West and Comcare [1999] AATA 159 (17 March 1999)

Last Updated: 17 March 1999

Administrative

Appeals

Tribunal

DECISION AND REASONS FOR DECISION [1999] AATA 159

ADMINISTRATIVE APPEALS TRIBUNAL )

) No A98/26

GENERAL ADMINISTRATIVE DIVISION )

Re ROBIN WEST

Applicant

And COMCARE

Respondent

DECISION

Tribunal Pamela Burton, Senior Member

Date 17 March 1999

Place Canberra

Decision The tribunal affirms the decision under review.

..............................................

Pamela Burton

Senior Member

CATCHWORDS

COMPENSATION - adjustment to normal weekly earnings for the purpose of assessing weekly compensation payments - applicant discharged from the Army on medical grounds - re-employed with the Commonwealth in the public service - resigned to work in the public sector - subsequent periods of employment with the Commonwealth at higher NWE than at the date of the compensable injury - whether the applicant can be regarded as an employee who "continues to be employed by the Commonwealth" and whose earnings are increased because of his "promotion" for the purposes of section 8(7) of the SRC Act.

Legislation

Safety Rehabilitation and Compensation Act 1988 sections 5, 8

Authorities

Saraswati v The Queen (1991) 172 CLR 1

Commonwealth v Human Rights And Equal Opportunity Commission & Anor (1998) 76 FCR 513

Secretary, Department of Social Security v Cooper (1990) 11 AAR 315

Breust v Commission for the Safety, Rehabilitation and Compensation of Commonwealth Employees (1991) 13 AAR 399

REASONS FOR DECISION

1. This is an application for review of a decision of the delegate of the respondent dated 23 October 1997 affirming a determination of 11 June 1997 that the applicant's rate of weekly compensation is calculated with reference to his pre-injury earnings in the Army rather than his subsequent pre-incapacity earnings.

2. The applicant was represented by Mr Erskine, and the respondent by Ms Bonsey, of counsel. The tribunal had before it the documents lodged pursuant to section 37 of the Administrative Appeals Tribunal Act 1975. No evidence was given at the hearing, the facts having been agreed. The tribunal received oral and written submissions on behalf of the parties.

3. The agreed facts are contained in Exhibit A. They can be summarised briefly. The applicant, a 50 year old man, injured his back on 22 October 1968 in the course of his employment as a data processing operator in the Army. He made a claim for compensation in respect of the injury on 16 April 1969 (T3). At the time, the applicant was a member of the Australian Regular Army. The respondent accepted liability for the condition "lesion of the lumbar intervertebral disc" on 11 August 1969 (T4, p.12). On 16 January 1970, the applicant was discharged from the Army on medical grounds. He received an invalidity pension on 17 January 1970.

4. On 29 January 1970, the applicant was employed by the Australian Public Service ("the APS") as a clerical assistant grade 1 in the Department of Army (T5, p.100). He resigned 15 months later. He then worked in various jobs in the private sector for the next 18 months. It is an agreed fact that in the period between 13 November 1972 and 21 April 1975 the applicant was not employed by the Commonwealth, and it seems he was not employed at all in that period.

5. On 21 April 1975, the applicant recommenced employment in the APS, this time working for the Department of Immigration and Ethnic Affairs. He resigned on 10 March 1981, having been advised to do so on medical grounds and once again received incapacity payments (Exhibit B). He resumed employment with the APS in May 1986, having applied for and obtained a position with the then Department of Aviation. Problems next arose for the applicant between March and June 1997 when he took sick leave. He requested that the leave be re-credited to him on the ground that he was entitled to compensation for the time he had off work. This gave rise to the issue of the rate at which the incapacity payments should be made.

6. The applicant retired on 4 February 1998 on medical grounds (T2), by which time he was employed at the level of ASO4. Again he disagreed with the respondent's decision as to the rate of pay of his ongoing compensation payments.

The legislation

7. Pursuant to section 14 of Safety Rehabilitation and Compensation Act 1988 ("the Act") the respondent is liable to pay compensation to the applicant for his incapacity in accordance with sections 19 and 20 of the Act. The formula by which the weekly amount of incapacity payments to which the applicant is entitled, requires the applicant's normal weekly earnings ("NWE") to be ascertained in accordance with section 8 of the the Act. Section 19 (to which reference is made in section 20) provides that Comcare is liable to pay compensation of a prescribed percentage of the applicant's NWE (less the amount per week he is deemed able to earn or is able to earn in suitable employment where applicable).

8. Section 8 of the Act establishes the value for the applicant's earnings before the injury. It sets out the formula for calculating the NWE. The section reads:

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.

(6) Subject to this section, if the minimum amount per week payable to an employee in respect of his or her employment by the Commonwealth or a licensed corporation at the date of the injury is increased, or would have been increased if the employee had continued in that employment, because of:

(a) the attainment by the employee of a particular age;

(b) the completion by the employee of a particular period of service; or

(c) the receipt by the employee of an increase in salary, wages or pay by way of an increment in a range of salary, wages or pay applicable to the employee or to his or her office, position or appointment;

the normal weekly earnings of the employee before the injury, as calculated under the preceding subsections, shall be increased by the same percentage as the percentage by which that minimum amount per week is increased, or would have been increased, as the case may be.

(7) Subject to this section, if:

(a) an employee continues to be employed by the Commonwealth or a licensed corporation after the date of an injury; and

(b) the minimum amount per week payable to the employee in respect of that employment is increased because of the promotion of the employee;

the normal weekly earnings of the employee before the injury, as calculated under the preceding subsections, shall be increased by the same percentage as the percentage by which that minimum amount per week is increased.

(8) 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.

(9) If the minimum amount per week payable in respect of employees included in a class of employees of which the employee was a member at the date of the injury is increased or reduced on or after that date as a result of:

(a) the operation of a law of the Commonwealth or of a State or Territory; or

(b) the making, alteration or operation of an award, order, determination or industrial agreement, or of the doing of any other act or thing, under such a law;

the normal weekly earnings of the employee before the injury, as calculated under the preceding subsections, shall be increased or reduced by the same percentage as the percentage by which that minimum amount was so increased or reduced, as the case may be.

(10) If the amount of the normal weekly earnings of an employee before an injury, as calculated under the preceding subsections, would exceed:

(a) where the employee continues to be employed by the Commonwealth or a licensed corporation-the amount per week of the earnings that the employee would receive if he or she were not incapacitated for work; or

(b) where the employee has ceased to be employed by the Commonwealth or a licensed corporation-whichever is the greater of the following amounts:

(i) the amount per week of the earnings that the employee would receive if he or she had continued to be employed by the Commonwealth or the licensed corporation in the employment in which he or she was engaged at the date of the injury;

(ii) the amount per week of the earnings that the employee would receive if he or she had continued to be employed by the Commonwealth or the licensed corporation in the employment in which he or she was engaged at the date on which the employment by the Commonwealth or the licensed corporation ceased;

the amount so calculated shall be reduced by the amount of the excess.

Issues

9. The applicant's pre-injury earnings as a Private in the Army (as adjusted by factors allowed by subsections 8(6) and 8(9)) are lower than his pre-incapacity earnings in the APS in 1997 and 1998. The central issue for the tribunal is to decide whether the applicant's post-injury Commonwealth employment falls within subsection 8(7) to allow his NWE to be increased by the same percentage that his weekly earnings increased in that employment. This raises the question of whether the applicant can be regarded for the purposes of the subsection as an employee who "continues to be employed by the Commonwealth" after the date of injury, and whose Commonwealth earnings increased because of his "promotion". That is, whether "continues" as used in the subsection means "continuing" in the same employment (in this case as a member of the Army), or whether it permits the construction of "continues" after interruption; and in different Commonwealth employment; and whether an increase in earnings is regarded as a "promotion".

Contentions

10. The applicant says that the word "continues" in the phrase "continues to be employed by the Commonwealth" in subsection 8(7) allows the subsection to be construed to include an employee who resumes employment with the Commonwealth, in a different capacity. The applicant contends that the subsection should not be so restrictively construed as to require "continuous" employment. The applicant says that the subsection applies to those who are employed by the Commonwealth from time to time after their injury, as well as to those who continue with their pre-injury employment. Counsel for the applicant urges that a technical construction restricting the meaning to "continuous" should be avoided given the remedial nature of the legislation.

11. The respondent says that the meaning of "continues" clearly requires a continuity in the employment, and is not receptive to a construction which allows the applicant, who had a break in his employment by working in the private sector, to fall within it. The respondent argues that the meaning of "continues to be employed" is to be construed in the context of subparagraph 8(7)(b). To fall within the subsection an employee not only has to continue in his or her Commonwealth employment, but has also to be promoted in that employment. The respondent submits that in that context continuity of the employment is required if promotion is to be given its natural meaning and not to be extended to go beyond intra-service promotion.

The legislative scheme

12. Subsections 8(6) and 8(7) allows the NWE to be increased in line with increments and promotions, so that, as Mr Erskine for the applicant points out, employees do not have their compensation payments frozen while salaries increase. In the case of increments subsection 8(6) covers both an employee who continues to be employed and receives increments, and an employee whose salary would have increased had he or she continued in that employment. Subsection 8(7) caters only for the employee who continues in the employ of the Commonwealth and whose salary increases because of promotion or promotions in that employment. It does not cater for the employee who ceases to be so employed, for it would be purely speculative as to what promotion if any, a person may have obtained had he or she continued in that employment. That is, the subsection allows for NWE to be adjusted to accord with the identifiable fact. Subsection 8(9) provides for NWE to be adjusted to accord with the fact of award changes, be it to operate to the advantage or disadvantage of an employee. Subsection 8(10) caters for the situation where an employee's earnings, for reasons other than the incapacity, become less than the adjusted pre-injury NWE, or would be less if the employee had continued in the Commonwealth employment, capping the amount of compensation payable so that the NWE calculated in accordance with the preceding subsections does not exceed the amount the employee was earning or would have earned but for the injury.

The meaning of "continues"

13. The applicant urges the word "continues" in subsection 8(7)(a) is to be read in the sense of going on after an interruption. The Macquarie Dictionary (2nd edition) provides various meanings for "continue". The first is "to go forwards or onwards in any course or action; keep on", and the second, "to go on after suspension or interruption", and further, "to carry on from the point of suspension or interruption: as to continue a narrative". The latter is supportive of the construction contended for by the applicant. The dictionary further provides for "continue" to mean "to cause to last or endure; maintain or retain: as in a position", or "to carry over, postpone, or adjourn; keep pending, as a legal proceeding".

14. The Act is a remedial statute beneficial in nature. In Saraswati v The Queen (1991) 172 CLR 1 at 21, His Honour Justice McHugh observed that if the literal or grammatical meaning of a provision does not give effect to the purpose of the legislation, that meaning cannot be regarded as "the ordinary meaning" and cannot prevail. His Honour Justice Burchett in Commonwealth v Human Rights And Equal Opportunity Commission & Anor (1998) 76 FCR 513 noted at 520-521 that although remedial legislation should be construed liberally:

it must be applied with a watchful eye. Sometimes the construction which is liberal to one person may be illiberal to others. Where remedial legislation contains exemptions to strike a careful and practical balance between competing interests, a Court which distorts that balance in the name of furthering the remedy risks usurping a political role, and in so doing, frustrating the will of Parliament.

The Act must be construed such that the purpose and object of the Act will be served. In so doing, it can only be construed consistently with the language of the Act (Secretary, Department of Social Security v Cooper (1990) 11 AAR 315).

15. Justice Davies in Breust v Commission for the Safety, Rehabilitation and Compensation of Commonwealth Employees (1991) 13 AAR 399, at 401 considered the construction of section 8 of the Act. He said that "[t]he whole of s 8 should be considered for the purpose of ascertaining the meaning of words used in the section". His Honour also considered the meaning of "that employment" in section 8. To what employment "that employment" refers in subsection 8(7) is also a matter I must consider. His Honour at page 402 concluded:

However, s 8 is drafted so as to leave no doubt that the references in s 8(1) to "his or her employment" and "that employment" are references to the employment out of which, or in the course of which, the injury or disease arose or was incurred. This is because the section does not refer to earnings generally but to the number of hours worked each week in an employment, to the employee's average hourly ordinary time rate, to the average amount of allowances payable "in respect of his or her employment' and to "the relevant period", a term defined in s 9. All these provisions show that s 8 is not concerned with earnings generally. From this, I deduce that the term "employment" has the limited meaning of "the relevant employment ...".

His Honour Justice Davies in Breust also examined the application of the Act in respect of members of the Defence Force. This required the Court to examine subsection 5(2) of the Act. The relevant part of subsection 5(2) states, in relation to the employments there mentioned, that such an employee:

shall, for the purposes of this Act, be taken to be employed by the Commonwealth, and a person's employment shall, for those purposes, be taken to be constituted by the person's performance of duties as such a member of the Australian Federal Police or member of the Defence Force or the duties of that office, as the case may be.

Commenting on this subsection, Justice Davies at 402 said:

However, I would point out that the provisions of s 5(2) of the Act detract from rather than support, the submission that the Act is concerned with the totality of the employee's employment or employments with the Commonwealth rather than with the employee's individual employment or employments with the Commonwealth. ...

This subsection contemplates that employment as a member or (sic) the defence force will be looked at as a separate employment by the Commonwealth.

16. For the purposes of the Act, a member of the defence forces' employment with the Commonwealth is constituted by that person's performance of the duties of that office. Once discharged from that office, his or her employment with the Commonwealth ceases. Bearing in mind the comments of Justice Davies, the reference to "that employment" in subsection 8(7)(b) must be read as a reference to the applicant's employment in the Army at the time he was injured, rather than to Commonwealth employment generally. The object of the section is to make a correct and fair assessment of what an employee's NWE were likely to be, had he or she not suffered the injury. The applicant's employment with the Army is the relevant employment to look at, not his subsequent employment with the Commonwealth. This interpretation of section 8 of the Act is in keeping with the purpose and object of the Act and is not inconsistent with the language of its provisions.

Discussion

17. It seems clear from the above cases that an employee's resumption of employment with the Commonwealth is not sufficient in itself for the employment to be regarded as continuing. In assessing whether or not subsection 8(7) applies to an employee's situation, regard must be had to the nature of the employment at the time the injury was suffered, the nature of the break in, or the suspension or interruption of, the employment, the nature of the resumed employment, and the employment history, including promotions, thereafter.

18. Circumstances can be envisaged where employment with the Commonwealth continues, notwithstanding a break in that employment. An employee who takes an authorised leave of absence does not necessarily discontinue his or her employment, though that person may be absent for a significant period of time, and working else where - for example on an exchange program. The duration of the break is a relevant factor to be looked at for the purpose of assessing the nature of the break in the employment, but on its own its length is not decisive.

19. The question arises whether an employee who resigns from Commonwealth employment and subsequently obtains employment in the APS can retrospectively change his or her status from that of a person who has ceased being employed by the Commonwealth to one who continues to be employed by the Commonwealth. If "ceased" is to be given any meaning in subsection 8(10), I do not think the passage of time can alter the status of the employee from someone who has "ceased" employment with, to someone who "continues" to be employed by, the Commonwealth.

20. Further, to come within subsection 8(7)(a) an employee is to have received an increase in salary as a result of a promotion. I accept the submission of counsel for the respondent, that the use of the word "promotion" reinforces the requirement of the continuity of service with the Commonwealth. The Macquarie Dictionary (2nd edition) gives the meaning of promotion, in the sense of its use in the subsection, as "advancement in rank or position". A promotion or advance to a position or place is referable to a previous position or place.

21. Resuming or returning to employment with the Commonwealth after termination of Commonwealth employment is not descriptive of an employee "who continues to be employed by the Commonwealth" after the date of an injury, when read in the context of the increase in pay arising as a result of the employee's "promotion". The applicant's return to the APS at a salary in excess of his earnings at the time of his previous termination, can not in those circumstances be regarded as a promotion from that previous employment.

22. The fact of increase in salary is only one factor in determining whether an appointment to a position is by way of "a promotion". An employee may receive a promotion without an increase in salary. I do not think that the fact on its own that an employee obtains a position at a higher salary level from the position held at the time of the employee's injury can be regarded as a "promotion", and certainly not in the applicant's circumstances where he moved in and out of Commonwealth employment over many years and held various positions with both the public and private sector.

23. Counsel for the applicant submits that had the applicant remained in the APS without a break, and had he been promoted he would unquestionably have enjoyed the benefit of subsection 8(7). That might be so. However, in this case, the applicant was discharged from the Army, and when he resumed employment with the Commonwealth, it was in the capacity of a civilian. Further, he did not continue in his APS employment and it can not be assumed that the increase in the applicant's earnings over the period of 29 years subsequent to his injury in 22 October 1968 are attributable only to promotions in the APS. I therefore do not have to decide whether Commonwealth employment which has been terminated can be regarded as unbroken in circumstances where the employee is re-employed in the same Commonwealth employment within a short period of time.

Findings

24. The applicant was discharged from the Army on medical grounds on 16 January 1970, and from 17 January the same year he was in receipt of an invalid pension. Upon discharge from the Army, the applicant discontinued his Commonwealth employment and he was consequently outside the provisions of subsection 8(7)(a). His subsequent employment with the Commonwealth was in clerical work as a civilian in the APS, not as a member of the Army. On 29 January 1970 he obtained a clerical position with the Department of the Army. On 6 May 1971 the applicant resigned his Commonwealth employment to take up employment in the private sector. His severance from the APS was complete. There is no evidence before me that on his resignation on 6 May 1971 the applicant intended to return to the APS or that his employment was to be resumed or continued at a later date. There is no evidence of any contractual right or any understanding that his employment could be resumed. He then worked in various positions in the private sector until 13 November 1972. He was unemployed or certainly not employed by the Commonwealth for approximately a further two and a half years, rejoining the APS on 21 April 1975. He obtained a different position in a different department. That break in the applicant's employment is a significant one. It was lengthy; it was not temporary. The applicant's employment history thereafter is also relevant. Having resumed employment with the Commonwealth he had further breaks in that employment. He in fact had nine years out of the Commonwealth employment in the 29 years following his compensable injury.

25. The first occasion the applicant ceased his Commonwealth employment after his injury was short. On subsequent occasions he ceased his Commonwealth employment and remained outside Commonwealth employment for longer periods of time. On each occasion he severed his connection with his Commonwealth employer, and on each return to Commonwealth employment, he was engaged in a new position. In view of the nature of each of the breaks in the applicant's employment, I find that he was not on any of the occasions he resumed employment with the APS after 16 January 1970, an employee who "continues to be employed by the Commonwealth" for the purposes of subsection 8(7).

26. There is no information available to the tribunal as to what the applicant did in the intervening years when he was not employed by the Commonwealth. The applicant may have gained experience or qualifications that allowed his re-entry into the APS at a higher wage. The continuity of employment is severed when a break in the employment is such that intervening factors come into play. The provisions of the Act clearly intend that consequence. Otherwise a bizarre result could arise on the applicant's construction of "continues to be employed by the Commonwealth", whereby Comcare's liability for periods of incapacity could be increased, rather than diminished, as an employee who has been successfully rehabilitated learns new skills in various employment situations, and resumes employment with the Commonwealth at a higher NWE than the employee would have had, had he or she not been injured.

27. Whether that occurred in the applicant's case is a matter of speculation. I do not need to make an inquiry into that matter. The difference between subsection 8(6) and 8(7) is that the matters in 8(6) can be ascertained without reference to the particular employee's employment progress. Subsection 8(7) allows only for the fact of promotion to be taken into account, and not that which is speculative. The relevant matters under the section are what age-related or other increments an employee received or would have expected to receive had he or she not been injured, and what increases in the minimum amount payable to the employee he or she in fact received because of promotion in that Commonwealth employment.

28. The tribunal is not satisfied that the applicant's salary level at the time of his incapacity some 29 years since the date of the injury arose by way of promotion in the course of his employment from time to time in the Commonwealth. It certainly did not arise by way of promotion from his position as a serving member of the Army.

Decision

29. I affirm the decision under review.

I certify that this and the 29 preceding paragraphs are a true copy of the decision and reasons for decision herein of Pamela Burton, Senior Member

Signed: .....................................................................................

Associate

Date of Hearing 7 December 1998

Date of Decision 17 March 1999

Counsel for the Applicant Mr Erskine

Solicitor for Applicant Gary Robb & Associates

Counsel for the Respondent Ms Bonsey

Solicitor for the Respondent Australian Government Solicitor