Compensation Act 1988 (Cth), ss 8, 9, 19 ANNA GRAY v COMCARE A 30 OF 2003 GYLES J 12 AUGUST 2004 SYDNEY (HEARD IN CANBERRA) IN THE FEDERAL COURT OF AUSTRALIA AUSTRALIAN CAPITAL TERRITORY DISTRICT REGISTRY A 30 OF 2003 ON APPEAL FROM THE ADMINISTRATIVE APPEALS TRIBUNAL BETWEEN: ANNA GRAY APPLICANT AND: COMCARE RESPONDENT JUDGE: GYLES J DATE OF ORDER: 12 AUGUST 2004 WHERE MADE: SYDNEY (HEARD IN CANBERRA) THE COURT ORDERS THAT: 1. The decision of the Tribunal will be set aside and, in lieu thereof, the respondent's reviewable decision dated 24 February 2002 will be set aside. 2. The respondent is to pay the costs of the applicant. 3. The matter is stood over for the parties to agree upon the appropriate order. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA AUSTRALIAN CAPITAL TERRITORY DISTRICT REGISTRY A 30 OF 2003 ON APPEAL FROM THE ADMINISTRATIVE APPEALS TRIBUNAL BETWEEN: ANNA GRAY APPLICANT AND: COMCARE RESPONDENT JUDGE: GYLES J DATE: 12 AUGUST 2004 PLACE: SYDNEY (HEARD IN CANBERRA) REASONS FOR JUDGMENT 1 This case concerns the application of a statute to circumstances not squarely contemplated by its terms. For the purpose of fixing amounts to be paid by way of compensation pursuant to the Safety, Rehabilitation and Compensation Act 1988 (Cth) (the Act) it is necessary to arrive at an amount described as 'normal weekly earnings' (NWE) of an employee. That topic is dealt with by s 8 of the Act, supplemented by s 9. Section 8(1) is as follows: '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: 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 Section 9(1) is as follows: '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.' 3 That formula is simple enough in the case of a permanent full-time employee. It is not so simple in the case of a casual employee such as the present applicant. 4 This is an appeal pursuant to s 44 of the Administrative Appeals Tribunal Act 1976 (Cth) from a decision of the Administrative Appeals Tribunal (the Tribunal) which affirmed a determination on behalf of Comcare that the applicant's normal weekly earnings pursuant to s 8 of the Act was $246.80. 5 The agreed facts which were considered by the Tribunal were as follows: '1. The applicant was born on 30 April 1964. 2. The applicant commenced employment with the ACT Department of Education, Youth and Family Services (the agency), as a casual relief teacher, on 15 March 2001. 3. The school terms in 2001 ran from: (a) Term one – Monday 5 February to Thursday 12 April; (b) Term two – Monday 30 April to Friday 6 July; (c) Term three – Monday 23 July to Friday 28 September; and (d) Term four – Monday 15 October to Friday 21 December. 4. From 31 May 2001 to 6 July 2001 the applicant was unable to work due to illness. 5. On 20 August 2001 the applicant suffered a low back injury, and lodged a claim for compensation under the Safety, Rehabilitation and Compensation Act 1988 (the Act) on 24 August 2001 (T10). 6. The applicant's claim was accepted by Comcare as 'lumbar sprain' (the injury) on 24 September 2001 (T19). 7. On 4 October 2001 Comcare advised that the applicant's NWE for the purposes of determining her entitlement to compensation for incapacity under section 19 of the Act was $246.80 (T22A). 8. On 18 October 2002 the applicant's solicitors requested reconsideration of the calculation of her NWE on the basis that for five weeks during Term two of 2001 she was unavailable to work due to illness (T51). The applicant's solicitors submitted that this period should not be taken into account in determining the applicant's NWE. 9. On 22 November 2002 the agency advised (T58): In calculating [the applicant's] NWE the Department considered the following factors: 1. The casual nature of her employment contract:- § special Teacher's Assistants sign on for casual employment for work during school term hours only. No work is available during the school holiday periods and they are not entitled to any pay during this time. § work is offered to casual staff on an as needs basis. § [the applicant] received a casual 15% loading in lieu of sick leave and recreational leave as part of the conditions of employment. § [the applicant] was free to accept or decline the work offered depending on personal circumstances. While unfortunate that [the applicant] was not able to accept work for the 5-week period due to ill health, the department is under no obligation to take this into consideration in determining normal weekly earnings. Indeed [the applicant] was compensated for sick leave via the 15% loading. Also [the applicant] was not required to submit medical certificates when unfit for work in May/June 2001 as she was not absent from her employment under section 9(4) of the Act given the casual nature of her employment. 10. The agency advised that the applicant's work hours for 2001 were: § Term 1 – 78 hours over a 4-week period (date of commencement to end of term); § 2-weeks school holidays – no work available; § Term 2 – 78.66 hours over the 10-week term (these hours were basically worked in a 5-week period as [the applicant] was unavailable for work for the last half of term due to her medical illness); § 2-weeks school holidays - no work available; and § Term 3 – 89.25 hours over a 4-week period (from the beginning of term to her date of injury). Averaged across the 18 school weeks that casual work was available, [the applicant] worked 13.66 hours per week with an average weekly salary of $246.80. 11. The agency further advised that: The normal weekly earning figures for casual school employees are calculated over the 40 week working period available to them in a year (a school year comprises 4 x 10-week school terms). Where an injured employee has not been on staff for a full year an average of the normal weekly hours is calculated by dividing the number of hours worked from commencement to the date of injury, excluding school holiday weeks. This method of calculation reflects the pattern of work and pay situation for [a] comparable non-injured casual. 12. On 21 February 2003, following a policy position meeting with the National Business Manager of Comcare, the agency advised (T62): It was then agreed at the meeting that: · DEFYS casual teachers and teaching assistants only qualify for NWE during the 40 weeks of school term. During the 12 weeks of school holidays there is no work available and therefore no expectation of pay. In effect the NWE for school holiday weeks is $zero and not included in departmental calculations. · Section 9(4) need not apply to a decision under section 8 regarding NWE and the 'reasonable period' for NWE calculations. Where a casual employee did not work for a period during the school term, whether due to lack of work or their lack of availability, it would not reflect the true nature of casual employment and the NWE if this period were excluded. For example, a casual who worked x hours a week except for say 2 weeks over the 10 week school term would have their NWE calculated over 10 weeks not the 8 weeks they worked. · Casuals are paid an additional loading in their hourly pay rate in lieu of sick and annual leave and by the nature of the terms and conditions of employment need not be available to work at all times. So if a causal [sic] is not available to work there is no expectation of pay. 13. On 24 February 2003 Comcare affirmed the determination dated 24 September 2001 and affirmed that the applicant's NWE pursuant to section 8 of the Act is $246.80.' 6 The essence of the decision of the Tribunal can be gleaned from the following: 'In this case, the applicant has received a 15 per cent loading added to her casual payment rate as a payment in lieu of sick leave. It follows therefore that she has been remunerated for the five weeks that she was absent on sick leave. The amount of this sick leave remuneration is therefore included in the respondent's total remuneration calculation of $4442.41 earned over an 18 week period. Section 8(5) of the Act prescribes that the normal weekly earnings before the date of injury shall 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 the employee was being so paid. In this case, the applicant was unable to make herself available for casual employment with the respondent, for a five weeks continuous period, due to sickness. It was submitted by the respondent that in other instances casual employees engaged under the ACT Skills Authority Award may not be available for several days spread over a number of weeks, during the period determined to be appropriate for the calculation of NWE pursuant to section 8(5) of the Act. However, in all cases, these employees have been remunerated for their sick leave via their 15 per cent loading payment. The Tribunal finds that it is appropriate for the respondent to consider that it is reasonable to include all paid sick leave periods in its calculation for NWE, irrespective of whether the sick leave is for a single continuous period or whether the total sick leave is spread over many weeks, during the period determined to be appropriate for the calculation of normal weekly earnings, pursuant to 8(5) of the Act. The decision under review is affirmed.' 7 The parties agreed that s 8(5) of the Act should be applied. That is still the position of each of them. 8 The question of law said by the applicant to be involved is: 'whether the Tribunal made an incorrect decision as to calculation of the Applicant's normal weekly earnings in accordance with sections 8 and 9 of the Safety, Rehabilitation and Compensation Act 1988 (Cth).' 9 The grounds of the appeal are as follows: '1. The Tribunal made an error of law in that it assumed that the payment of a 15% loading on the Applicant's casual pay rate was a relevant consideration which it was reasonable to take into consideration in determining the "relevant period" pursuant to s 8(5) of the Safety, Rehabilitation and Compensation Act 1988 (Cth) ("the Act") in the context of determining the Applicant's normal weekly earnings ("NWE"). Particulars: See lines 30 to 40 page 7 and 1 to 14 of the Tribunal's written reasons for decision ("the reasons"). The Tribunal misconstrued the function of the 15% loading and the fact that it reflects not only that the casual employee is not entitled to sick leave but also to other forms of leave. 2. The Tribunal made an error of law in that it concluded that the 15% loading was in lieu of sick leave and that the Applicant had therefore already been remunerated for sick leave taken. Further, the Tribunal erred in law in concluding that such periods of "paid sick leave" were relevant to determining the Applicant's NWE. See Line 30 page 7 of the reasons: "In this case the Applicant has received a 15 per cent loading added to her casual payment rate as a payment in lieu of sick leave. It follows therefore that she has been remunerated for the five weeks leave that she was absent on sick leave." And Line 9 page 8 of the reasons: The Tribunal finds that it is appropriate for the respondent to consider that it is reasonable to include all paid sick leave periods in its calculation for NWE…" 3. The Tribunal made an error of law in that it failed to take into account a relevant consideration that is that the assessment of NWE is made in order to correctly compensate the employee for loss of future earning capacity. 4. The Tribunal made an error of law in that it failed to take into account a relevant consideration, namely that the five week period during which the Applicant was not available to offer herself for employment was the result of an aberrant illness and therefore not reflective of her usual earning capacity, and thus it was not reasonable to take this period into account in determining the relevant period. Particulars The Tribunal failed to address the Applicant's submission on this point.' 10 It is submitted for the respondent that the identified question is not properly a question of law within the meaning of s 44 at all and that none of the grounds raise questions of law as required. It is submitted that the discretion involved in applying s 8(5) is very wide and cannot be confined in the way suggested by the grounds put forward on behalf of the applicant. 11 The starting point for the respondent's argument is sound. The discretion which is given to Comcare pursuant to s 8(5) to select such period as it 'considers reasonable' is limited only by the stated purpose of arriving at an amount that does fairly represent the weekly rate at which the employee was being paid in respect of his or her employment before the injury. The only question of law which can arise in these circumstances is whether a consideration taken into account by the Tribunal was truly irrelevant to that purpose (R v Australian Broadcasting Tribunal; Ex parte 2HD Pty Ltd (1979) 144 CLR 45 at 49–50; Allen Commercial Constructions Pty Ltd v North Sydney Municipal Council (1970) 123 CLR 490). 12 There are some other provisions which need to be considered before resolving the questions which arise: 'SECT 8 Normal weekly earnings … (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. … (8) Subject to this section, where: (a) the employment of an employee is of a kind referred to in subsection 5(4) or (6) or subsection (3) of this section; and (b) the employee is not receiving earnings from any other employment at the date of the injury; the normal weekly earnings of the employee before the injury shall be an amount determined by Comcare to be the amount per week that the employee would have been able to earn at the date of the injury (including any amount in respect of overtime worked on a regular basis) if he or she had engaged in suitable paid employment. … SECT 9 Relevant 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. … SECT 19 Compensation for injuries resulting in incapacity … (2) Subject to this Part, Comcare is liable to pay to the employee in respect of the injury, for each week that is a maximum rate compensation week during which the employee is incapacitated, an amount of compensation worked out using the formula: NWE - AE where: AE is the greater of the following amounts: (a) the amount per week (if any) that the employee is able to earn in suitable employment; (b) the amount per week (if any) that the employee earns from any employment (including self-employment) that is undertaken by the employee during that week. NWE is the amount of the employee's normal weekly earnings. (2A) For the purposes of subsection (2), a week is a maximum rate compensation week, in relation to an employee to whom this section applies, if: (a) it is a week during which the employee's incapacity prevents the employee working the employee's normal weekly hours because the employee is unable to work or unable to work at the level at which the employee worked before the injury; and (b) the total number of hours that the employee has been prevented from working, or working at that level, during that incapacity, in that week and in all previous weeks, if any, to which paragraph (a) applies, does not exceed 45 times the employee's normal weekly hours. … (3) Subject to this Part, Comcare is liable to pay compensation to the employee, in respect of the injury, for each week during which the employee is incapacitated, other than a week referred to in subsection (2), of an amount calculated using the formula: where: adjustment percentage is a percentage equal to: (a) if the employee is not employed during that week—75%; or (b) if the employee is employed for 25% or less of his or her normal weekly hours during that week—80%; or (c) if the employee is employed for more than 25% but not more than 50% of his or her normal weekly hours during that week—85%; or (d) if the employee is employed for more than 50% but not more than 75% of his or her normal weekly hours during that week—90%; or (e) if the employee is employed for more than 75% but less than 100% of his or her normal weekly hours during that week—95%; or (f) if the employee is employed for 100% of his or her normal weekly hours during that week—100%. AE applies in relation to the whole of that particular week and has the same meaning as in subsection (2). NWE is the amount of the employee's normal weekly earnings.' 13 In my opinion, the inclusion of a 15 per cent loading in the casual payment rate was irrelevant to the statutory purpose of arriving at an amount that fairly represented the weekly rate which the employee was being paid in respect of her employment before the injury for the purpose of providing compensation for injury resulting in incapacity. It is apparent that the Tribunal accepted the principle that, in the case of a casual employee, it was appropriate to take a period of service long enough to take account of the hours which were worked when work was available in order to assess realistically the usual number of hours worked per week on a casual basis. Whilst somewhat arbitrary, the principle is a response to a difficult problem and would appear to be generally supported by employer and employees. I have some residual concern that this principle might work unfairly to a casual employee if s 19 were strictly applied according to its terms. I say no more about that because it was not argued. I would add that, although it does not directly arise in this case, I cannot see why casual employment might not be part-time employment within the meaning of s 8(3). The Act does not distinguish between permanent and casual employment but rather between full-time and part-time work. Be that as it may, s 8 is important because of the place of NWE in the formula in s 19(2). 14 In my opinion, the search for 'normal weekly earnings' in this statutory context plainly means 'normal whilst working'. An employee does not work whilst absent on sick leave. During that period, an employee neither earns nor receives payment for work. Even if sick pay were received during that period, that would not be correctly described as earnings in the relevant sense. That is even clearer where no remuneration at all is received for the relevant period of sick leave. Section 19 would certainly work unfairly if the normal weekly earnings were depressed below a proper casual rate. In my opinion, s 8(4) and s 9(4) give support to this reasoning, although neither is directly applicable to the present case. 15 It follows that the first two grounds of appeal are established and, although not identified in the section of the amended notice of appeal which refers to questions of law, each can properly be so regarded. I do not regard the remaining grounds to be of substance in this case. 16 The decision of the Tribunal will be set aside and, in lieu thereof, the respondent's reviewable decision dated 24 February 2002 will be set aside. Rather than remit the matter to the Tribunal, I would propose to have the parties agree upon the appropriate order as it is purely a matter of arithmetic and the matter will stand over for that purpose. The respondent is to pay the costs of the applicant. I certify that the preceding sixteen (16) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gyles. Associate: Dated: 12 August 2004 Counsel for the Applicant: L Walker Solicitor for the Applicant: Slater & Gordon Counsel for the Respondent: D O'Donovan of Australian Government Solicitor Date of Hearing: 24 May 2004 Date of Judgment: 12 August 2004