Telstra Corporation Ltd v Keen

REASONS FOR JUDGMENT 1 The issue in this appeal is whether redundancy payments made to an employee of Telstra Corporation Ltd ("Telstra") are properly to be characterised as amounts payable to that employee by way of salary, wages or pay for the purposes of s 33(1) of the Safety, Rehabilitation and Compensation Act 1988 (Cth) ("SR&C Act"), so reducing the amount of compensation for incapacity payable to the respondent, Ms Keen, under that Act.

Background setting 2 On 29 December 1997 Ms Keen was made redundant and received a redundancy payment. The quantification of that payment was in accordance with an "agreed benefit framework" prescribed in an industrial agreement (the AOTC Redundancy Agreement) and the benefit payable was calculated as a sum equivalent to 80 weeks of her ordinary pay. The appellant received as well some other sums under the Agreement on termination. 3 Insofar as presently relevant, the AOTC Redundancy Agreement provided: "1.2 In negotiating this Agreement, the parties have sought to achieve: … (ii) the provision of fair compensation for employees who leave AOTC through redundancy; [emphasis added] … 7. ENTITLEMENTS [The 'agreed benefit framework'] … 7.2 The agreed benefit framework is: (i) four weeks pay for each completed year of continuous service up to five years, (ii) three weeks pay for each completed year of continuous service thereafter, plus a pro-rata payment for each completed month of continuous service since the last completed year of continuous service, (iii) for employees over fifty years of age, four weeks pay for each year of service beyond fifty years of age, including pro-rata adjustment for each completed month of continuous service since the last completed year of continuous service, (iv) the minimum sum payable under these arrangements, including any payment in lieu of notice (four weeks), to be eight weeks salary and the maximum to be eighty-four weeks salary. (v) the sum payable to an employee under these arrangements not to exceed the sum of salary that would be payable were the employee to continue in employment until the maximum retiring age." 4 Ms Keen suffered a work related injury in 1991. In late 2000, she sought compensation under the SR&C Act on the basis of that injury. The Administrative Appeals Tribunal ("the Tribunal") determined on 23 June 2003 that Ms Keen was entitled to payment of compensation for incapacity under that Act. There has been a sequence of Telstra decisions and reviews and appeals to the Tribunal concerning the proper basis upon which her compensation claim should be calculated. It is agreed for the purposes of this appeal that the calculation should be made under s 21 of the SR&C Act. That section relevantly provides that: "21 Compensation for injuries resulting in incapacity where employee is in receipt of a lump sum benefit (1) This section applies to an employee who, being incapacitated for work as a result of an injury retires voluntarily, or is compulsorily retired, from his or her employment at any time after the commencement of this section and, as a result of the retirement, receives a lump sum benefit under a superannuation scheme. (2) Comcare is liable to pay compensation to the employee, in respect of the injury, in accordance with this section for each week after the date of the retirement during which the employee is incapacitated." The section then prescribes how the compensation is to be calculated. 5 The present question arises because Telstra has contended, unsuccessfully before the primary Judge and now on this appeal, that s 33 of the SR&C Act applies to reduce the amount of compensation payable to Ms Keen. Section 33(1) provides: "(1) Where, in relation to a day in respect of which compensation is payable to an employee under section 19, 20, 21, 21A, 22 or 31, an amount or amounts are paid or payable to the employee by the Commonwealth or a licensed corporation by way of salary, wages or pay, the amount of compensation payable under that section in respect of that day shall be reduced by the amount, or the sum of the amounts, so paid or payable to the employee. (2) In this section, a reference to an amount paid or payable to an employee by the Commonwealth or a licensed corporation does not include a reference to: (a) an amount by way of pay in respect of a period of leave of absence granted, or in lieu of the grant of a period of leave of absence, under section 16 or 17 of the Long Service Leave (Commonwealth Employees) Act 1976, section 73 or 74 of the Public Service Act 1922 as in force before 20 December 1976 or section 7 or 8 of the Commonwealth Employees' Furlough Act 1943 as in force before that day; (b) an amount by way of pay in respect of a period of leave of absence granted, or in lieu of the grant of a period of leave of absence, under regulations in force under the Naval Defence Act 1910, the Defence Act 1903 or the Air Force Act 1923; (ba) an amount by way of pay in respect of a period of leave of absence, or in lieu of the grant of a period of leave of absence, in the nature of long service leave under a law of a State or Territory or an industrial award, determination, order or agreement; (c) any amount that the employee is able to earn in suitable employment or any amount of earnings payable to an employee, being an amount that has been taken into account for the purposes of calculating the amount of compensation payable to the employee under section 19; or (d) an amount of deferred pay within the meaning of Part III of the Defence Forces Retirement Benefits Act 1959 or of any provision of that Part." The section goes on to exempt specific payments, e.g. a payment in respect of a period of leave of absence or deferred pay, from the operation of s 33(1).