Paterson v Stanmorr Pty Ltd & Anor [2000] VSCA 220

Paterson v Stanmorr Pty Ltd & Anor [2000] VSCA 220 - VSCA 2000 case summary — Zoe

[11]

"(1) In this Act, `the worker's pre-injury average weekly earnings" means - (a) the average weekly earnings during the 12 months preceding the relevant injury if the worker has been continuously employed by the same employer for that period; or (b) ... calculated at the worker's ordinary time rate of pay for the worker's normal number of hours per week. ... (4) For the purposes of sub-section (1), a worker's average weekly earnings shall be calculated by dividing the sum of amounts payable to the worker calculated at the worker's ordinary time rate of pay for the normal number of hours per week by the number of weeks during which the worker actually worked or was on annual, sick or other paid leave. (6) For the purposes of sub-section (1) - (a) if an ordinary time rate of pay is fixed for the worker's work under the terms of the worker's employment and, in addition, a piece-rate is payable, the ordinary time rate of pay shall be deemed to be the sum of the ordinary time rate of pay and the average weekly piece rate payment received by the worker during the relevant period under sub-section (i). (b) if an ordinary time rate of pay is not fixed for the worker's work under the terms of the worker's employment, the ordinary time rate of pay shall be deemed to be the average weekly rate earned by the worker during the relevant period under sub-section (1); and (c) if the normal number of work hours per week is fixed in any industrial award applicable to a worker, the worker's normal number of hours per week in that work shall be deemed to be the number so fixed; and (d) if a normal number of work hours per week is not fixed for the worker's work under the terms of the worker's employment, the normal weekly number of hours shall be deemed to be the average weekly number of hours worked by the worker during the relevant period under sub-section (1). ... " (f) if the worker is a person who - (i) under sections 6, 7 or 8 is deemed to be working under a contract of service; or (ii) under section 9 is deemed to be a worker - the worker's pre-injury average weekly earnings shall be calculated with reference to amounts payable to the worker and deemed to be remuneration under those sections, less any part of those amounts attributable to the supply of capital or materials. ..."

[24]

In opposition to the submission made by the respondents, counsel for the appellant contended that the wide meaning given to "earnings" so as to include non-pecuniary benefits was so deeply ingrained into compensation law in this State that it should be assumed that the legislature intended, when enacting s.5A, not to exclude from weekly payments those workers whose average weekly earnings comprised, wholly or in part, payments in kind. Although the gearing of such earnings to "ordinary time rate of pay" excluded from calculation, in appropriate cases, payments additional to "ordinary time" payments, such as overtime, penalty rates, or shift allowances, there is nothing in s.5A, so the appellant submitted, that evidences an intention to exclude from the calculation of average weekly earnings payments of a non-pecuniary kind which are essential components of the salary package of a totally incapacitated worker. In a case such as this one, where there was no "ordinary time rate of pay for normal hours worked", it was necessary to compute the pre-injury average weekly earnings by applying s.5A(6) (b) and (d). This required a calculation according to the pre-injury "average weekly rate earned" and, so it was submitted, the application of such a concept to a worker in the position of the appellant comprehended the inclusion of payments in kind of the valuable nature which were included in her salary package. It was contended that, if it were not so, unexplained anomalies would be created where workers such as "share-farmers", or other persons deemed by the Act to be "workers" or "employed upon contracts of service", would be excluded from a major component of statutory compensation. In contrast to the respondents' submission, the appellant contended that the specific inclusion of non-pecuniary benefits in the definition of "remuneration" and "current weekly earnings" emphasised that such payments were intended to be included within the definition of "pre-injury average weekly earnings".

[59]

These submissions found favour with her Honour. However, none of them can displace what, in my view, is the obvious intention of the scheme which is, in appropriate cases, to measure compensation by reference to earnings in kind as well as in cash. Reference to the history of the legislation does not assist. It is true that, in 1985, the Accident Compensation Act, unlike its predecessors, geared the calculation of "pre-injury average weekly earnings" to "ordinary time rates of pay for normal hours worked per week". No doubt, this was because the Parliament was aware that many, if not most workers, had their terms of employment regulated by industrial awards. Necessarily, if a worker's terms of employment were regulated by an award, or contract, which provided for an ordinary time rate of pay for standard hours per week worked, then overtime or other rates for extra-ordinary hours worked would be excluded from the calculation. But, as I have previously indicated, this says nothing about whether the legislature intended, particularly in cases where the worker was employed on terms which did not fix ordinary time rates of pay for standard hours worked, to exclude payments in kind from the calculation of pre-injury average weekly earnings. Indeed in such cases the Act requires the pre-injury average weekly earnings to be calculated in accordance with the "average weekly rate (of pay) earned" and, for reasons which I have previously indicated, there is nothing in the scheme of the legislation to suggest that payments in kind should be excluded where, to do so, would be to underestimate the value of the worker's pre-injury weekly earnings. Indeed, even in cases where a worker is engaged on ordinary time rates of pay for standard hours worked, payments or allowances in kind which are unvarying across the class of workers to which they are given, and do not import peculiarities of time or circumstance, will not necessarily be excluded from the calculation of "average weekly earnings"[13]. Nor, in my view, is the respondents' contention advanced by reference to what was formerly s.95 (2) of the 1985 Act. That sub-section, which existed only so long as there were "base rates" of weekly payments fixed by the Act, was designed to allow the "value of other payments" to be taken into account only to ensure that, in appropriate cases, the compensation payments did not fall below those "base rates". The history and purpose of the sub-section, which was referred to by McHugh, J. in Catlow (supra at 563), was not to evidence an intention to exclude payments in kind from the calculation of pre-injury average weekly earnings, but rather, I suspect, to permit back into the calculation of ordinary time rates of pay, for a limited purpose, the value of payments for overtime, or shift-work, or penalty rates which otherwise would be excluded.

[61]

For reasons already stated, I cannot accept her Honour's conclusion. When the Act was introduced in 1985, and geared the calculation of "pre-injury average weekly earnings" to "ordinary time rate of pay for ... normal number of hours per week", the legislature did not intend, in my opinion, to remove from the calculation of "average weekly earnings" those payments of a non-pecuniary kind which the terms of employment disclosed as a valuable component of the worker's emoluments; a fortiori where those terms did not fix an ordinary time rate of pay for normal hours per week and where, accordingly, the ordinary time rate of pay was deemed to be the "average weekly rate earned by the worker" during the 12 months, or other period, preceding the relevant injury. Indeed, the view which I take of the legislative intent is, I think, strengthened by the definition given to the meaning of "remuneration", by reason of which benefits payable in cash or in kind are deemed to be included in the remuneration of those persons deemed to be "workers" by ss. 7-9, 11, 13 and 16(4) of the Act. Although it may be true that the Act intended to give an extended meaning to the definition of "remuneration" for the purposes of calculating premiums or levies payable by employers, that cannot mean, as the learned judge thought, that the definition is of no relevance to the calculation of average weekly rates of pay earned by workers. It would, as I have said, be a strange result if the Act was extending compensation benefits to "deemed workers" who were, or may have been, in receipt of "remuneration" payable wholly or partly in kind, but was intending to exclude such payments in computing their compensation benefits. I agree with her Honour that this is an Act to which many amendments have been made, indeed to the point where, in some instances, it has lost coherence. Some amendments have been made, quite obviously, as ad hoc responses to decisions given by the courts. As the Appeal Division of the Supreme Court pointed out in Accident Compensation Commission v. Alger[14], what is now s.5A(6)(f) was introduced into s.95 of the Act in 1987 (Act 83 of 1987, s.40(5)) following the decision of the Court in Glazebrook (supra) which, as I have previously noted, concluded that, in calculating pre-injury average weekly earnings, expenses incurred by the worker in operating his own delivery truck in the course of his employment with his employer did not have to be called into account. This sub-section, which became s.5A(6)(f) following the general amendments to the Act in 1989, provides that the pre-injury average weekly earnings of persons deemed to be workers or working under contracts of service pursuant to ss. 6, 7, 8 and 9 of the Act are to be "calculated with reference to amounts payable to the worker and deemed to be remuneration under those sections less any part of those amounts attributable to the supply of capital or materials". If anything, the introduction of that subsection into s.5A of the Act not only re-inforces my view that the definition of "remuneration" remains of relevance to the calculation of pre-injury average weekly earnings, but fortifies the conclusion that such calculation is to take account, where appropriate, of payments in kind as well as payments in cash.

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Judgment (145 paragraphs)

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Cases Cited (1)