Average weekly earnings - overtime component - whether regular and established pattern - pattern established but hours fluctuating significantly - decision set aside as to weekly payments prior to amendments to Act - decision confirmed in relation to payments arising subsequently.

Determination of Review Officer made on 4th November, 1991

(Hearings 20th June, 19th July, 20th August & 20th September, 1991)

This is the determination of an application lodged on the 19th March, 1991, by Jerzey George Gorski as worker under a contract of service with Hills Industries Ltd as exempt employer. The application seeks a review pursuant to the Workers' Rehabilitation and Compensation Act, 1986 ("the Act"), of decisions made on the 19th & 30th October, 1990, and the 18th February, 1991, by the exempt employer to exclude the overtime component in the calculation of weekly payments of income maintenance.

When the matter was called on for hearing the applicant worker appeared and gave evidence. The respondent was represented by Mr C Sharp of counsel of Norman Waterhouse. Mr B Kitson, Claims Manager, and Mr Keith Giumelli, Director of the tubing division at Hills Industries, attended and gave evidence on behalf of the respondent.

The issue before me is whether or not, in calculating the worker's average weekly earnings, consideration should be given to include the overtime worked in the 12 months leading up to the date of injury and consider what the worker could have reasonably expected to earn if he had not suffered this injury. Initially, allowances paid as a consequence of the galvabond technique and dirt money was an issue, however, during the course of the proceedings it was agreed that these were both prescribed allowances and could not be included in the calculation of average weekly earnings for this worker.

It was the worker's sworn evidence that he worked overtime since commencing with Hills Industries Ltd whenever it was available and, in fact, sought out overtime. Overtime was usually worked by a number of people, the requirement for overtime to be worked was normally based on absenteeism, sick leave, annual leave and production requirements. Occasionally, overtime was worked on weekends when there was a need to perform special cleaning of machines.

It was the worker's evidence that he was one of eight employees in the factory who were classified at the same level and were able to perform tasks in any one of the 15 positions in the factory.

It was the worker's sworn evidence that the document provided by the respondent marked "R '1'" was reasonably accurate with regard to overtime and the weeks in which the overtime was worked for the 52 week period prior to his date of injury. This document was found to be incorrect with regard to the pay periods ending the 18th December, 1989, and the 2nd July, 1990. Upon investigation, these two periods were subsequently amended by the respondent to show that the worker had worked seven hours and five minutes overtime during the pay period ending the 18th December, 1989, and seven hours and 40 minutes overtime during the pay period ending the 2nd July, 1990.

It was the worker's evidence that due to compulsory leave taking during the Xmas closure of the plant between December and January, that four week period should not be included in any calculations. The applicant submitted that an analysis of the 52 week period commencing the 23rd October, 1989, and concluding on the 15th October, 1989, the date of injury, showed that the worker worked overtime during 24 of the possible 48 pay periods and did not work overtime during the other 24 pay periods as it was not available to him.

It was the worker's evidence that subsequent to his injury and return to work on light duties, he was unable to perform any overtime until he was passed as fit for normal duties. This resulted in his inability to perform overtime for a substantial period. It was appropriate to consider the comparison between what he could earn but for the injury, and the earnings of work colleagues, Mr Potempa and Mr D Raison. In the document submitted by the respondent marked "R'5'", Mt Potempa's overtime hours worked during the period between the 22nd October, 1990, and the 10th June, 1991, clearly indicates that the 34 week period was reduced to a 30 week period as a result of excluding the annual Xmas closure during December and January. Mr Potempa had worked overtime during 20 pay periods out of a possible 30.

The worker stated that whilst he was not in possession of, and the respondent had not provided a break down of overtime worked by Mr D Raison, he was aware that Mr Raison had received income totalling $29,500 in the financial year ending the 30th June, 1991. This, the worker believed, was the approximate figure he could have expected to have earned but for the subject injury.

It was submitted on behalf of the respondent that the applicant worker had been working in the tube mill for approximately six years and on the date of injury was the acting leading hand. The worker was classified as process controller grade two and the only appropriate comparators in this grade of a process controller were Mr Payne and Mt Potempa. The two comparators were used by the respondent in compiling the overtime hours from date of injury until the 10th June, 1991.

Mr Giannelli, Managing Director, was called to give sworn evidence for the respondent. It was his evidence that there were two shifts at the tube mill division and that overtime was based predominantly on production requirements. He did concede, however, that if there was absenteeism on particular machines, there would then be a requirement to work overtime. He stated that the day shift would be asked to work overtime first and if insufficient numbers were achieved then the afternoon shift would be asked to work overtime. Specialised cleaning of certain machines would take place as preventative maintenance measures every six to eight weeks. This required overtime to be worked and was normally done at the completion of the production run.

It was Mr Giannelli's sworn evidence that he was required to provide an assessment of the sales of the tube mill division for October, 1990, and it was his assessment that as sales had been declining for some time, there would be a decrease in the amount of overtime to be worked. Production, in fact, had been reduced by approximately 1000 tonnes per month from October until July which was approximately a 25% reduction. Mr Giannelli stated that the only overtime that had been worked since October, 1990, was as a consequence of absenteeism and the special cleaning of machines. Whilst overtime was offered to the day shift and then the afternoon shift personnel, there was some pecking order for staff to be offered overtime; he was aware that some workers were more willing to work overtime than others. Mr Giannelli was shown schedules presented by the respondent marked "R'1'", "R'2'" & "R'4'" and he agreed they indicated the approximate level of overtime worked from October, 1990, to date.

Mr Kitson, Claims Manager for the employer, gave sworn evidence in relation to his calculations of the worker's average weekly earnings. It was Mr Kitson's evidence that in arriving at his calculations, he considered if a worker worked overtime more often than not, then he would include it in the average weekly earnings. With regard to the galvabond payment and dirt money allowance, however, these were both prescribed allowances and were excluded from his calculations of the worker's average weekly earnings.

It was Mr Kitson's sworn evidence that he asked Mr Giannelli approximately one month after the worker's injury for a predication with regard to overtime to be worked in the tube mill division to see if there was any change in the pattern. It was stated that he was advised that overtime would decrease and that sales were 17% down on budget for September, 1990, and there was no sign of any increase in sales or a need to increase production resulting in overtime.

Mr Kitson stated that since the commencement of this hearing, he has had a need to recalculate the worker's average weekly earnings and, as consequence, has found that his initial calculation was incorrect due to an arithmetical error. The appropriate rate should have been $442.67 per week and as a consequence of it being his arithmetical error, the employer would not seek recovery of any payment in excess of this rate that was made to the worker. Mr Kitson stated that he chose Mr Potempa and Mr Payne as comparators as they were the only two who were, as he understood, exactly the same grade as the worker. He was aware that overtime was not readily available and fluctuated greatly in the tube mill division. When he considered overtime periods being worked with regard to calculating average weekly earnings, he did not deduct periods for annual leave and/or Xmas compulsory closure of the tube mill.

As a consequence of the amendments to the Act proclaimed to commence on the 8th April, 1991, he reviewed the worker's position and in particular, paid close attention to the amounts of overtime being worked by Mr Potempa and Mr Payne. As a consequence of his assessment, he was of the view that Mr Gorski should not have any overtime component included in his rate of pay subsequent to the date of injury both as a result of the overtime that he worked during the 12 month period prior to his injury and as a consequence of the overtime being worked by his comparators. Mr Kitson's view was that the overtime worked by the applicant during the 52 week period prior to his date of injury was not a regular and established pattern. He did not work this overtime more often than not. After viewing the calculations of the periods of overtime worked by the comparators, Mr Kitson was of the view that the overtime worked by the two comparators was also not in a regular and established pattern. There was no uniformity with regard to the number of hours worked within each pay period.

It was submitted on behalf of the applicant that in all the circumstances, he had established that the overtime he had worked during the 52 week period prior to his date of injury showed that it was worked in accordance with a regular and established pattern. As a consequence, it should be included in his calculations of average weekly earnings. It was submitted by the applicant with regard to average weekly earnings calculations subsequent to the 8th April, 1991, that it should be based on the overtime hours and periods of work performed by one of the comparators provided by the respondent, namely Mr A Potempa.

It was submitted on behalf of the respondent that the records of overtime worked by the applicant for the 52 week period prior to the date of injury clearly show that the overtime worked was neither in accordance with a regular and established pattern, nor were the number of hours substantially uniform.

It was submitted on behalf of the respondent that the dicta in the matter of Francese v the Corporation of the City of Adelaide, full court of the Supreme Court, decision 326/1989, King CJ, Leggo and Milhouse JJ; [1989] SASC 1796 whereby if the overtime worked was occasional or spasmodic in response to busy periods and special demands so that it does not form part of the regular income, it can not be said to be worked in accordance with a regular and established pattern. This was the case with Mr Gorski.

It was submitted on behalf of the respondent in relation to calculations subsequent to the amendments to the Act in April, 1991, that not only was there a requirement for the overtime to be worked in a regular and established pattern, but it also had to be uniform. It was also submitted on behalf of the respondent that in any view the documents marked "R'4'" and "R'5'" clearly show that Mr Payne and Mr Potempa did not work overtime in accordance with a regular and established pattern and the number of hours worked in the pay periods in which they did work overtime were not in accordance with a regular and established pattern and the number of hours worked in the pay periods in which they did work overtime was not uniform as it fluctuated dramatically during the period between the 22nd October, 1990, and the 10th June, 1991.

It was submitted on behalf of the respondent that in calculating average weekly earnings it was not appropriate to view circumstances in hindsight as the basis for the calculation can only be a consideration of the overtime worked during the 52 week period leading up to the date of injury and using that as a basis in which to forecast what the worker could have reasonably expected to earn but for the injury. The respondent stated that in those circumstances the worker had no entitlement to have any overtime component included in his average weekly earnings calculations. The respondent further submitted that having regard to the arithmetical error contained in the initial calculation of average weekly earnings, I was required to make a fresh determination correcting the amount of income maintenance payments and should confirm the employer's decision with regard to the exclusion of overtime payments and prescribed allowances.

In reaching my decision I take into account all the evidence and submissions given at the hearing and the documents on file. I refer to the reasons for decision of Chief Justice King in the matter of Francese v the Corporation of the City of Adelaide, full court of the Supreme Court, decision 326/1989; [1989] SASC 1796, pages six and seven where His Honour states:

"I think that those considerations throw light upon the meaning to be attributed to the expression 'regular and established pattern' as used in this section. The objective of the provision appears to be to provide to the worker during disability amounts by way of compensation equivalent to the earnings which he could have counted upon receiving if there had been no disability. I think that the expression should be understood in a sense which best achieves that objective.

Understood in that light, I think that the expression means no more than that the overtime, to be included in the computation of average weekly earnings, must be sufficiently established and worked with sufficient regularity to form part of the worker's regular income which is to be maintained during disability, and to constitute a solid basis for an estimate of the earnings which the worker could reasonably have been expected to earn during disability. Pattern in this context does not import any notion of uniformity in, or even correspondence between, the number of hours worked in the various pay periods. If overtime is worked regularly and is an established incident of the employment so is the form in practice part of the regular income, a regular and established, albeit perhaps an uneven or disjointed, pattern exists. On the contrary, if overtime is worked only occasionally or spasmodically in response to busy periods or special demands so that it does not form part of the regular income, it can not be said to be worked in accordance with a regular and established pattern. The amount of overtime which is to be included in the computation is the amount that the worker could reasonably be expected to have earned during the period of disability is to be estimated taking in to account the average earned during the previous 12 months."

I am satisfied, having regard to that dicta and the information provided by the parties that the worker should have a component of overtime included in his average weekly earnings as I am satisfied the evidence shows the worker worked overtime regularly in an established pattern so as to form, in practice, part of his regular income. It was regular and established even though, to use the words of His Honour, Chief Justice King in Francese v the Corporation of the City of Adelaide, "..... perhaps an uneven or disjointed pattern exists ...."

I am satisfied that the worker should have included in his average weekly earnings calculations a component for overtime equivalent to 3.19 hours per week. I find that the payment of a galvabond allowance and dirt money are prescribed allowances under the Act and are excluded in the calculation of average weekly earnings for this worker.

I am satisfied, having considered the documents provided by the respondent and Section 4(8)(b) of the Act, proclaimed to have commenced on the 8th April, 1991, excludes overtime from this worker's calculations for average weekly earnings from the 8th April, 1991, as the comparators' figures provided by the respondent clearly show that whilst overtime is worked in accordance with a regular and established pattern, the number of hours per period fluctuate dramatically.

Pursuant to Section 96(2) of the Act I set aside the decision of the exempt employer and substitute my determination to include in the worker's average weekly earnings calculations a component of 3.19 hours per week with respect to an overtime payment to be included in the calculations from week ending the 22nd October, 1990, to the 7th April, 1991, both dates inclusive.

Furthermore, I determine to confirm the decision of the exempt employer to exlude the overtime from the 8th April, 1991, and confirm the galvabond allowance and dirt allowance are prescribed allowances under the Act, therefore, they are to be exluded from the calculations of notional weekly earnings.

Any appeal against this determination must be lodged with the Workers' Compensation Appeal Tribunal within one month of the receipt of this determination. Enquiries about appeals may be directed to the Registrar of the Tribunal, 4th Floor, Hooker House, 33 King William Street, Adelaide, (phone: 226.9718) and forms for appeal are available from the same address.