[2007] HCA 47
CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384
[1997] HCA 2
Collector of Customs v Agfa-Gevaert Ltd (1996) 186 CLR 389
[1996] HCA 36
Commissioner of Taxation of the Commonwealth of Australia v Consolidated Media Holdings Ltd (2012) 250 CLR 503
[2012] HCA 55
Cooper Brookes (Wollongong) Pty Ltd v Commissioner of Taxation of the Commonwealth of Australia (1981) 147 CLR 297
Source
Original judgment source is linked above.
Catchwords
[2007] HCA 47
CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384[1997] HCA 2
Collector of Customs v Agfa-Gevaert Ltd (1996) 186 CLR 389[1996] HCA 36
Commissioner of Taxation of the Commonwealth of Australia v Consolidated Media Holdings Ltd (2012) 250 CLR 503[2012] HCA 55
Cooper Brookes (Wollongong) Pty Ltd v Commissioner of Taxation of the Commonwealth of Australia (1981) 147 CLR 297[1981] HCA 26
Environment Protection Authority v Orchard Holdings (NSW) Pty Ltd (in liq) (2014) 86 NSWLR 499[2014] NSWCA 149
Flinders Ports Pty Ltd v Woolford (2015) 121 SASR 485[2015] SASCFC 6
Hunter Quarries Pty Ltd v Mexon (2018) 98 NSWLR 526[2018] NSWCA 178
K & S Lake City Freighters Pty Ltd v Gordon & Gotch Ltd (1985) 157 CLR 309[1985] HCA 48
Knight v South Australia (2022) 140 SASR 326[2022] SASCA 14
Maunsell v Olins [1975] AC 373
Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355[1998] HCA 28
Saraswati v The Queen (1991) 172 CLR 1[1991] HCA 21
SAS Trustee Corporation v Miles (2018) 265 CLR 137[2018] HCA 55
Secretary, Department of Communities and Justice v Stewart [2023] NSWPICPD 35
South Australia v Day (2000) 78 SASR 270
[2000] SASC 451
Stone v Stannard Brothers Launch Services Pty. Ltd. [2004] NSWCA 277
Sydney Seaplanes Pty Ltd v Page (2021) 106 NSWLR 1
[2021] NSWCA 204
Uelese v Minister for Immigration and Border Protection (2015) 256 CLR 203
Judgment (17 paragraphs)
[1]
Background
Since 2007, Mr Stewart has been employed by the Secretary, Department of Communities and Justice (the "Secretary"), working within Corrective Services New South Wales. As at 1 February 2021, Mr Stewart was a Senior Prison Officer with a salary of $106,866.24 per annum.
On 20 November 2020, Mr Stewart suffered a workplace injury to his shoulder sustained whilst working at Cooma Correctional Centre (the "earlier injury"). This caused him to be totally incapacitated for work from 20 November 2020 until 1 February 2021. Liability for this injury under the Compensation Act was accepted by the Secretary. Thus, for the period 20 November 2020 to 1 February 2021, Mr Stewart received weekly payments of compensation pursuant to s 33 of the Compensation Act. For the purposes of the earlier injury, his pre-injury average weekly earnings were calculated to be $4,119.72 gross per fortnight.
On 1 February 2021, Mr Stewart lodged a claim for post-traumatic stress disorder resulting from the nature and conditions of his employment over a number of years (the "later injury"). Liability for the later injury was also accepted by the Secretary. Mr Stewart remained totally incapacitated for work on account of his later injury as at 8 February 2022, when he prepared his witness statement.
By letter of 25 February 2021, Mr Stewart was notified by QBE, whom the Court was told was "contracted to perform the insurance function, administering and so on" under the Compensation Act, that his pre-injury average weekly earnings figure for the later injury, for the purpose of the Compensation Act, was $1,565.68. This was based upon gross earnings of $81,415.30 averaged over the 52 weeks from 3 February 2020 to 31 January 2021. The figure of $81,415.30 did not include any of the compensation payments made under the Compensation Act in respect of the earlier injury (consistent with cl 6(2)(c) of Sch 3 to the Compensation Act). However, whilst the amounts of compensation paid under the Compensation Act were ignored when calculating Mr Stewart's pre-injury average weekly earnings, the period during which compensation was paid was taken into account in the averaging calculation. This meant that Mr Stewart's earnings over a period of 41 weeks and 4 days (that is, 52 weeks, less the 10 weeks and 3 days when he was incapacitated from the earlier injury) were divided by 52 to reach the figure that was determined to be his pre-injury average weekly earnings for the purposes of determining compensation payable under the Compensation Act for the later injury.
As Mr Stewart was then in the first entitlement period (being the first thirteen weeks post-injury pursuant to ss 32A and 36 of the Compensation Act), he was thus entitled to be paid $1,487.40 per week, being 95% of his pre-injury average weekly earnings of $1,565.68.
Despite representations from Mr Stewart's solicitor, including with support from an advice prepared by Mr Fraser Doak, a barrister, QBE maintained that Mr Stewart's pre-injury average weekly earnings in respect of the later injury had been correctly calculated.
In these circumstances, on 9 February 2022, Mr Stewart filed an application in the Personal Injury Commission. The claim came before Member Burge on 30 May 2022. Relying upon reg 8D of the 2016 Regulation (set out below at [48]), on 28 June 2022, Member Burge determined:
"(1) The relevant earning period for the calculation of pre-injury average weekly earnings should be adjusted to exclude the period where the applicant was paid workers' compensation benefits for an unrelated injury.
(2) The relevant earning period for the calculation of pre-injury average earnings should therefore be adjusted to 1 February 2020 to 19 November 2020."
Pursuant to s 352 of the Workplace Injury Management and Workers Compensation Act 1998 (NSW) (the "Management Act"), the Secretary filed an appeal against the decision of Member Burge on 26 July 2022.
[2]
The decision of the Deputy President
On 23 June 2023 Deputy President Wood confirmed order 1 made by Member Burge but amended order 2 to read:
"The relevant earning period for the calculation of the pre-injury average weekly earnings is adjusted to 1 February 2020 to 19 November 2020 pursuant to regulation 8E of the Workers Compensation Regulation 2016."
The Deputy President found that Member Burge had erred in finding that reg 8D of the 2016 Regulation applied in the circumstances. Having found error, the Deputy President redetermined the matter pursuant to s 352(6A) of the Management Act. The Deputy President rejected contentions made on behalf of Mr Stewart that:
1. the period of 52 weeks in cl 2(2) of Sch 3 to the Compensation Act should be read as a maximum period, and not a prescriptive period, for the purpose of calculating pre-injury average weekly earnings: at [79]-[80]; and
2. because cl 6(2)(c) of Sch 3 to the Compensation Act excludes weekly compensation payments from being "earnings", the clause should be read as also excluding the period during which such payments were made from the 52 week period used to calculate pre-injury average weekly earnings: at [85].
The Deputy President found (at [96]), however, that during the period of incapacity from the earlier injury, Mr Stewart was on "unpaid leave" within the meaning of reg 8E of the 2016 Regulation (set out at [48] below). Thus, the relevant earning period should be amended effectively to exclude that period of incapacity. Neither party before the Deputy President relied upon reg 8E of the 2016 Regulation but both were given the opportunity to make submissions as to whether it applied.
The Deputy President found (at [94]) that an unjust outcome would result if a narrow view were taken of the term "unpaid leave" in reg 8E of the 2016 Regulation. Such an outcome would be "contrary to the intention of legislation, which was clearly to apply fairness to the calculation of the pre-injury average weekly earnings." Further, the Deputy President found (at [96]) that Mr Stewart's absence from employment on account of the earlier injury fell within the ambit of "unpaid leave" in circumstances in which any payments of compensation were excluded from the calculation of "earnings".
[3]
Notice of appeal
Pursuant to s 353(1) of the Management Act, the Secretary appeals on a point of law from the whole of the decision of the Deputy President.
The single ground of appeal pressed by the Secretary is that the Deputy President erred in law in construing a "period of unpaid leave" in reg 8E of the 2016 Regulation to include, or as capable of including, a period of absence from work by reason of incapacity due to an injury for which a worker is being paid workers compensation.
[4]
Notice of contention
By a document styled as a notice of contention and dated 15 February 2024, which Mr Stewart was permitted to rely upon as a notice of contention, Mr Stewart contends that the decision of the Deputy President should be upheld on the following grounds:
"1. The Deputy President erred in rejecting the Respondent's submission that the interpretation of clause 2(2) of Schedule 3 of the Workers Compensation Act 1987 (NSW) (1987 Act) should be read to mean "a maximum of 52 weeks."
2. The Deputy President erred in finding that relevant period for the calculation of the Worker's pre-injury average weekly earnings under clause 2(2) of Schedule 3 could not be reduced from 52 weeks other than by the operation of Division 2 of Part 4 of the Workers Compensation Regulation 2016 (NSW) (2016 Regulation).
3. The Deputy President erred in failing to find that the relevant period for the calculation of the Worker's pre-injury average weekly earnings was reduced to exclude the period in which he was receiving payments of weekly benefits compensation during which the Worker was not receiving "earnings" as defined by clause 6(1) of Schedule 3 of the 1987 Act." (Emphasis in original).
[5]
The legislative scheme at the time of Mr Stewart's injury
The relevant legislative scheme for the purposes of this appeal includes the Compensation Act, the Management Act and the 2016 Regulation. Under s 2A of the Compensation Act, the Compensation Act and the Management Act are to be construed together, with the Management Act prevailing in the event of any inconsistency.
Section 3 of the Management Act provides:
3 System objectives
The purpose of this Act is to establish a workplace injury management and workers compensation system with the following objectives -
(a) to assist in securing the health, safety and welfare of workers and in particular preventing work-related injury,
(b) to provide -
• prompt treatment of injuries, and
• effective and proactive management of injuries, and
• necessary medical and vocational rehabilitation following injuries,
in order to assist injured workers and to promote their return to work as soon as possible,
(c) to provide injured workers and their dependants with income support during incapacity, payment for permanent impairment or death, and payment for reasonable treatment and other related expenses,
(d) to be fair, affordable, and financially viable,
(e) to ensure contributions by employers are commensurate with the risks faced, taking into account strategies and performance in injury prevention, injury management, and return to work,
(f) to deliver the above objectives efficiently and effectively.
The payment of compensation to workers for injuries arising out of or in the course of their employment is provided for in s 9, read together with the definition of "injury" in s 4, of the Compensation Act. The circumstances in which an employer is liable to compensate a worker for injury are dealt with in Pt 2 of the Compensation Act.
Part 3 of the Compensation Act sets out what benefits will be provided to workers in circumstances where an employer is liable to compensate them for injuries or death. Division 2 of Pt 3 of the Compensation Act was substantially amended by the Workers Compensation Legislation Amendment Act 2018 (NSW) (the "2018 Amendment Act") with effect from 21 October 2019. Within Div 2 of Pt 3 of the Compensation Act, s 33 provides for the payment of weekly compensation during a period of total or partial incapacity. Section 36 of the Compensation Act, read together with the definitions in s 32A, provides that, subject to a weekly maximum, for the first thirteen weeks a worker who has no current work capacity is entitled to compensation at the rate of 95% of the worker's pre-injury average weekly earnings.
[6]
Section 130 of the Fair Work Act 2009 (Cth)
As the Secretary relies, in his written submissions, upon s 130 of the Fair Work Act 2009 (Cth), it is convenient to set this out here. It provides:
130 Restriction on taking or accruing leave or absence while receiving workers' compensation
(1) An employee is not entitled to take or accrue any leave or absence (whether paid or unpaid) under this Part during a period (a compensation period) when the employee is absent from work because of a personal illness, or a personal injury, for which the employee is receiving compensation payable under a law (a compensation law) of the Commonwealth, a State or a Territory that is about workers' compensation.
(2) Subsection (1) does not prevent an employee from taking or accruing leave during a compensation period if the taking or accruing of the leave is permitted by a compensation law.
(3) Subsection (1) does not prevent an employee from taking unpaid parental leave during a compensation period.
"This Part" as referred to in s 130(1) above, is Part 2-2 of the Fair Work Act, which sets out the National Employment Standards. As regards leave, those standards set out a minimum entitlement of an employee to whom the Fair Work Act applies to parental leave (Div 5), paid and unpaid no safe job leave (ss 81A and 82A), annual leave (Div 6), various forms of personal leave (Div 7), community service leave (Div 8), long service leave (Div 9) and an entitlement to be absent from employment on public holidays (Div 10).
The distinction between leave and absence in the Fair Work Act is also demonstrable in s 525, which relevantly provides:
525 Employee not stood down during a period of authorised leave or absence
An employee is not taken to be stood down under subsection 524(1) during a period when the employee:
(a) is taking paid or unpaid leave that is authorised by the employer; or
(b) is otherwise authorised to be absent from his or her employment.
Note: An employee may take paid or unpaid leave (for example, annual leave) during all or part of a period during which the employee would otherwise be stood down under subsection 524(1).
[7]
Legislative history
As originally passed, s 36(1) of the Compensation Act provided for weekly compensation of injured workers by reference to the worker's "current weekly wage rate." The worker's "current weekly wage rate" was determined by reference to the worker's weekly wage immediately before being incapacitated (if remunerated under an award, employed by the Crown or within a prescribed class of workers) or was otherwise a fixed weekly rate pursuant to s 42 of the Compensation Act (as passed).
Section 35 of the Compensation Act (which was inserted from October 2012 by the Workers Compensation Legislation Amendment Act 2012 (NSW) and later repealed by the 2018 Amendment Act) provided that the amount to be paid by weekly payments was to be determined by a calculation which took into account the worker's pre-injury average weekly earnings, non-pecuniary benefits provided to the worker by the employer, the worker's earnings after the injury and the statutory maximum weekly compensation amount. "Pre-injury average weekly earnings" was, at that time, defined in s 44C (also inserted from October 2012 and later repealed by the 2018 Amendment Act):
44C Definition - pre-injury average weekly earnings
(1) In this Division, pre-injury average weekly earnings, in respect of a relevant period in relation to a worker, means the sum of:
(a) the average of the worker's ordinary earnings during the relevant period (excluding any week during which the worker did not actually work and was not on paid leave) expressed as a weekly sum, and
(b) any overtime and shift allowance payment that is permitted to be included under this section (but only for the purposes of the calculation of weekly payments payable in the first 52 weeks for which weekly payments are payable).
(2) If a worker has been continuously employed by the same employer for less than 4 weeks before the injury, pre-injury average weekly earnings, in relation to that worker, may be calculated having regard to:
(a) the average of the worker's ordinary earnings that the worker could reasonably have been expected to have earned in that employment, but for the injury, during the period of 52 weeks after the injury expressed as a weekly sum, and
(b) any overtime and shift allowance payment that is permitted to be included under this section (but only for the purposes of the calculation of weekly payments payable in the first 52 weeks for which weekly payments are payable).
(3) If a worker:
(a) was not a full time worker immediately before the injury, and
(b) at the time of the injury was seeking full time employment, and
(c) had been predominantly a full time worker during the period of 78 weeks immediately before the injury,
pre-injury average weekly earnings, in relation to that worker, means the sum of:
(d) the average of the worker's ordinary earnings while employed during the period of 78 weeks immediately before the injury (excluding any week during which the worker did not actually work and was not on paid leave) (the qualifying period), whether or not the employer is the same employer as at the time of the injury expressed as a weekly sum, and
(e) any overtime and shift allowance payment that is permitted to be included under this section (but only for the purposes of the calculation of weekly payments payable in the first 52 weeks for which weekly payments are payable).
(4) In relation to a worker of a class referred to in Column 2 of an item in Schedule 3 [none of which are relevant to Mr Stewart], pre-injury average weekly earnings means the amount determined in accordance with Column 3 of that item, expressed as a weekly sum.
(5) An overtime and shift allowance payment is permitted to be included in the calculation of pre-injury average weekly earnings (but only for the purposes of the calculation of weekly payments payable in the first 52 weeks for which weekly payments are payable) if:
(a) the worker worked paid overtime or carried out work that attracted a shift allowance during the relevant period, and
(b) the worker would, but for the worker's injury, have been likely, at any time during that 52 week period, to have worked paid overtime or carried out work that attracted a shift allowance.
(6) The amount of an overtime and shift allowance payment that is permitted to be included is to be calculated in accordance with the following formula:
A
B
where:
A is the total amount paid or payable to the worker for paid overtime and shift allowances in respect of the relevant period.
B is the number of weeks during the relevant period during which the worker worked or was on paid annual leave.
(7) If the amount of a worker's pre-injury average weekly earnings is less than any minimum amount prescribed by the regulations as applicable to the worker, the amount of the worker's pre-injury average weekly earnings is deemed to be that minimum amount. Different minimum amounts may be prescribed for different classes of workers, including part-time and full-time workers.
[8]
Extrinsic materials
The 2018 Amendment Act was introduced by the Workers Compensation Legislation Amendment Bill 2018 (NSW) (the "2018 Bill"). The Explanatory Note to the 2018 Bill, as introduced into Parliament, confirms that the object of the 2018 Bill was to make changes including "with respect to the calculation of the pre-injury average weekly earnings of a worker for the purpose of determining the worker's entitlement to weekly payments of compensation".
As regards the proposed new Sch 3 to the Compensation Act, the Explanatory Note to the 2018 Bill identified that Sch 3 made:
"… the following significant changes relating to earnings for the purposes of the calculation of weekly payments of compensation:
(a) Clause 2 defines pre-injury average weekly earnings as the weekly average of the gross pre-injury earnings received by the worker during the period of 52 weeks before the injury for work in any employment in which the worker was engaged at the time of the injury. Regulations may provide for the adjustment of the 52-week period to reflect any change in earnings circumstances of the worker or to align the period with the regular pay period of the worker. The regulations may also specify a minimum amount of pre-injury average weekly earnings that is to apply in respect of a class of worker.
(b) Clause 3 establishes a mechanism for a worker and the employer to agree as to the amount of pre-injury average weekly earnings that is to apply for the purposes of the calculation of weekly payments of compensation.
(c) Clause 6 defines earnings by reference to the actual amount of weekly income of the worker earned in any employment, rather than by reference to ordinary earnings (which currently exclude overtime and shift allowances)."
As is apparent, the "significant changes" set out do not include any reference as to whether periods of incapacity in respect of which payments are made under the Compensation Act are to be included for the purpose of calculating pre-injury average weekly earnings.
To the extent that the second reading speeches in the New South Wales Legislative Council and Assembly cast light on the purpose behind the changes in the 2018 Amendment Act to the calculation of pre-injury average weekly earnings, these speeches suggest that the aim was to simplify the system for calculation of the relevant figure. Thus, in the Legislative Council, Mr MacDonald, who introduced the 2018 Bill, explained that the reforms therein were "designed to simplify the dispute resolution process for injured workers who are required to navigate the workers compensation scheme", and that:
"… Schedule 3 to the bill provides for a simplified approach to establish the various factors that determine an injured worker's pre-injury average weekly earnings [PIAWE] that are used to inform the amount of weekly payment compensation payable to a worker. The bill addresses concerns with the complexity and inflexibility of the current PIAWE provisions. It establishes a dedicated PIAWE schedule with a definition of earnings that aligns more closely with the actual earnings of a worker over a defined relevant earning period, which is usually 52 weeks. The new PIAWE definitions align more closely to the Motor Accident Injuries Act 2017 by including all earnings of workers in their capacity as workers, such as overtime, shift and other allowances, and loading. In doing so, it removes the routine need for reference to a worker's ordinary earnings under a relevant award or fair work instrument. Consequently, the bill does not exclude shift and overtime allowances from PIAWE after 52 weeks of payments.
Importantly, the new schedule 3 to the Act introduced by the bill provides for a simple and clear method of determining PIAWE. The bill also includes a provision to amend the schedule by regulation. This provides flexibility to keep pace with the changes in the way that workers earnings are determined. This regulation-making power mirrors a similar power introduced in the Motor Accident Injuries Act 2017. Consistent with this adaptable and flexible approach is a regulation-making power to adjust the relevant earning period to accommodate changes in the worker's earnings circumstances and the ability to align the calculation of weekly payments with an injured worker's normal pay cycles. The regulations may also provide for the adjustment of weekly payments following a work capacity decision if required."
[9]
Relevant principles of statutory construction
Ultimately, the task of the Court in applying accepted principles of statutory construction is to discern what Parliament is taken to have intended: Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355; [1998] HCA 28 at [70]. In Cooper Brookes (Wollongong) Pty Ltd v Commissioner of Taxation of the Commonwealth of Australia (1981) 147 CLR 297 at 320; [1981] HCA 26, Mason and Wilson JJ, partially quoting DC Pearce, stated that:
"… The fundamental object of statutory construction in every case is to ascertain the legislative intention by reference to the language of the instrument viewed as a whole … The rules [of statutory construction] … are no more than rules of common sense, designed to achieve this object."
It is now orthodox that context is to be considered in the first instance, not merely after ambiguity is identified: see eg K & S Lake City Freighters Pty Ltd v Gordon & Gotch Ltd (1985) 157 CLR 309 at 315; [1985] HCA 48; Project Blue Sky at [69]; CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384 at 408; [1997] HCA 2 ("CIC Insurance"). As the High Court confirmed in CIC Insurance (at 408), "if the apparently plain words of a provision are read in the light of the mischief which the statute was designed to overcome and of the objects of the legislation, they may wear a very different appearance." Moreover, in CIC Insurance the High Court confirmed (at 408) that "context" is to be understood in its "widest sense to include such things as the existing state of the law and the mischief which, by legitimate means … one may discern the statute was intended to remedy." Relevant context may include legislative history and extrinsic materials, albeit that such material cannot displace the meaning of the statutory text: Commissioner of Taxation of the Commonwealth of Australia v Consolidated Media Holdings Ltd (2012) 250 CLR 503; [2012] HCA 55 at [39] (French CJ, Hayne, Crennan, Bell and Gageler JJ).
The purpose (or purposes, for there may be a number) of any particular statute may be expressly stated, may be discerned only by inference upon examination of the legislation as a whole, or may be revealed from the nature and context of a particular statute's enactment: Saraswati v The Queen (1991) 172 CLR 1 at 21; [1991] HCA 21 (McHugh J). As Gageler J (as his Honour then was) explained in SAS Trustee Corporation v Miles (2018) 265 CLR 137; [2018] HCA 55 at [41]:
"… statutory text must be considered from the outset in context and attribution of meaning to the text in context must be guided so far as possible by statutory purpose on the understanding that a legislature ordinarily intends to pursue its purposes by coherent means." (Footnotes omitted).
[10]
The proper construction of "period of unpaid leave" in cl 2(3) of Sch 3
[11]
The parties' submissions
Uncontroversially, the Secretary contends that, consistent with s 11 of the Interpretation Act, the expression "unpaid leave" in reg 8E of the 2016 Regulation should be given the same meaning as in cl 2(3)(a) of Sch 3 to the Compensation Act absent any "contrary intention". So much may be accepted. No contrary intention is apparent.
The Secretary's first key contention on appeal is that neither the text nor purpose of cl 2(3)(a) of Sch 3 to the Compensation Act supports the construction adopted by the Deputy President. In this regard, the Secretary contends that "reasoning by reference to abstract notions of justice or fairness is unsound." In any event, the Secretary contends that the Deputy President erred in reasoning by reference to abstract notions of justice and fairness as, in doing so, she relied upon purpose without considering the means and extent to which such purpose was pursued in the particular provisions under consideration. Moreover, the Secretary contends that reasoning by reference to notions of justice or fairness is unsound given that there are many ways in which levels of compensation under the Compensation Act may be impacted by an earlier injury and the construction adopted by the Deputy President focuses upon one, arising from the circumstances of Mr Stewart, without giving any regard to others. Thus, for example, the Secretary contends that the construction adopted by the Deputy President leaves open the prospect that a worker who suffered only from partial incapacity by reason of an earlier injury will still have that period of partial incapacity taken into account in determining pre-injury average weekly earnings. That, the Secretary submits, would result in its own unfairness if the position of that worker is compared with the position of a worker, such as Mr Stewart, who suffered from a period of total incapacity.
Second, the Secretary contends that the terms of cl 6(2)(c) of Sch 3 to the Compensation Act, which excludes compensation payments made under the Compensation Act from the meaning of "earnings", reflect a legislative choice to fashion payments of compensation under the Compensation Act by reference to the earning capacity of the worker as at the date of the relevant injury. If the worker's earning capacity has been diminished by reason of an earlier injury, that diminution is to be reflected in payment of a lower level of compensation than would otherwise be the case.
[12]
Consideration
The Secretary's contentions should be rejected for the following reasons.
First, as the Secretary submits, in the 2018 Amendment Act, Parliament provided that adjustments to the relevant earning period for the purpose of calculating a worker's pre-injury average weekly earnings were to be dealt with by regulations. However, in cl 2(3)(a) of Sch 3 to the Compensation Act, Parliament did not simply provide that regulations could adjust the relevant period for "any … other change in the earnings circumstances in the worker's employment", a phrase which would be broad enough to include "any period of unpaid leave". Instead, Parliament expressly included in cl 2(3)(a) of Sch 3 that regulations may provide for such adjustment "to take into account any period of unpaid leave or other change in earnings circumstances of the employment" (emphasis added). In so providing, Parliament should be taken to have intended that the circumstance that a worker had had a period of unpaid leave within the 52 weeks before the relevant injury was a particular circumstance which could justify adjustment to the relevant earning period. That is apparent from the express inclusion of those words in cl 2(3)(a) of Sch 3 to the Compensation Act. In construing the words in cl 2(3)(a), and in reg 8E of the 2016 Regulation, the express inclusion of those words should be given significance.
Parliament should thus be taken to have envisaged, as at least a reasonable likelihood, that regulations would be made under cl 2(3)(a) of Sch 3 to the Compensation Act to provide for adjustment of the relevant earning period to take into account any period of unpaid leave. This follows from the express inclusion of those words in cl 2(3)(a) understood in the context of the scheme of the Compensation Act, as is apparent from the second reading speech (set out above) and from the text of Sch 3 when compared with the form of the Compensation Act prior to the 2018 Amendment Act, which was to omit any adjustments from the legislation leaving such matters to be dealt with by regulations.
Thus, notwithstanding that the scheme of cl 2(3) of Sch 3 to the Compensation Act is that adjustments were to be made by regulation, rather than by the terms of Sch 3 itself, the task of construction of cl 2(3)(a) of Sch 3 should be premised upon a parliamentary intention, subject of course to regulations being made, that periods of unpaid leave would merit an adjustment of the relevant earning period for the purpose of calculating pre-injury average weekly earnings.
[13]
Notice of Contention
Having regard to my conclusion as set out above, the notice of contention can be dealt with briefly. It is sufficient to observe that the proposed construction of cl 2(2) of Sch 3 to the Compensation Act advanced by Mr Stewart by way of notice of contention should be rejected as being both inconsistent with the text of that clause, and inconsistent with the apparent purpose of Sch 3 to the Compensation Act.
As to the former, cl 2(2) of Sch 3 to the Compensation Act defines the "relevant earning period" as the period of 52 weeks ending immediately before the date of injury. There is nothing in the language of cl 2(2) of Sch 3 that contemplates that the "relevant earning period" is a "maximum" of 52 weeks. On that basis alone, Mr Stewart's contention should be rejected.
However, as set out above, it would be inconsistent with Sch 3 to the Compensation Act as a whole for the "relevant earning period" to have a flexible content, constrained only by it having to be less than 52 weeks. If that were the case, the provision in cl 2(3) of Sch 3 for regulations to extend or reduce that period would make no sense. Moreover, there would be unacceptable uncertainty plaguing the calculation of pre-injury average weekly earnings if there were no clarity as to what period was to be used for the purpose of calculating either the worker's earnings, or the period over which those earnings should be averaged.
It necessarily follows that in my judgment the notice of contention should be dismissed.
[14]
Conclusion
During the hearing of the appeal the Court was informed that the parties had agreed that, whatever the outcome, there should be no order as to the costs of the appeal. In those circumstances, I would have made orders that the appeal and notice of contention be dismissed.
GRIFFITHS AJA: I am grateful to Stern JA for summarising the factual background and setting out the relevant legislative provisions, which need not be repeated. I agree with her Honour's reasons for rejecting the notice of contention. I respectfully disagree, however, that the appeal should be dismissed.
Like many difficult questions of statutory interpretation, this case presents a constructional choice. Ultimately, however, the core issue is whether the Deputy President was correct to adopt what can appropriately be described as a strained interpretation of the expression "period of unpaid leave" in reg 8E so as to avoid an outcome which the Deputy President viewed as "plainly unfair".
Alternatively, applying well settled principles of interpretation, should that expression be given a different and narrower meaning? If that interpretation produces unfairness, power exists to make a regulation under cl 2(3) of Sch 3 of the Workers Compensation Act 1987 (NSW) (Compensation Act), which authorises the making of an appropriate adjustment so as to address unfairness.
For the following reasons, I prefer the second of those approaches.
First, cl 2(3)(a) of Sch 3 of the Compensation Act and reg 8E of the Workers Compensation Regulation 2016 (NSW) are the only provisions in the legislation containing the expression "a" or "any" "period of unpaid leave". Subject to the manifestation of a contrary intention, they should be given the same meaning (no significance attaches to the fact that one of the two provisions is prefaced by the term "a", while the other uses "any"). There being no contrary intention here, the proper construction of "period of unpaid leave" in reg 8E turns on the meaning of that expression in cl 2(3)(a).
I see no reason why the expression "any period of unpaid leave" in cl 2(3)(a) should be given anything other than its ordinary meaning in this particular context. In my view, that ordinary meaning does not encompass a situation where a worker is unable to work because of incapacity and is receiving workers compensation. Such a worker is not on leave, nor is the person unpaid. I will now explain why that is so.
[15]
Conclusion
For these reasons, I would allow the appeal. I accept the appellant's submission that this is an appropriate case for this Court to determine the matter, rather than remit it.
[16]
Orders
I would make the following orders:
1. The appeal is allowed.
2. Set aside the orders made by the Deputy President on 23 June 2023.
3. In lieu thereof:
1. Revoke the Certificate of Determination dated 28 June 2022;
2. Determine that the relevant earning period for the purpose of calculating the then respondent's pre-injury average weekly earnings is from 2 February 2020 to 31 January 2021.
1. Dismiss the notice of contention.
2. There be no order as to costs.
[17]
Amendments
02 April 2024 - Removed extra space in headnote.
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Decision last updated: 02 April 2024
Parties
Applicant/Plaintiff:
Secretary, Department of Communities and Justice
Respondent/Defendant:
Stewart
Legislation Cited (17)
Workers' Compensation Act 1926(NSW)
Workers Compensation Amendment (Pre-injury Average Weekly Earnings) Regulation 2019(NSW)
Workers Rehabilitation and Compensation Act 1986(SA)
Workmen's Compensation Act 1910(NSW)
Workplace Injury and Management and Workers Compensation Act 1998(NSW)
Saraswati v The Queen (1991) 172 CLR 1; [1991] HCA 21
SAS Trustee Corporation v Miles (2018) 265 CLR 137; [2018] HCA 55
Secretary, Department of Communities and Justice v Stewart [2023] NSWPICPD 35
South Australia v Day (2000) 78 SASR 270; [2000] SASC 451
Stone v Stannard Brothers Launch Services Pty. Ltd. [2004] NSWCA 277
Sydney Seaplanes Pty Ltd v Page (2021) 106 NSWLR 1; [2021] NSWCA 204
Uelese v Minister for Immigration and Border Protection (2015) 256 CLR 203; [2015] HCA 15
WorkPac Pty Ltd v Thearle [2016] NSWCA 303
Texts Cited: Explanatory Note, Workers Compensation Legislation Amendment Bill 2018 (NSW)
New South Wales Legislative Assembly, Parliamentary Debates (Hansard), 17 October 2018
New South Wales Legislative Council, Parliamentary Debates (Hansard), 19 September 2018
Perry Herzfeld and Thomas Prince, Interpretation (2nd ed, 2020, Thomson Reuters)
Workers Compensation Legislation Amendment Bill 2018 (NSW)
Category: Principal judgment
Parties: Secretary, Department of Communities and Justice (Appellant)
Hall & Wilcox (Appellant)
Bell Lawyers (Respondent)
File Number(s): 2023/231566
Publication restriction: Nil.
Decision under appeal Court or tribunal: Personal Injury Commission
Jurisdiction: Workers Compensation Division
Citation: [2023] NSWPICPD 35
Date of Decision: 23 June 2023
Before: Deputy President Wood
File Number(s): W697/22
HEADNOTE
[This headnote is not to be read as part of the judgment]
Since 2007, Mr Stewart has been employed by the Secretary, Department of Communities and Justice (the Secretary), working within Corrective Services New South Wales. On 20 November 2020, Mr Stewart suffered a workplace injury to his shoulder whilst working at Cooma Correctional Centre (the earlier injury). This caused him to be totally incapacitated for work from 20 November 2020 until 1 February 2021. Liability for this injury under the Workers Compensation Act 1987 (NSW) (Compensation Act) was accepted by the Secretary. Thus, for the period 20 November 2020 to 1 February 2021, Mr Stewart received weekly payments of compensation pursuant to s 33 of the Compensation Act.
On 1 February 2021, Mr Stewart lodged a claim for post-traumatic stress disorder resulting from the nature and conditions of his employment over a number of years (the later injury). Liability for the later injury, which had left Mr Stewart totally incapacitated for work, was also accepted by the Secretary. On 25 February 2021, Mr Stewart was notified by QBE that his pre-injury average weekly earnings figure for the later injury, for the purpose of the Compensation Act, was $1,565.68. This was based upon gross earnings of $81,415.30 averaged over the 52 weeks from 3 February 2020 to 31 January 2021. The figure of $81,415.30 did not include any of the compensation payments made under the Compensation Act in respect of Mr Stewart's earlier injury (consistent with cl 6(2)(c) of Sch 3 to the Compensation Act). However, whilst the amounts of compensation paid under the Compensation Act were ignored when calculating Mr Stewart's pre-injury average weekly earnings, the period during which compensation was paid was taken into account in the averaging calculation. This meant that Mr Stewart's earnings over a period of 41 weeks and 4 days (that is, 52 weeks, less the 10 weeks and 3 days when he was incapacitated from the earlier injury) were divided by 52 to reach the figure that was determined to be his pre-injury average weekly earnings for the purposes of determining compensation payable for his later injury.
Despite representations from Mr Stewart's solicitor, the Secretary maintained that Mr Stewart's pre-injury average weekly earnings in respect of the later injury had been correctly calculated. In these circumstances, on 9 February 2022, Mr Stewart filed an application in the Personal Injury Commission. On 28 June 2022, Member Burge determined, in reliance upon reg 8D of the Workers Compensation Regulation 2016 (NSW) (2016 Regulation), that the relevant earning period for the calculation of Mr Stewart's pre-injury average weekly earnings should be adjusted to exclude the period where he was paid workers compensation for the earlier injury.
The Secretary filed an appeal against the decision of Member Burge. On 23 June 2023, Deputy President Wood found that Member Burge had erred in finding that reg 8D of the 2016 Regulation applied in the circumstances. However, the Deputy President found that during the period of incapacity from the earlier injury, Mr Stewart was on "unpaid leave" within the meaning of reg 8E of the 2016 Regulation. Thus, the relevant earning period should be amended effectively to exclude that period of incapacity.
The Secretary appealed from the whole of the decision of the Deputy President. By way of notice of contention, Mr Stewart contended that the decision of the Deputy President should be upheld on the basis that the "relevant period" for the purposes of calculating pre-injury average weekly earnings should be construed as a maximum period of 52 weeks rather than, as the Deputy President held, a fixed period of 52 weeks subject to modification under the 2016 Regulation.
The single issue in the appeal was whether a period of absence from work due to incapacity from an injury for which a worker was paid workers compensation under the Compensation Act, constitutes a "period of unpaid leave" for the purposes of cl 2(3)(a) of Sch 3 to the Compensation Act and reg 8E of the 2016 Regulation.
The Court (Griffiths AJA, Leeming JA agreeing with separate reasons, Stern JA in dissent) held, allowing the appeal:
Per Griffiths AJA
(1) The meaning of the expressions "any" or "a" "period of unpaid leave" should be given their ordinary meaning in this particular context: [130]. The Compensation Act uses "leave" in the sense of an entitlement or authorisation which relieves a worker of their duties as conferred by or under an employment contract, statute, or industrial agreement: [131]. It is implicit in this scheme, as with the different scheme in place in South Australia, that the meaning given to "period of unpaid leave" should not be unduly extended: [132]-[135]. Thus, a period of absence owing to compensable injury should not be regarded as a "period of unpaid leave" for the purposes of the NSW legislative scheme.
Flinders Ports Pty Ltd v Woolford (2015) 121 SASR 485; [2015] SASCFC 6; Knight v State of South Australia (2022) 140 SASR 326; [2022] SACA 14, considered.
(2) The receipt of workers compensation is not "unpaid leave" per its ordinary meaning in either cl 2(3)(a) of Sch 3 of the Compensation Act or reg 8E of the 2016 Regulation: [139]-[140]. Assigning an alternate construction would sit uncomfortably with the legislative scheme in Pt 2 of the Compensation Act, which imposes an employer's liability to pay compensation. It might more accurately be described as "paid leave": [141]. Clause 6(2)(c) of Sch 3 is of little assistance, as it has a wider scope than reg 8E: [142]. The regulation-making power is available to redress any perceived unfairness in circumstances such as these; it should be assumed that Parliament was content to leave it to the Executive to make any regulation on the subject if seen fit to do so: [143], [146]-[147]. In those circumstances, the phrase "person on unpaid leave" should not be given a strained meaning.
Collector of Customs v Agfa-Gevaert Ltd (1996) 186 CLR; [1996] HCA 36, considered.
Per Leeming JA
(3) Regulation 8E did not apply to Mr Stewart because his being absent from work and in receipt of workers compensation payments was not "unpaid leave". That was because:
(1) The regulation-making power authorised the making of regulations to provide for the adjustment of the relevant earning period "to take into account any period of unpaid leave or other change in earnings circumstances". The regulation, which referred only to "unpaid leave", fell short of a full exercise of a power which also extended to any other change in earnings circumstances. In those circumstances there was no occasion to adopt an expansive construction of "unpaid leave": at [13].
(2) The regulations did not deal with the case of a worker who suffers two injuries, the first of which was only partially incapacitating, nor did they have the appearance of a comprehensive scheme: at [14]-[15].
Per Stern JA (in dissent)
(4) It is unlikely that Parliament intended Sch 3 to the Compensation Act (and regulations made thereunder) to have the consequence, subject to a vague and unparticularised regulation-making power to cater for "other" changes in earning circumstances, that those who have suffered from a period of incapacity for which compensation was paid under the Compensation Act during the 52 weeks prior to a later injury would necessarily receive compensation under the Compensation Act at a level that is lower than would have been the case if they had not suffered from that period of incapacity: [98]
(5) None of the bases, advanced in the Secretary's submissions provides any convincing basis upon which Parliament could be found to have so intended: [100]-[103].
(6) The term a "period of unpaid leave" is, on its face, sufficiently broad to comprehend as "leave" a period during which a worker is expressly or implicitly permitted to be absent from work, whether that absence is by reason of sickness, incapacity, or some other matter. Such an absence is at least implicitly permitted by an employer who releases the worker from any obligation to be ready, willing and able to perform work as directed by the employer: [105]-[106].
Flinders Ports Pty Ltd v Woolford (2015) 121 SASR 485; [2015] SASCFC 6; Knight v State of South Australia (2022) 140 SASR 326; [2022] SACA 14, not followed.
(7) There is nothing in either the Compensation Act or the Workplace Injury and Management and Workers Compensation Act 1998 (NSW) (noting that the two are to be construed together) to suggest that the word "leave" cannot include a period when a worker is implicitly permitted to be absent from work on account of incapacity: [107]-[111].
(8) Whilst compensation is paid to a worker under the Compensation Act in respect of loss of earnings during such period, the permitted absence from the place of employment is not on the basis of payments being made under the employment arrangement (whether contractual or under an award). That suggests that it would not be characterised, from either an employer or employee's perspective, as a period of "paid leave". It would be somewhat unlikely for Parliament to have provided that payments are to be excluded from the ambit of "income" in respect of a period of incapacity, as it did in cl 6(2)(c) of Sch 3, but at the same time to have characterised that period of incapacity as being "paid" for the purpose of cl 2(3)(a) of Sch 3: [112].
(9) The Compensation Act does not pursue a single purpose. However, where, as here, the construction advocated by the Secretary would lead to a result which appears, on its face, to be unjust and discriminatory against those who have had an earlier claim for compensation when compared with others, that may suggest that Parliament did not intend such an outcome. That is particularly so where no apparent purpose is served by so construing the legislation and the construction does not appear to further any of the identified statutory objectives: [113].
Hunter Quarries Pty Ltd v Mexon (2018) 98 NSWLR 526; [2018] NSWCA 178, considered.
(10) The legislative history provides some support for the construction adopted by the Deputy President, notwithstanding that caution is necessary where legislation has been amended to reflect a different form of words: [116]-[118].
Thereafter, the relevant percentage diminishes to 80% up to 130 weeks: s 37 of the Compensation Act. It is only in limited circumstances that a worker is entitled to compensation after 130 weeks: s 38 of the Compensation Act. After 260 weeks, a worker's entitlement to compensation ceases unless the injury has resulted in more than 20% permanent impairment: s 39 of the Compensation Act.
As is immediately apparent, a worker's "pre-injury average weekly earnings" are central to the amount of compensation payable to an incapacitated worker under the Compensation Act. The meaning of this term is set out in Sch 3 to the Compensation Act which was introduced by the 2018 Amendment Act. Clause 2 of Sch 3 to the Compensation Act relevantly provides:
2 Meaning of "pre-injury average weekly earnings"
(1) Pre-injury average weekly earnings, in relation to an injured worker, means the weekly average of the gross pre-injury earnings received by the worker for work in any employment in which the worker was engaged at the time of the injury.
Note -
See also clauses 3-5 relating to modifications of pre-injury average weekly earnings by agreement and in relation to apprentices, trainees and persons aged under 21 years.
(2) Except as provided by this clause (or by regulations made under this clause), in calculating the pre-injury earnings received by a worker in employment for the purposes of subclause (1), no regard is to be had to earnings in the employment paid or payable to the worker for work performed before or after the period of 52 weeks ending immediately before the date of the injury (the relevant earning period).
(3) The regulations may provide for the adjustment of the relevant earning period for a worker in employment (including, for example, by extending or reducing the period) -
(a) to take into account any period of unpaid leave or other change in earnings circumstances in the employment, or
(b) to align the relevant earning period with any regular interval at which the worker is entitled to receive payment of earnings for work performed in the employment.
…
As regards "earnings", cl 6(1)-(2) of Sch 3 to the Compensation Act provides:
(1) The earnings received by a worker in respect of a week means the amount that is the income of the worker received by the worker for work performed in any employment during the week.
(2) The income of a worker does not include -
…
(c) any payment in respect of loss of earnings under a scheme to which the workers compensation legislation relates or under any other insurance or compensation scheme, or
…
Whilst cl 6 of Sch 3 to the Compensation Act deals with what is or is not "income", and thus "earnings", it says nothing about how the period of time for which a worker was receiving payment under the Compensation Act should be treated for the purposes of the calculation of pre-injury average weekly earnings. Moreover, it presupposes that the income of a worker would, were it not for the exclusion, include sums paid in respect of loss of earnings, including under the Compensation Act.
Division 2 of Pt 4 of the 2016 Regulation, introduced by the Workers Compensation Amendment (Pre-injury Average Weekly Earnings) Regulation 2019 (NSW) and which commenced on 21 October 2019 (the day when the relevant amendments to Sch 3 pursuant to the 2018 Amendment Act took effect), provides for the adjustment of the "relevant earning period" under cl 2(2) of Sch 3 to the Compensation Act in certain circumstances, including those in regs 8D and 8E of the 2016 Regulation.
Regulations 8B-8E of the 2016 Regulation relevantly provide:
8B Adjustment for workers not continuously employed - Schedule 3, clause 2(3)(a) of 1987 Act
(1) The relevant earning period for a worker in employment is to be adjusted in accordance with this clause if the worker was not engaged in the employment from the beginning of the unadjusted earning period.
(2) The relevant earning period for the worker in the employment is to be adjusted by excluding any period before the day on which the worker was first engaged in the employment.
8C Adjustment for financially material change to earnings - Schedule 3, clause 2(3)(a) of 1987 Act
(1) The relevant earning period for a worker is to be adjusted in accordance with this clause if, during the unadjusted earning period, there was a change of an ongoing nature to the employment arrangement resulting in a financially material change to the earnings of the worker (for example, a change from full-time to part-time work).
(2) The relevant earning period is to be adjusted by excluding from the period any period before the change to the earnings of the worker occurred.
8D Alignment of relevant earning period with pay period - Schedule 3, clause 2(3)(b) of 1987 Act
(1) The relevant earning period for a worker in employment may be adjusted to align the relevant earning period with any regular interval at which the worker is entitled to receive payment of earnings for work performed in the employment.
(2) The relevant earning period is not to be adjusted as provided by this clause unless the insurer is reasonably satisfied that the amount of pre-injury average weekly earnings calculated by reference to the period as so adjusted is not less than the amount that it would have been but for the adjustment.
8E Adjustment for unpaid leave - Schedule 3, clause 2(3)(a) of 1987 Act
(1) The relevant earning period for a worker is to be adjusted in accordance with this clause if, during any period of not less than seven consecutive calendar days within the unadjusted earning period -
(a) no earnings in the employment were paid or payable to the worker, and
(b) the worker took a period of unpaid leave (the unpaid leave period) commencing on the first day of that consecutive period.
(2) The relevant earning period is to be adjusted by excluding each day (whether or not the day was a usual work day for the worker) of the period commencing on the first day of the unpaid leave period and ending immediately before the day on which earnings in the employment once again became payable to the worker.
Subdivision 4 of Div 2 of Pt 3 of the Compensation Act provides for the interaction between compensation payments under the Compensation Act and other payments that may be made to workers, including for sick leave. It includes:
49 Weekly compensation payable despite holiday pay etc (cf former s 7 (2B))
(1) Compensation is payable under this Division to a worker in respect of any period of incapacity for work even though the worker has received or is entitled to receive in respect of the period any payment, allowance or benefit for holidays, annual holidays or long service leave under any Act (Commonwealth or State), award or industrial agreement under any such Act or contract of employment.
(2) The amount of compensation so payable is the amount which would have been payable to the worker had the worker not received or been entitled to receive in respect of the period any such payment, allowance or benefit.
50 Weekly compensation and sick leave (cf former s 7 (2C))
(1) Compensation is payable to a worker in respect of a period of incapacity for work even though the worker has received or is entitled to receive in respect of that period any wages for sick leave under any Act (Commonwealth or State), award or industrial agreement under any such Act or contract of employment.
(2) If a worker is paid compensation by the employer in respect of any period of incapacity for work in respect of which the employer is, or but for this section would be, liable under any Act (Commonwealth or State), award or industrial agreement under any such Act or contract of employment to pay the worker any wages for sick leave -
(a) that liability shall, to the extent of the compensation so paid, be deemed to have been satisfied by that payment notwithstanding the terms of that Act, award, agreement or contract, and
(b) the amount of that compensation shall, for the purposes of subsections (4) and (5), be deemed to have been paid as compensation and not as wages.
(3) If a worker, in respect of any period of incapacity for work in respect of which the employer is liable to pay compensation to the worker, is paid wages for sick leave by the employer and either an award is made afterwards for the payment of compensation to the worker in respect of that period or the employer agrees afterwards that compensation be paid to the worker in respect of that period -
(a) the employer's liability to pay compensation in respect of that period shall, to the extent of the wages paid, be deemed to have been satisfied by that payment, and
(b) the wages shall, to the extent of the compensation, be deemed for the purposes of subsections (4) and (5) to have been paid as compensation and not as wages.
(4) If a worker is paid any compensation in respect of a period of incapacity for work, the worker shall, in respect of any entitlement to sick leave, or wages for sick leave, accruing after the expiration of that period -
(a) if the worker has not also been paid wages for sick leave in respect of that period - be deemed not to have been entitled to or granted, or to have received, any sick leave or wages for sick leave in respect of that period, or
(b) if the worker has also been paid wages for sick leave in respect of that period - be deemed not to have been entitled to or granted, or not to have received, sick leave or wages for sick leave in respect of the whole of that period, but only in respect of a lesser period calculated as provided by subsection (5).
(5) The lesser period referred to in subsection (4) is a period which bears to the period of incapacity of the worker the same proportion as the wages paid to the worker in respect of the period of incapacity bear to the total amount of the wages and compensation paid to the worker in respect of the period of incapacity.
(6) In this section -
compensation means weekly payments of compensation under this Division.
wages means wages, salary, allowance or other payment.
Section 174 of the Compensation Act requires an employer to keep records including of "all wages paid to workers employed by the employer". Section 174(9) defines "wages" relevantly as follows:
(a) includes salary, overtime, shift and other allowances, over-award payments, bonuses, commissions, payments to working directors (including payments as directors' fees), payments for public and annual holidays (including loadings), payments for sick leave, value of board and lodging provided by the employer for the worker and any other consideration in money or money's worth given to the worker under a contract of service or a training contract,
…
(c) does not include -
…
(v) compensation under this Act, or
…
The term "unpaid leave" is not referred to in the Compensation Act other than in cl 2(3)(a) of Sch 3.
The word "leave" otherwise appears in the Compensation Act in the terms "sick leave", "long service leave" and "annual leave" in ss 50 and 174 as set out above. There is also a reference to "hours of leave approved by the employer" in s 40(2) of the Compensation Act, which provides that such hours are not included in "hours of work" for the purpose of determining whether a worker's hours of work disentitle the worker from receiving weekly compensation payments.
There was also reference to "paid leave" in s 44E(1)(a) of the Compensation Act (also inserted in October 2012 and later repealed by the 2018 Amendment Act) which provided that:
(1) Subject to this section, in relation to pre-injury average weekly earnings, the ordinary earnings of a worker in relation to a week during the relevant period are:
(a) if the worker's base rate of pay is calculated on the basis of ordinary hours worked, the sum of the following amounts:
(i) the worker's earnings calculated at that rate for ordinary hours in that week during which the worker worked or was on paid leave,
(ii) amounts paid or payable as piece rates or commissions in respect of that week,
(iii) the monetary value of non-pecuniary benefits provided in respect of that week, or
…
Provision was also made in s 44H of the Compensation Act (again inserted in October 2012 and later repealed by the 2018 Amendment Act), in respect of a worker's ordinary hours of work for the purpose of the calculation of pre-injury average weekly earnings, to exclude from the calculation periods when the worker "did not actually work and was not on paid leave".
There is nothing in the second reading speeches in the New South Wales Legislative Council or Assembly that deal in any way with the question of whether a period during which a worker was incapacitated from work and receiving compensation, rather than earnings, should be taken into account in calculating the worker's pre-injury average weekly earnings.
Nor is there anything to suggest any intention to change the relevant scheme such that periods away from work due to incapacity, for which compensation and not sick leave is paid, should be taken into account in calculating pre-injury average weekly earnings.
In Uelese v Minister for Immigration and Border Protection (2015) 256 CLR 203; [2015] HCA 15 at [45], the majority (French CJ, Kiefel, Bell and Keane JJ) held:
"In addition, it is well settled that a construction "which appears irrational or unjust" is to be avoided where the statutory text does not require that construction. The view of s 500(6H) taken by the Tribunal in this case may be expected to lead to irrationality or injustice. For example, it would be irrational to hold that s 500(6H) precludes the Tribunal from receiving and acting upon an admission by an applicant for review elicited in the course of cross-examination that important aspects of the case he or she had presented in chief were false. And it would be distinctly unjust if the Minister could rely upon any answer elicited in cross-examination but the applicant could not." (Footnotes omitted).
As to purpose, care must be taken where a statutory provision strikes a balance between two competing interests. In such a case, as set out by Gleeson CJ in Carr v Western Australia (2007) 232 CLR 138; [2007] HCA 47 at [5]:
"Where the problem is one of doubt about the extent to which the legislation pursues a purpose, stating the purpose is unlikely to solve the problem. For a court to construe the legislation as though it pursued the purpose to the fullest possible extent may be contrary to the manifest intention of the legislation and a purported exercise of judicial power for a legislative purpose."
Whilst the Compensation Act can be described as remedial legislation, in Sydney Seaplanes Pty Ltd v Page (2021) 106 NSWLR 1; [2021] NSWCA 204 at [56] (Bell P, as his Honour then was, Leeming JA and Emmett AJA agreeing) and at [85] (Leeming JA, Bell P and Emmett AJA agreeing), it was held that characterisation of a statute as remedial "does not relieve the court from giving effect to an interpretation … that furthers what the court objectively determines to have been its purpose."
As regards the Compensation Act, having referred to the system objectives in s 3 of the Management Act, Payne JA (Gleeson JA and Sackville AJA agreeing) in Hunter Quarries Pty Ltd v Mexon (2018) 98 NSWLR 526; [2018] NSWCA 178, said:
"[65] It is true that one purpose of the Workers Compensation Act is to benefit workers but it is going too far to say that every grant of an entitlement should be construed broadly because it is part of a beneficial scheme…
[66] The Workers Compensation Act does not pursue a single purpose of providing the maximum amount of benefits to workers at all costs. Where, as here, the problem is one of doubt about the extent to which the legislation pursues a purpose, stating the purpose is unlikely to solve the problem. For this Court to construe the Workers Compensation Act as though it pursues only the purpose of providing benefits to workers to the fullest extent possible would be contrary to the manifest intention of the legislation."
To similar effect, in WorkPac Pty Ltd v Thearle [2016] NSWCA 303 at [40], McColl JA (Ward JA and Adamson J, as their Honour's then were, agreeing), held:
"Determining the proper meaning of cl 26 remains a task of statutory construction. As Heydon J said in Victims Compensation Fund Corp v Brown, "to begin consideration of issues of construction by positing that a 'liberal', 'broad', or 'narrow' construction will be given tends to obscure the essential question, that of determining the meaning the relevant words used require." (Footnotes omitted).
The general principles of statutory interpretation apply to delegated legislation: Collector of Customs v Agfa-Gevaert Ltd (1996) 186 CLR 389 at 398; [1996] HCA 36 (Brennan CJ, Dawson, Toohey, Gaudron and McHugh JJ); see also ss 32 and 33 of the Interpretation Act 1987 (NSW). However, it must be recognised that subordinate legislation is not always drafted by parliamentary counsel, and may not adopt conventions regularly applied in drafting statutes: Environment Protection Authority v Orchard Holdings (NSW) Pty Ltd (in liq) (2014) 86 NSWLR 499; [2014] NSWCA 149 at [44]-[45] (Leeming JA, Bathurst CJ and McColl JA agreeing) and other authorities cited by Perry Herzfeld and Thomas Prince, Interpretation (2nd ed, 2020, Thomson Reuters) at [14.40].
Third, the Secretary contends that Parliament made a choice, expressed in cl 2(3) of Sch 3 to the Compensation Act, that it would be through regulations that adjustments would be made to the relevant earning period used for the purpose of calculating a worker's pre-injury average weekly earnings. Thus, the Secretary contends regulations could have been made to cover circumstances such as those of Mr Stewart, and there is no need to adopt a "strained" construction of "unpaid leave" in cl 2(3)(a) of Sch 3 to the Compensation Act to achieve what could have been achieved by regulations. The Secretary submits that, for this reason, the Deputy President erred in relying upon the purpose of the Compensation Act as being to apply fairness to the calculation of pre-injury average weekly earnings. Further, the Secretary contends that "errors" resulting from the adoption of an averaging system do not necessarily reflect a failure of the purposes of the Compensation Act.
Fourth, as to text, the Secretary contends that "unpaid" means that the worker is not receiving payment, which would not cover someone who is in receipt of a compensation payment under the Compensation Act in the relevant earning period. Thus, the Secretary contends that the Deputy President erred in construing "unpaid" to mean "not paid any income".
As to the meaning of "leave", consistent with what the Secretary contends is the "ordinary meaning of the term when used in an employment or industrial context", the Secretary submits "leave" in cl 2(3)(a) of Sch 3 to the Compensation Act means "an entitlement or authorisation relieving a worker from the performance of their duties conferred by or under an employment contract, a statute or an industrial instrument." The Secretary contends that absence by reason of incapacity due to compensable injury is not "leave" so understood. Whilst the Secretary contends that the reference in reg 8E of the 2016 Regulation to a worker who "took" a period of unpaid leave further supports this construction of cl 2(3)(a) of Sch 3 to the Compensation Act and reg 8E of the 2016 Regulation, Senior Counsel accepted during the hearing that the language of the regulation could not be used to construe the Compensation Act.
The Secretary contends that this construction of "leave" is supported by ss 49 and 50 of the Compensation Act.
The Secretary also relies, in support of his construction of "leave", on Flinders Ports Pty Ltd v Woolford (2015) 121 SASR 485; [2015] SASCFC 6, a judgment of the Full Court of the Supreme Court of South Australia and Knight v South Australia (2022) 140 SASR 326; [2022] SASCA 14. Whilst the Secretary accepts that both of these cases concerned different legislation, he contended that their essential reasoning was both persuasive and applicable.
One issue in Flinders v Woolford was as to the whether periods of absence from work by reason of a work-acquired injury for which the respondent was receiving weekly compensation payments should be ignored when calculating a worker's average number of hours worked per week under s 3(2) of the Long Service Leave Act 1987 (SA) ("LSL Act") for the purpose of determining the rate at which the respondent was entitled to be paid under s 8(4) of the LSL Act. Section 3(2) of the LSL Act relevantly provided:
3 - Interpretation
…
(2) A reference in this Act to a worker's ordinary weekly rate of pay is a reference to the worker's weekly rate of pay as at the relevant date exclusive of overtime, shift premiums and penalty rates but this definition is subject to the following qualifications -
…
(b) if during the whole or part of the period of three years immediately preceding the relevant date -
…
(iii) the worker worked on a casual or part-time basis, the worker's ordinary weekly rate of pay will be ascertained by averaging the number of hours worked per week in that period of three years and multiplying that result by the worker's rate of pay per hour as at the relevant date, exclusive of overtime, shift premiums and penalty rates (and for the purposes of this paragraph a person who is employed on a casual basis is not to be regarded as being paid at a penalty rate); and
…
The difficulty for the respondent in Flinders v Woolford arose because for most of the relevant three year period provided under s 3(2)(b) of the LSL Act, he was incapacitated and did not work: at [101]. However, s 3(4) of the LSL Act provided:
(4) For the purpose of averaging weekly earnings under subsection (2)(a) or the number of hours worked per week under subsection (2)(b) -
(a) any week when the relevant worker was on unpaid leave for the whole of the week will be disregarded; and
(b) the relevant periods under subsection (2)(a) and (2)(b) will be taken to be periods (which need not be consecutive) totalling 12 months (in the case of subsection (2)(a)) or 3 years (in the case of subsection (2)(b)) after disregarding any weeks when the worker was not at work due to unpaid leave; and
(c) any period when the relevant worker was on paid leave will be taken into account.
By way of aside, on 19 November 2015, shortly after Flinders v Woolford was decided, the South Australian Parliament amended s 3(4) of the LSL Act to provide that any week when a worker was "absent from work on account of a work injury (within the meaning of the Return to Work Act 2014 (SA)) for which the worker received weekly payments under that Act or, before 1 July 2015, under the Workers Rehabilitation and Compensation Act 1986 (SA) will be disregarded" for the purposes of calculating average weekly earnings.
The respondent in that case contended that the period during which he was incapacitated should be excluded for the purpose of calculating his long service leave entitlement. Stanley J (Kelly J agreeing) rejected that contention. The crux of his Honour's reasoning (at [105]) was that absence from work due to an inability to work is not absence "with the permission of the employer" and is thus not leave in any "commonly understood industrial sense" as leave is an "entitlement relieving the employee from the performance of work duties, which is conferred by the terms of the employment contract, an industrial instrument or Act of Parliament". His Honour continued (at [105]) that the employer permitted the absence from work "only to the extent it took no action to terminate the contract of employment". His Honour also found (at [105] and [107]) that the distinction between leave on the one hand, and absence due to compensable injury on the other, was supported by the terms of s 40 of the Workers Rehabilitation and Compensation Act and the decision in South Australia v Day (2000) 78 SASR 270; [2000] SASC 451. His Honour found (at [108]) that the language of the section was "intractable."
Kourakis CJ was in dissent on this issue. Having regard to the manifest purpose of s 3(4) of the LSL Act being to "strike a fair balance between employer and employee, and to minimise manipulation of the average" (at [17]) and the "capricious" result that would otherwise follow (at [19]), Kourakis CJ held (at [22]) that absence by reason of compensable injury was unpaid leave for the purpose of s 3(4) of the LSL Act. Having acknowledged that in many other industrial contexts such absence is not ordinarily regarded as leave, his Honour held (at [21]):
"However, the word leave is not yet a term of art. The ordinary meaning of the term is wide enough to refer to any release from the employment obligation to be ready, willing and able to perform work as directed by the employer, effected by operation of law or allowed at the discretion of the employer. The Workers Rehabilitation and Compensation Act 1986 (SA) does not confer a statutory entitlement to leave during a period of incapacity caused by a compensable injury. Nor in this case, and in most cases of absence due to compensable injury, is there evidence of active consent by the employer. However, an employer's decision not to exercise, for a definite or indefinite future period, the power to direct an injured worker to perform work, when communicated to a worker, in effect releases the worker from the obligation to be ready, willing and able to work and gives that worker leave from his or her employment. Indeed if an employer does not so direct over a period of the time whilst the worker is in receipt of compensation, it is likely that the employer would be estopped from terminating the contract of employment for breach without first giving the worker notice that he or she is once again required to be ready, willing and able to work."
Further, his Honour held (at [24]) that leave during a period of incapacity caused by a compensable injury is "unpaid" as workers compensation payments are not pay for work done.
In Knight v State of South Australia, the Court held (at [6]) that weekly payments of compensation by way of top-up payments made to the appellant under the Return to Work Act, on account of an earlier compensable injury, were not earnings for the purpose of calculating average weekly earnings, pursuant to s 5(3) of the Return to Work Act which relevantly provided:
5 - Average Weekly Earnings
…
(3) For the purposes of this section, any amount paid while a worker was on annual, sick or other leave will be taken to be earnings.
Having found (at [60]) that "[r]easonable minds might differ" as to the question considered in Flinders v Woolford, the Court observed (at [62]) that the purpose of s 5(3) of the Return to Work Act was to ensure that the calculation of average weekly earnings reflected what the worker was in fact being paid by the employer under a contract of service. The Court found (at [63]-[64]) that "leave" did not "naturally embrace" what occurs when a worker is not working by reason of incapacity caused by work injury and in receipt of workers compensation and that the words "annual, sick or other leave" in s 5(3) of the Return to Work Act must be construed ejusdem generis and were confined to those species of payment made by an employer in connection with employment.
Broadly, the respondent contended that the Deputy President's conclusion as to construction was correct for the reasons that she gave.
Second, as set out above, the purpose of statutory construction is to determine, having regard to text and context, the meaning of the words used by Parliament. That task must be carried out having regard to the terms of Sch 3 as a whole and on the assumption that Parliament intended to put in place a coherent scheme for determining a worker's pre-injury average weekly earnings. In particular, it is necessary to construe cl 2(3)(a) of Sch 3 to the Compensation Act in light of the terms of cl 6(2)(c) which exclude payments "in respect of loss of earnings to which the workers compensation legislation relates" from being "income", and thus "earnings" for the purpose of the calculation of pre-injury average weekly earnings. It is beyond doubt, in light of this provision, that Parliament turned its mind to a circumstance such as that suffered by Mr Stewart, namely that the calculation of pre-injury average weekly earnings is being made where, within the relevant 52 week period, the worker has been incapacitated by reason of an earlier injury for which compensation was paid. Further, unlike any of cl 6(2)(a)-(b) and (d), cl 6(2)(c) of Sch 3 has the effect that a worker who was incapacitated from working on account of an earlier injury and was in receipt of compensation for that injury would have nothing included by way of "earnings" for the period of incapacity for the purpose of calculating pre-injury average weekly earnings. That gives rise to a particular and stark incoherence in the scheme for performing that calculation upon the Secretary's proposed construction.
It is of course possible that, as submitted by the Secretary, Parliament intended payments made under workers compensation legislation to be excluded from a worker's earnings for the purpose of calculating the worker's pre-injury average weekly earnings, but for the period during which those payments were made to still be included in the "relevant earning period" for the purpose of the averaging calculation, unless the Governor made regulations adjusting that period on the basis that this was an "other change in earnings circumstances in the employment". On balance, however, it is unlikely that Parliament so intended.
More particularly, it is unlikely that Parliament intended Sch 3 to the Compensation Act (and regulations made thereunder) to have the consequence, subject to a vague and unparticularised regulation-making power to cater for "other" changes in earning circumstances, that those who have suffered from a period of incapacity for which compensation was paid under the Compensation Act during the 52 weeks prior to a later injury would necessarily receive compensation under the Compensation Act at a level that is lower than would have been the case if they had not suffered from that period of incapacity. That necessarily would disadvantage the very people for whose benefit the scheme of compensation under the Compensation Act benefits. Given that consequence, it is necessary to ascertain whether there is any rational basis, consistent with the object and purpose of the legislation, for Parliament having taken that course.
The incoherence of the scheme is underscored having regard to the effect of s 15 of the Compensation Act. Section 15 provides that, for a disease which is contracted by a gradual process (such as will occur, I would add, with many mental health conditions), where death or incapacity results from the injury, the injury is deemed to have happened "at the time of the worker's death or incapacity". Incapacity, in this context, means incapacity which results in a loss of wages even if there had previously been incapacity not resulting in any loss of wages: Stone v Stannard Brothers Launch Services Pty. Ltd. [2004] NSWCA 277 at [37] (Hodgson JA, Mason P and Handley JA agreeing). As Senior Counsel for the Secretary explained during his oral submissions, the "working of the scheme" operates such that the date of injury for a second injury (if it is an injury contracted by a gradual process) will be the date upon which the worker ceases to be incapacitated on account of the first injury, even if the second injury in fact occurred before that date. On the Secretary's construction, that aspect of the "working of the scheme" under the Compensation Act will have the consequence that those who suffer from an immediately incapacitating physical injury and a psychiatric injury of gradual onset will inevitably receive less compensation for the incapacitating effect of the psychiatric injury because that injury is "deemed to have happened" only after the incapacity for the physical injury ceases.
Ultimately, the only rational bases for Parliament having so intended advanced in the Secretary's submissions were:
1. That the level of compensation for the later injury was determined by the worker's "earning capacity" as at the date of the later injury;
2. That in any event there may be some unfairness to those who suffer from a partial incapacity during the 52 week period; or
3. Parliament intended such matters to be dealt with by regulations which could be framed so as to avoid unfairness.
None of these provides any convincing basis upon which Parliament could be found to have intended those who have suffered from incapacity, for which compensation was paid during the 52 weeks prior to a later injury, would necessarily receive compensation for that later injury at a level lower than an equivalent worker who had not suffered from such incapacity.
The flaw in the first suggested rationale is that it does not correspond with the effect of cl 2(3)(a) of Sch 3 to the Compensation Act on the Secretary's proposed construction. A worker may suffer from incapacity over a substantial period during the 52 week period but have returned to their pre-injury earning capacity by the time the second injury occurs. Yet such a worker would suffer the effects of cl 2(3)(a) of Sch 3 on the Secretary's proposed construction, even though they had no diminished earning capacity as at the date of the later injury. Conversely, at the time of a later injury, a worker may be incapacitated by reason of an earlier injury or illness for which compensation is not payable under the Compensation Act, and be permitted on that account to be absent from work. That period of absence would, on the Secretary's proposed construction, seemingly fall within the ambit of the term "period of unpaid leave" irrespective of whether the worker's earning capacity was impaired at the time of the later injury.
As to the Secretary's second proposed rationale, the effect of cl 2(3)(a) of Sch 3 to the Compensation Act in a case of partial incapacity does not provide any material support for the Secretary's contention in the present case. The operation of the Compensation Act in cases of partial incapacity from an earlier injury was not fully explored on this appeal. As those questions did not arise on appeal, it is unnecessary to reach any concluded view as to this. In any event, potential unfairness in the application of Sch 3 to the Compensation Act in cases of partial incapacity does not suggest any reason why Parliament should be taken to have intended those suffering from periods of incapacity, for which compensation was paid under the Compensation Act during the 52 weeks prior to a later injury, to have their pre-injury average weekly earnings set at a level lower than it would have been if they had not suffered from that incapacity.
As to the Secretary's third proposed rationale, as set out at [78] above, it is unlikely that Parliament intended to leave the question of whether periods during which a worker was incapacitated and in receipt of payments of compensation under the Compensation Act in the 52 week period preceding a later injury, were to be excluded from the "relevant earning period" for the purpose of calculating pre-injury average weekly earnings in respect of that later injury, to be dealt with by regulations only on the basis that this may fall within the phrase "or other change in earnings circumstances in the employment" in cl 2(3)(a) of Sch 3. I consider it far more likely that Parliament intended that circumstance to fall within the ambit of a "period of unpaid leave" in cl 2(3)(a) which was given specific articulation in Sch 3 to the Compensation Act.
Third, the term a "period of unpaid leave" is, on its face, sufficiently broad to comprehend as "leave" a period during which a worker is expressly or implicitly permitted to be absent from work, whether that absence is by reason of sickness, incapacity, or some other matter. Such an absence is at least implicitly permitted by an employer who releases the worker from any obligation to be ready, willing and able to perform work as directed by the employer: as held by Kourakis CJ in dissent in Flinders v Woolford at [21]. In my judgment, it is artificial to limit the word "leave" to absences from work which are expressly authorised by legislation or contract. There is no rational basis upon which to suggest that a worker who is absent from work by reason of incapacity should be treated differently in this regard from a worker who is absent from work for personal or other reasons. Still less is there any reason to treat a worker who is absent from work by reason of incapacity and is receiving compensation under the Compensation Act differently in this regard from a worker who is absent from work by reason of incapacity and is on sick leave or, having exhausted their sick leave, remains on leave but without payment. They are all absent from work with the explicit or implicit permission of their employer, and there is no good reason why the characterisation of that absence from work as "leave" should turn upon whether or not compensation is payable in respect of the period of absence under the Compensation Act. In each case, whether expressly or implicitly, the worker is permitted to be absent from work.
In this regard, the reasoning of Kourakis CJ, in dissent, in Flinders v Woolford is to be preferred to that of Stanley J (with whom Kelly J agreed). In particular, I agree that the word "leave" is sufficiently broad to comprehend a period of absence from work which is expressly or implicitly permitted by an employer. An employer permits a worker who asserts incapacity to be absent from work when they take no steps to compel attendance. That is so irrespective of the fact that there may be consequences under the Compensation Act if an employer dismisses a worker because they are not fit for employment: see eg ss 241 and 242 of the Compensation Act.
Fourth, there is nothing in either the Compensation Act or the Management Act (noting that the two are to be construed together) to suggest that the word "leave" cannot include a period when a worker is implicitly permitted to be absent from work on account of incapacity. Contrary to the Secretary's contention, ss 49 and 50 of the Compensation Act do not support a distinction being drawn between "leave" and a "period of incapacity for work". Whilst s 49(1) of the Compensation Act (set out above at [49]) refers to the latter, that language is entirely explicable given that the scheme of the Compensation Act is for payments to be made for some periods of incapacity for work. The use of that language in s 49(1) of the Compensation Act says nothing about whether such a period could also be described as a period of leave. Moreover, s 50(1) of the Compensation Act expressly comprehends that "wages for sick leave" may be payable to a worker in respect of a "period of incapacity for work". It is thus plain that under the Compensation Act, a period of incapacity for work can also be a period of "leave".
In my judgment, s 50 of the Compensation Act not only does not support the Secretary's proposed construction, it stands against it. This is because, under s 50, a period of incapacity for work may be both sick leave, for which a worker either is or is entitled to be paid, and a period of incapacity in respect of which a worker is entitled to receive compensation under the Compensation Act. It is anomalous to suggest that the latter cannot fall within the ambit of the word "leave" in cl 2(3)(a) of Sch 3 to the Compensation Act when in both instances the worker is absent from work on account of (the same) incapacity, with the implicit permission of their employer.
Moreover, the effect of s 50(2) of the Compensation Act is that an employer's liability to pay wages for sick leave will be satisfied by any payment of compensation under the Compensation Act in respect of the same period. Having regard to the terms of cl 6(2)(c) of Sch 3, however, such payment of compensation will be disregarded for the purpose of calculating the pre-injury average weekly earnings of the worker if there is a later injury. Thus, the Secretary's proposed construction would have the anomalous consequence that the payment of compensation under the Compensation Act would diminish the worker's pre-injury average weekly earnings from what these earnings would have been if the worker had been paid the wages for sick leave to which they were entitled.
The Secretary's proposed construction would also lead to anomalies having regard to s 50(3) of the Compensation Act. That subsection provides that wages for sick leave paid by an employer in respect of a period of incapacity shall, to the extent of wages paid, satisfy the employer's obligations to pay compensation in respect of the relevant period, where the employer subsequently is required to or agrees to pay compensation. Thus, on the Secretary's proposed construction, in the event of a later injury, a worker's pre-injury average weekly earnings will depend upon the happenstance of whether or not the employer paid the worker wages for sick leave for the period of incapacity before being liable to pay compensation in respect of that same period.
This analysis is predicated upon wages for sick leave falling within the definition of "earnings" in cl 6(1) of Sch 3 to the Compensation Act. During the hearing of the appeal, Senior Counsel for the Secretary relevantly contended "generally payment while on sick leave is accepted to be earnings". In any event, it is tolerably clear that such wages would be "earnings" for this purpose. First, the Compensation Act describes these payments as "wages" in both ss 50 and 174. Whilst cl 6 of Sch 3 to the Compensation Act does not use the language of "wages", Parliament's description of these payments as wages suggests that they are regarded as payments on account of work done by the worker and are thus "income" within the meaning of cl 6(1) of Sch 3 to the Compensation Act. Second, a payment of wages by an employer for sick leave is aptly described as a payment made in consideration for the work which the worker performs under the employment arrangement. It is thus within the ambit of "income". In this regard, the better view is that under cl 6(1) of Sch 3 to the Compensation Act, a worker's earnings in respect of a particular week includes an amount paid as income provided that it is paid as income during that week, irrespective of whether that payment is in respect of work actually performed during that particular week. There is some obscurity in the language of cl 6(1) of Sch 3 to the Compensation Act, in particular as to whether the words "during the week" qualify the receipt of income by the worker, or the performance of work in the employment. However, construing cl 6(1) of Sch 3 to the Compensation Act in the context of cl 6 of Sch 3 as a whole, it is clear that "income" will be "earnings", provided it is received in the week in question (irrespective of when the work was actually performed). It would otherwise make no sense for Parliament to have provided, in cl 6(2)(c) of Sch 3, that "income" does not include "any payment in respect of loss of earnings under a scheme to which the workers compensation legislation relates or under any other insurance or compensation scheme". Manifestly, as such payment is in respect of loss of earnings, it will not have been made in respect of work performed in that week. It would thus have been wholly unnecessary to exclude such a payment from the ambit of "income" if that term were limited to payments "for" work performed in the week in question.
Fifth, a period of incapacity in respect of which a worker is paid compensation, but not wages, can fall within the language of "any period of unpaid leave" in cl 2(3)(a) of Sch 3 to the Compensation Act on its face. Whilst compensation is paid to the worker under the Compensation Act in respect of loss of earnings during that period, the permitted absence from the place of employment is not on the basis of payments being made under the employment arrangement (whether contractual or under an award). That suggests that it would not be characterised, from either the employer or the employee's perspective, as a period of "paid leave". Notwithstanding that they correspond to the same period of time, the payments do not themselves have the necessary nexus to the "leave". Rather, they are payments made on account of the fact that the worker has sustained a loss of earnings over the period. In this regard, there is an obvious distinction between such payments, and payments made by the employer in respect of sick leave. Moreover, it would be somewhat unlikely for Parliament to have provided that payments are to be excluded from the ambit of "income" in respect of a period of incapacity, as it did in cl 6(2)(c) of Sch 3, but at the same time to have characterised that period of incapacity as being "paid" for the purpose of cl 2(3)(a) of Sch 3.
Sixth, as to purpose, it is obviously correct, as recognised by Payne JA in Hunter Quarries v Mexon, that the Compensation Act does not pursue a single purpose: see above at [72]. However, where, as here, the construction advocated by the Secretary would lead to a result which appears, on its face, to be unjust and discriminatory against those who have had an earlier claim for compensation when compared with others as was accepted by the Secretary, consistent with the principles set out above, that may suggest that Parliament did not intend such an outcome. That is particularly so where no apparent purpose is served by so construing the legislation and the construction does not appear to further any of the identified statutory objectives.
In this regard, whilst obviously anything that limits the quantum of claims for compensation will likely have some impact upon the expense of the system of compensation under the Compensation Act, it was not contended that the Deputy President's construction would have a significant impact upon the affordability or financial viability of the workers compensation system established under the Compensation Act: cf the system objective at s 3(d) of the Management Act. Nor was it suggested that that construction would have any material impact upon the efficiency or effectiveness of that system: cf s 3(f) of the Management Act. Whilst the Secretary did submit that the system of averaging was "to ensure that the workers compensation scheme can be efficiently administered", the construction adopted by the Deputy President did not, in any way, seek to undermine that system of averaging.
As against that, however, it is beyond argument that the Secretary's construction could lead to unfairness to those in the position of Mr Stewart, absent regulations being made, on the basis that such circumstances are under the rubric of there being an "other change in earning circumstances of the employment".
Finally, whilst my rejection of the Secretary's construction does not depend upon this factor, the legislative history (which, whilst not relied upon by Mr Stewart in his submissions, was raised with Senior Counsel for the Secretary by the Court during the hearing of the appeal) provides some support for my preferred construction, notwithstanding that caution is necessary where legislation has been amended to reflect a different form of words. In particular, it is apparent that, prior to the 2018 Amendment Act, s 44C(1)(a) of the Compensation Act provided that for the purpose of determining pre-injury average weekly earnings, any week "during which the worker did not actually work and was not on paid leave" would be excluded from the averaging calculation. That period was also excluded for the purpose of determining a worker's ordinary hours of work pursuant to s 44H(a)(ii) of the Compensation Act. Moreover, the terms of s 44D(2) of the Compensation Act make it clear that, prior to the 2018 Amendment Act, Parliament turned its mind specifically to the position of a worker who was absent from work by reason of an incapacity for which they were entitled to compensation under the Compensation Act:
44D Definitions applying to pre-injury average weekly earnings - relevant period
…
(2) The relevant period, in relation to pre-injury average weekly earnings of a worker who, during the 52 weeks immediately before the injury, voluntarily (otherwise than by reason of an incapacity for work resulting from, or materially contributed to by, an injury that entitles the worker to compensation under this Act):
(a) alters the ordinary hours of work, or
(b) alters the nature of the work performed by the worker,
and, as a result, the worker's ordinary earnings are reduced, does not include the period before the reduction takes effect.
There is no suggestion, whatsoever, in any material before the Court that Parliament intended to do anything other than simplify the workers compensation legislative scheme through passage of the 2018 Amendment Act. The Explanatory Note to the 2018 Bill purports to identify the "significant changes" made by the new Sch 3 to the Compensation Act and is completely silent as to whether a previous period of incapacity is to be included in the relevant period for the purpose of calculating pre-injury average weekly earnings. Similarly, the second reading speech in the New South Wales Legislative Council, to which we were taken by Senior Counsel for the Secretary, says nothing to suggest any intention to change the pre-existing position in this regard. Rather, consistent with the stated aim of simplification, the text of both the previous and the amended provisions suggest that the change in language was intended to encapsulate and simplify the previous form of words.
The position would be different if there were any hint, either in the language of the Compensation Act or in the extrinsic material to which we were referred, that Parliament intended to effect a change from the position under the former s 44C(1)(a) of the Compensation Act. However, the absence of any such suggestion provides some support for the construction adopted by the Deputy President.
Having regard to the analysis set out above, the Secretary's proposed construction should be rejected. I would have dismissed the single ground of appeal.
As to the meaning of "leave", I accept the appellant's submission that, in this employment or industrial context, the Compensation Act uses "leave" in its ordinary meaning as having the sense of an entitlement or authorisation which relieves a worker of performance of their duties conferred by or under an employment contract, statute or industrial agreement. That is also the meaning given to the term by a majority of the Full Court in Flinders Ports Pty Ltd v Woolford (2015) 121 SASR 485; [2015] SASCFC 6 (which was subsequently approved by the Court of Appeal in Knight v State of South Australia (2022) 140 SASR 326; [2022] SASCA 14). Those cases were directed to workers legislation in South Australia, which naturally does not govern this Court's interpretation of differently worded legislation in this State. But they do provide helpful guidance and I am not persuaded they are clearly wrong.
In Woolford, the majority held that the "absence of the worker from employment due to compensable injury" is not a form of leave. Stanley J (with whom Kelly J agreed; Kourakis CJ dissenting) said at [105]:
… More fundamentally, however, a worker's absence from his or her employment because of an injury arising from employment is not "leave" in any commonly understood industrial sense. Leave is an entitlement relieving the employee from the performance of work duties, which is conferred by the terms of the employment contract, an industrial instrument or Act of Parliament that applies to that employment. Usually such leave is paid. Leave can also be granted to an employee by an employer as an indulgence. The employee is relieved from the performance of work outside of any contractual or statutory context. Usually in those circumstances it is unpaid…
After referring to s 40 of the Workers Rehabilitation and Compensation Act 1986 (SA) (which was in broadly similar terms to ss 49 and 50 of the Compensation Act), Stanley J concluded at [106] and [108] that it was implicit in the provision that the absence of a worker from employment due to compensable injury is not a form of leave. Thus absence from work as a result of a work-related injury would not be characterised as unpaid leave for the purposes of s 3(4)(a) of the Long Service Leave Act 1987 (SA).
In Knight, the issue was whether weekly payments of compensation under the Return to Work Act 2014 (SA) were earnings for the purpose of calculating average weekly earnings under s 5(3) of that Act (which provided that, for the purposes of that section, "any amount paid while a worker was on annual, sick or other leave will be taken to be earnings"). As Stern JA has noted, the Court of Appeal acknowledged in Knight that reasonable minds might differ as to the question which had been determined in Woolford. But the Court held at [63]-[64] that the receipt of workers compensation by a worker who was not working by reason of incapacity caused by a work injury did not fall within the phrase "other leave" in s 5(3) of that Act. The Court construed the words "annual, sick or other leave" as all relating to payment made by an employer in connection with employment. It noted at [58]-[59] that while the observations in Woolford at [105] were made in a different statutory context, there was no reason to doubt their accuracy or utility and the Court expressly rejected the claim that the statements about leave made in Woolford were wrong. I respectfully agree with those observations.
It is notable that the majority in Woolford acknowledged that a construction of s 3(2) of the Long Service Leave Act which had the effect of disregarding weekly payments received by the worker under the Workers Rehabilitation and Compensation Act produced "an unfortunate result", which deserved Parliament's attention (see at [115]). In my view, there is a need for similar judicial restraint here. The term "leave" should be given its ordinary meaning and should not be strained. All the more so where there is available a power to make a regulation to address any unacceptable unfairness in that interpretation. (Incidentally, it was noted in Knight at [60] that the Long Service Leave Act was amended after Woolford so as to incorporate time spent away from work by reason of compensable work injuries when calculating an entitlement to long service leave).
Interpreting "leave" in the context of the expression "period of unpaid leave", as referring to an entitlement or authorisation which relieves a worker of the performance of their duties by or under an employment contract, statute or industrial agreement, is also consistent with other provisions in the Compensation Act which describe other types of "leave". For example, s 49(1) provides that compensation is payable in respect of a period of incapacity for work even though the worker has or may receive any payment, allowance or benefit for "long service leave". Similar provision is made in s 50(1) in respect of "sick leave". Both those kinds of leave involve an entitlement or authorisation which excuses a worker from performing their duties of employment.
It may be accepted that a worker may receive both weekly compensation under the Compensation Act as well as payment for sick leave under any Act, award or industrial agreement or contract of employment (see s 50(1)). But no anomaly is produced if the receipt of weekly compensation payments does not fall within the ambit of the term "leave" in cl 2(3)(a). That is because, in my respectful view, the term "leave" does not cover the situation where a worker is absent from employment due to compensable injury in the ordinary sense of that term.
Returning now to the power to make a regulation so as to avoid an unfair or unjust outcome, cl 2(3)(a) empowers the making of regulations to provide for the adjustment of the relevant earning period for a worker in employment (including, for example, by extending or reducing the period) to "take into account any period of unpaid leave" or "other change in earnings circumstances in the employment". It is necessarily implicit in the phrase "other change in earnings circumstances in the employment" that it goes beyond the concept of "any period of unpaid leave", otherwise the phrase would be otiose. Assuming for the moment that the expression "period of unpaid leave" does not include a period during which a worker receives workers compensation payments, a regulation could be made under cl 2(3)(a) requiring an adjustment to be made of the relevant earning period for a worker in employment so as to include in that relevant period part or all of the time during which an injured worker received such compensation. That is because this would involve the making of a regulation adjusting the relevant earning period with reference to the period within which such compensation was being received, which falls within the expression of "other change in earnings circumstances in the employment".
According their ordinary meaning to the words in the relevant expression is consistent with other authority, including the High Court's approval in Collector of Customs v Agfa-Gevaert Ltd (1996) 186 CLR 389 at 398; [1996] HCA 36 of the following observations of Lord Simon of Glaisdale in Maunsell v Olins [1975] AC 373 at 391:
Statutory language, like all language, is capable of an almost infinite gradation of 'register' - ie, it will be used at the semantic level appropriate to the subject matter and to the audience addressed (the man in the street, lawyers, merchants, etc). It is the duty of a court of construction to tune in to such register and so to interpret the statutory language as to give to it the primary meaning which is appropriate in that register (unless it is clear that some other meaning must be given in order to carry out the statutory purpose or to avoid injustice, anomaly, absurdity or contradiction). In other words, statutory language must always be given presumptively the most natural and ordinary meaning which is appropriate in the circumstances.
Secondly (and necessarily related to the first point because of the collocation "unpaid leave"), I do not consider that the receipt of workers compensation payment is unpaid leave within the meaning of either cl 2(3)(a) or reg 8E. The notion of such receipt constituting "unpaid leave" sits uncomfortably with the legislative scheme in Pt 2 of the Compensation Act imposing liability on an employer to pay compensation to an injured worker. The scheme involves the payment of compensation where such liability arises. Thus s 9(2) of the Compensation Act explicitly provides that compensation "is payable" where a worker has received an injury in circumstances which make the employer liable.
Where a total or partial incapacity for work results from an injury, the "compensation payable" includes a weekly payment during the period of the incapacity (s 33). The concept of "weekly payments" also appears in ss 34-40. Assuming for the sake of argument (and contrary to the above) that a worker's absence from work because of incapacity may properly be described as "leave", that leave is more accurately described as "paid leave", because of the receipt of weekly payments of workers compensation. It is artificial to describe a worker receiving workers compensation as being on "unpaid leave".
Thirdly, I do not consider that the text of cl 6(2)(c) has any particular significance in construing the meaning of the expression "period of unpaid leave" in cl 2(3)(a) or reg 8E. Clause 6(2)(c) excludes from the term "income" (which is an aspect of "earnings") any prior payments made under workers compensation legislation. This provision applies to a worker who is totally or partially incapacitated for work. It therefore has a wider scope than reg 8E, which only operates where no earnings in the employment were paid or payable to the worker, thereby necessarily excluding a worker who has been partially incapacitated and continues to work and receive lower weekly earnings.
In any event, it is significant that cl 6(2)(c) contains an explicit and unequivocal provision that states that the "income" of a worker does not include any payment in respect of loss of earnings under a scheme to which the workers compensation legislation relates. Self-evidently, Parliament turned its mind to this matter in the context of defining what are "earnings" in that provision. There is, however, no equivalent unequivocal provision regarding the relevance of receipt of workers compensation payments in calculating pre-injury average weekly earnings. It should be assumed that Parliament was content to leave it to the Executive to make an appropriate regulation on the subject if seen fit to do so.
Fourthly, I do not consider that the proper construction of the expression "unpaid leave" in cl 2(3)(a) and reg 8E is assisted by reference to the terms of former s 44C(1) of the Compensation Act, the terms of which are set out at [57] above. That provision contained a definition of pre-injury average weekly earnings which operated from October 2012 until its repeal by the 2018 Amendment Act. The definition in s 44C(1) relevantly provided that pre-injury average weekly earnings in respect of a relevant period in relation to a worker meant the sum of various figures, which included "the average of the worker's ordinary earnings during the relevant period (excluding any week during which the worker did not actually work and was not on paid leave) expressed as a weekly sum" (emphasis added). The text of that provision is in different terms to the expression "unpaid leave" in the current legislation. While it is true that the extrinsic material to the 2018 amendments does not indicate that the Parliament intended to effect a change from the position under s 44C(1)(a), I do not consider that the repeal of s 44C(1) and its replacement provides support for the Deputy President's construction. That is because the text of the provisions is notably different.
Further, the change begs the question whether the expression "was not on paid leave" covers the receipt of payments of workers compensation. In particular, do such payments represent "paid leave"? As I have emphasised, to the extent that the 2018 Amendment Act operates to produce unfair or unjust results, the regulation-making power is available to redress any perceived unfairness. The failure to date to make such a regulation in respect of circumstances such as those which have arisen here may simply reflect the fact that to date the executive considers that no regulation is warranted.
Fifthly, I do not consider that the construction of cl 2(3)(a) of Sch 3 should be predicated upon a parliamentary intention (subject to any regulations being made) that periods of unpaid leave would merit an adjustment of the relevant earning period for the purpose of calculating pre-injury average weekly earnings. Again, this simply begs the question as to whether or not workers compensation payments constitute "unpaid leave".
Sixthly, although purpose is undoubtedly a relevant consideration in the task of construction, it has limited utility in a case such as this. That is because, although the legislation can accurately be described as "beneficial", it also represents the outcome of a balancing of competing considerations in implementing that purpose. Moreover, it is important to appreciate that one part of the implementation of that purpose is the creation of the regulation-making power to address any anomalies or unfairness in the operation of the primary legislation. This has important ramifications for the Court's role in legislative construction.