What is “service” under the Fair Work Act?

What is “service” for the purposes of the Fair Work Act? Here is the answer.

“Consideration

 

  • The proper construction of the expression ‘unpaid authorised absence’ in 22(2)(b) was considered by a Full Bench of the Commission in Workpac Pty Ltd v Bambach3 (Bambach). In that matter, the Bench was considering an appeal from a decision in which it had been found that the period in which an employee was absent and in receipt of workers’ compensation payments was not an excluded period for the purposes of s.22. In dismissing the appeal, the Full Bench rejected the argument that the expression ‘unpaid authorised absence’ consisted of absences not paid by an employer, including those where the employer simply passes on payments of other parties such as occurs with workers’ compensation arrangements. The Bench said:

 

  • We reject this proposition insofar as it applies to the payments made to Mr Bambach while absent on workers’ compensation. Both the workers’ compensation payments and the payment of accident pay were made pursuant to a legal obligation upon his employer, WorkPac.

 

  • Contrary to the appellant’s submission, the fact that WorkPac chose to insure against such liabilities, and hence the payments were actually made by WorkPac’s insurer, is irrelevant. The fact that the payments were made pursuant to a legal obligation upon the employer is the critical consideration. The nature of the payment does not change because the employer has entered into an indemnity arrangement with a third party.

 

  • Bambach was referred to in the decision of the Federal Circuit Court of Australia (as it then was) in Hall v. Medical Imaging Queensland Pty Ltd4 (Hall). The Court there considered whether an employee in receipt of workers’ compensation payments under the Queensland workers’ compensation scheme accrued annual leave during that period. The answer to the question was dependent on the proper construction of s.22(2)(b) of the Act. The applicant argued that the absence was not unpaid because WorkCover was paying compensation to him that his employer was otherwise obliged to The respondent argued that that the period was caught by s.22(2)(b) because no amounts were paid by them and the period was therefore unpaid leave or an unpaid authorised absence.

 

 

 

  • In rejecting the respondent’s arguments, the Court made reference (as the Full Bench did in Bambach) to the earlier Commission decision in Webster v. Toni and Guy Port Melbourne Pty Ltd5 (Webster). In the latter case, the Commission concluded that an employee’s absence due to a motor vehicle injury was a period of ‘unpaid leave or unpaid authorised absence’ despite the fact that the employee was receiving payments from a statutory body, the Transport Accident Commission, during the period in question. The Court in Hall said:

 

  1. What then differentiates between an employee who is absent and paid compensation by reason of a statute like the Workers’ Compensation Act (Qld) and a worker who receives payment because of a private insurance arrangement or a statutory “no fault” compensation scheme? The answer is supplied by Bambach. That decision demonstrates that, if the employer has an obligation to pay the employee whilst he is absent, then whether the employer pays the employee, or another does on the employer’s behalf does not matter. The absent (sic) is not unpaid for the purposes of 22(2)(b) of the Fair Work Act.

 

  1. Bambach does not bind me but it is I think, with respect, What is important is the existence of an obligation on the employer to pay the employee whilst he or she is absent.

 

  • In each of Bambach and Hall the employees’ claim for workers’ compensation had been accepted and they were in receipt of workers’ compensation The argument was about the significance of the fact that the payments were not coming directly from the employer. This is not the case here. In this case it was accepted that no weekly workers’ compensation payments were ever made and that ultimately, after the termination of the Applicant’s employment, the claim for workers’ compensation was rejected. The Respondent says this is a critical distinction and that the absence of payment means the period is one of ‘unpaid leave or unpaid authorised absence’.

 

  • There are various passages in Bambach where the Bench discusses the import of an employee being ‘on workers’ compensation’. For example, in its consideration of the Explanatory Memorandum to the Act at paragraph [55] the Bench says:

 

It seems to us that the Explanatory Memorandum in fact supports the contrary proposition, namely that an absence on workers’ compensation is not an ‘excluded period’ for the purpose of calculating an employee’s service and hence her or his entitlement to various forms of leave. Indeed if the appellant’s construction of s.22 was correct then there would be no need for s.130 to ‘switch off’ the leave accrual rules in Part 2.2.6

 

  • At paragraph [67] the Bench says “We have concluded that an absence on workers’ compensation is not an ‘excluded period’ within the meaning of 22”. The Respondent argued that these references needed to be considered in the context of the matter the Bench was dealing with and were not statements of general application. In particular, the Respondent said that references in Bambach to an employee being ‘on workers compensation’ should be read as a reference to employees whose workers’ compensation claim has been accepted and who are in receipt of workers compensation benefits. This was not the situation in the present case.

 

 

 

  • There is in my view, some force in the Respondent’s submission on this point. The Bench in Bambach was dealing with a particular factual The injury in that matter was never in dispute. The workers’ compensation claim was accepted from the outset.7 The employee was in receipt of workers’ compensation payments.8 For those reasons it was unnecessary for the Bench to turn their minds to other situations in which the status of a workers’ compensation claim might not be so well-settled, and they did not do so. Moreover, the argument in Bambach was about the source of the payment and whether the amounts paid had to come directly from the employer in order for the leave or absence to be considered ‘paid’. The Bench concluded that it did not, and it is that principle for which the decision stands.

 

  • In the NSW workers’ compensation system, once an insurer has received initial notification of an injury it must start making provisional weekly payments of compensation within seven calendar days unless there is a reasonable excuse for not doing Section 267 of the Workplace Injury Management and Workers Compensation Act 1998 (NSW) provides as follows:

 

267 Duty to commence weekly payments following initial notification of injury

 

  • Provisional weekly payments of compensation by an insurer are to commence within 7 days after initial notification to the insurer of an injury to a worker, unless the insurer has a reasonable excuse for not commencing those weekly payments.

 

  • A person does not have a reasonable excuse for not commencing those weekly payments unless the person has an excuse that the Workers Compensation Guidelines provide is a reasonable excuse.

 

  • The payment of provisional weekly payments of compensation under this section is on the basis of the provisional acceptance of liability by the insurer for a period of up to 12 weeks determined by the insurer having regard to the nature of the injury and the period of incapacity.

 

  • The acceptance of liability on a provisional basis does not constitute an admission of liability by the employer or insurer under this Act or independently of this Act.

 

  • An insurer who fails to commence weekly payments of compensation as required by this section is guilty of an offence.

 

: Maximum penalty–50 penalty units.

 

  • In this matter, it was not in dispute that the Applicant did not receive workers’ compensation payments after notifying of his compensation claim. The evidence was that the Respondent’s insurer relied on the ‘reasonable excuse’ provisions of the NSW legislation. Liability for the claim was never accepted either on a provisional or final basis. I make no comment on that decision. The point is that following the making of a workers’ compensation claim in NSW, the legislation allows for a limited number of possibilities with respect to payment to a claimant; either provisional payments commence, or the reasonable excuse provisions are invoked (or liability is refused) and no payments are made.9 In circumstances such as here where the latter situation arises, I do not think it is possible to conclude that the

 

 

 

periods in question were anything other than a period of unpaid leave or unpaid authorised absence within the meaning of s.22(2)(b).

 

  • Where an employee has been absent on unpaid sick leave and a workers’ compensation claim relating to the period of leave is ultimately rejected, the Commission has previously concluded that the period of the absence in respect of which the workers compensation claim is made did not count as service for the purposes of the minimum employment period.10

 

  • For completeness, I note that the evidence of Mr. Coniglio referred to some minor reimbursement of medical expenses for the The reasonable excuse provisions apply to provisional weekly payments but not to medical expenses compensation.11 The Applicant himself suggested that no such claims were made. In either event I do not think the reimbursement of these kinds of expenses, as distinct from regular workers’ compensation payments for lost earnings, would change the result.

 

  • The Applicant was not protected from unfair dismissal because he had not completed a period of employment with his employer of at least the minimum employment period. In the circumstances it is unnecessary to consider the application for an extension of time.

 

The application is dismissed.”

 

Charbel Joseph Younan v Westpac Banking Corporation (U2024/839) per DEPUTY PRESIDENT ROBERTS   SYDNEY, 13 MARCH 2024