Workers’ Compensation Update
Interpretation of Amount Aa
EG Greens & Sons Pty Ltd v Sabourne [2009] WASCA 172
On 7 October 2009 the Court of Appeal delivered a decision on the correct interpretation of “weekly payments” in cl 11 of sch 1 of the Workers’ Compensation & Injury Management Act 1981 (WA). The decision has a potentially wide impact on employers who engage workers pursuant to an Award or industrial agreement. It could have serious ramifications for the calculation of insurance premiums for those employers.
Background
The Worker was a slaughterman who suffered injuries arising from his employment with the Employer. The Worker was paid weekly compensation payments of $718.50 gross per week being the base rate prescribed for the Worker’s level in the relevant industrial award. The Worker applied to the Dispute Resolution Directorate for orders that his weekly compensation payments be increased to $1,335.10 gross per week which were his average earnings per week prior to his injury.
Pursuant to cl 11 of sch 1, workers employed pursuant to an industrial award are paid Amount A for the first 13 weeks, and then Amount Aa thereafter. The Employer conceded that the correct rate of pay for the first 13th weeks was $1,335.10 (Amount A) however contended that thereafter it was $718.50 (Amount Aa).
The difference between the two amounts was the payment of what was termed an “overtally” which the Employer considered to be an “incentive”, and thus a “bonus or allowance”, which was not included in Amount Aa.
The Worker succeeded at first instance and obtained an order from the Arbitrator that his rate of weekly payments after the 13th week was $1,335.10.
The Employer then appealed the Arbitrator’s decision to the Commissioner. The Commissioner confirmed the decision of the Arbitrator. The Employer then appealed to the Court of Appeal.
Wheeler JA (Buss and Newnes JJA agreeing) dismissed the Appeal and found that “overtally” payments were no more than a method of calculating the rate of pay for workers who are paid on a piecework rate and were to be included in their normal weekly earnings as defined under the Act.
The Court of Appeal also held that the definition of “Amount Aa” did not exclude every payment capable of being regarded as an “incentive” within the definition of “bonus or allowance” in cl 11(2).
Wheeler JA was of the view that there is, or may be, some overlap between Amount A and Amount Aa. Her Honour rejected the argument that the definition of Amount Aa must be read as if it expressly excluded any payments referred to in Amount Aa, as the legislature deliberately failed to include them in the definition of Amount Aa. Her Honour used the example of overtime, and she was of view that as Amount Aa included “any over award or service payments paid on a regular basis as part of the worker’s earnings” then Amount Aa was capable of including some types of overtime payments. She gave the example of a worker who received regular excess hours or regular “unsocial” hours. Her Honour was of the view that it was possible that there will be payments which are capable both satisfying both descriptions of “bonus or incentive” and an “over award… payment paid on a regular basis” and therefore be included in both Amount A and Amount Aa.
Her Honour appeared to come to her decision based on public policy considerations of “fairness”. She was of the view that it was fair to withdraw payments after the 13th week which were of a “one off” nature but not those which both the worker and employer contemplated would be a regular part of the worker’s remuneration.
Conclusion
This case affects the calculation of weekly payments for workers that are employed pursuant to an industrial award or industrial agreement and leads to a potential result that there is no “step-down” after the 13th week.
The result is that industrial award workers will often be in a better position than non-award workers who cannot avoid the “step-down”. This is because non-award workers, for the first 13 weeks, are paid an average of their weekly earnings but after the 13th week are paid 85% of that. Non-award workers will experience a step down in their pay as was intended by Parliament.
Employers will need to review their industrial agreements and awards to try to overcome the effects of the Court of Appeal’s decision to provide a clear and unequivocal delineation between incentives and the ordinary rate of pay. If there is any ambiguity or the provision is not clearly expressed then there is a real risk that the amounts will not be excluded. It is recommended that employers seek advice on the implications of this decision for industrial award workers.
If you would like further information in respect of this matter please contact David Williams on 08 6263 6555.
WHL Legal Pty Ltd
Level1, 321 Murray Street
PERTH WA 6000
Phone: (08) 6263 6555
Facsimile: (08) 6263 6566