Secretary, Department of Communities and Justice v Stewart (NSWCA 2024)

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Key Takeaways

The Court of Appeal determined that a period of absence from work due to a work injury, and for which workers compensation payments were paid, does not constitute a ‘period of unpaid leave’.

For the purposes of determining pre injury average weekly earnings (‘PIAWE’) and the weekly benefits as a result of a second work injury resulting in incapacity, any period in the previous 52 weeks in which the worker was receipt in weekly benefits for an earlier injury, is to be taken into account as part of the relevant period.

Brief Facts

The worker was employed as a Senior Prison Officer. On 20 November 2020, he suffered a workplace injury to his shoulder (‘the first injury’). Liability was accepted by the insurer. As a result of the injury, the worker had no capacity for work from 20 November 2020 to 1 February 2021 and was in receipt of weekly benefits. For the purposes of the first injury, PIAWE was calculated at $2,059.86 per week.

On 1 February 2021, the worker made a further workers compensation claim for post-traumatic stress disorder resulting from the nature and conditions of his employment (‘the second injury’). Liability was also accepted with respect to the second injury. As a result of the second injury, Mr Stewart had no capacity for work and PIAWE was calculated as being $1,565.68 per week. That calculation did not include any of the weekly benefits paid as a result of the first injury, however the relevant earnings period included the period in which the worker was paid weekly benefits for the first injury (20 November 2020 to 1 February 2021).

The worker asserted that the relevant earnings period for the purposes of calculation of PIAWE should not have included the period in which he was paid weekly benefits for the first injury. If that period were to be excluded, his PIAWE would have been $1,958.51.

At first instance, Member Burge accepted the worker’s assertion.

On appeal, Deputy President Wood found error in the decision of Member Burge, however found that during the period of incapacity for the first injury, the worker was on ‘unpaid leave’ within the meaning of clause 8E of the Workers Compensation Regulation 2016 (‘the regulation’) and the relevant earnings period should be adjusted to exclude that period.

The decision was appealed by the employer to the Court of Appeal.

Judgment

The single issue for determination by the Court of Appeal was whether a period of absence from work due to incapacity arising from an injury for which a worker was paid workers compensation benefits, constituted a ‘period of unpaid leave’ for the purposes of clause 2(3)(a) of Schedule 3 of the Workers Compensation Act 1987 (‘the 1987 Act’) and clause 8E of the regulation.

Relevantly, clause 2(3)(a) of Schedule 3 of the 1987 Act is in the following terms;

(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.

Clause 8E of the regulation is in the following terms;

(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.

Griffiths AJA and Leeming JA allowed the appeal, however provided separate reasons. Stern JA dissented.

Griffiths AJA determined that the expression ‘period of unpaid leave’ should be given its ordinary meaning. The 1987 Act uses ‘leave’ in the sense of an entitlement or authorization which relieves the worker of their duties as conferred by or under an employment contract, statute or industrial agreement. That meaning should not be unduly extended, thus a period of absence owing to a compensable injury should not be regarded as a period of ‘leave.’

He further found that receipt of workers compensation is not ‘unpaid leave’ when given its ordinary meaning.

Similarly, Leeming JA found that an absence from work when in receipt of workers compensation payments was not ‘unpaid leave’ and the regulation power in clause 2(3)(a) of Schedule 3 of the 1987 Act authorized the making of regulations for the adjustment of the relevant earnings period in circumstances such as the worker’s and there was therefore no occasion to adopt an expansive construction of the phrase ‘unpaid leave.’

In the circumstances, it was determined that clause 8E of the regulation did not apply and the period in which the worker was in receipt of weekly benefits for the first injury, was to be taken into account when determining PIAWE for the second injury.

Implications

This case provides judicial guidance for practitioners and insurers when calculating PIAWE for workers who suffer a further injury when in receipt of workers compensation benefits for an earlier injury.

The decision clarifies that for the purposes of determining PIAWE as a result of a second injury, any period in the previous 52 weeks in which the worker was receipt in weekly benefits for an earlier injury, is to be taken into account as part of the relevant period.